An Obama Presidency Could Sever Gulf States US Dollar Peg?

[BiscayneSunrise]

Re: An Obama Presidency Could Sever Gulf States US Dollar Peg?

Before we can talk about what happened in Basra, we should talk about what HASN'T happened.

The military surge over the past year was focused around Iraq except for Basra. Basra was under the control of the British Army which has remained in their camps and have not engaged the local community. Because of that, Basra remained a refuge for Shia rebels with deteriorating security conditions and a thorn in the side of the central government. Finally, the central government decided it had to take action.

To me, the very fact that the Iraqi central government took military action is a HUGE indicator of their increasing political strength. For too long, Mailiki had been viewed as a weak player holding a weak hand but this military initiative belies that. The US military did not bail out the Iraqis. They provided some air support and ground advisers.

If the cease fire seemed like it came early, remember that in counter insurgency operations the goal is not to totally crush the enemy but to prove to the local citizens that the counter insurgency forces have the military and political strength and the staying power to eclipse the rebels.

I respectfully disagree with your analysis that the Iraqis were unable to stand up for themselves militarily. Not only did they do that, but even more importantly, they proved they had the political will to press their advantage.

[rj1]

Re: An Obama Presidency Could Sever Gulf States US Dollar Peg?

It is popular to say that the US invasion of Iraq has been a de-stabilizing influence in the ME. The exact opposite is true.

The Gulf countries are dumping trillions of dollars into infrastructure upgrades. I doubt they would be doing that if they didn't feel pretty good about the future and stability of their region. The two biggest beneficiaries to Saddam's overthrow were the Kuwaiti's and the Saudi's, next biggest beneficiaries are the Iranian's.

I strongly dispute the notion the Saudis benefitted from Saddam's overthrow. Saddam was a toothless tiger after the Gulf War. He couldn't hurt the Saudis if he wanted to. Plus, he was a Sunni, was very anti-Iran, which was good for Saudi Arabia. The Muslim Cold War as it has been called is going on between the Saudis and Iranians since the early 1980s. And Saddam was the Saudis' Iranian buffer. And now the Saudis have a Shiite leader mildly sympathetic to Iran to their east.

Since the war is indirectly responsible for the dollar's decline, perhaps the dollar peg and resultant inflation is just nature's way of making the ME oil producers pay their share of the war.

Last I checked, resultant inflation is hitting...everyone.

Hopefully, once and for all since the US was threatening to re-establish Sunni minority rule in Iraq, which would be Iran's worst nightmare.

I would love to see the U.S. try and engineer a 20% minority win an election in Iraq when there is largely ethnic-based voting, and especially considering the front for Bush's foreign policy since 2001 has been spreading democracy, so that rules out a coup unless Bush is willing to go on camera and renounce his foreign policy of the last seven years. This is a guy who believed in spreading democracy so much that he actually helped Hamas into power!

Spreading democracy in Iraq is very pro-Iran, cause the majority of Iraqis are Shiites, and Iraqi Shiites are naturally inclined toward Iran.

[BiscayneSunrise]

Re: An Obama Presidency Could Sever Gulf States US Dollar Peg?

OK, third attempt to respond. last two were erased due to "server busy"

Short version: You correctly point out Bush's foreign policy has been all about spreading democracy, oftentimes to the exclusion of anything else. In the case of Iraq, he has spent trillions of dollars, tens of thousands of lives, tons of political capital, lost the Republican majority and maybe even destroyed the Republican Party, all for the single minded goal of democratizing the ME. Love him or hate him, I think that, at least, deserves a begrudging respect.

[Guest]

Re: An Obama Presidency Could Sever Gulf States US Dollar Peg?

... Bush's foreign policy ... he has spent ... tens of thousands of lives.

Biscayne - got to part ways with you on this assessment - the above must be qualified by noting those 'tens of thousands of lives' have been largely Iraqi, not American lives - and that is a very thorny issue. You have to be very, very right in a cause for this to be even remotely justifiable, if it ever is. Nothing is ever simple - and the above observation, "grist for the mill" for so many self-righteous observers, is only a fraction of the true story.

The full context is 'highly complicated' and the "Greek Chorus" decrying this as ruthless and wanton slaughter by America have one hell of a lot of explaining to do of their own - and I don't see that when they are held to that task, they are willing to do any of that explaining.

___________

I think the objection is : "democracy imposed by the gun is immoral and evil". The answer to that of course in principle always remains "yes".

Then it gets quite complicated : Iraqi dictator invades a small Gulf nation (big oil producer though) - annexes it, putting his large army right on the border of Saudi Arabia, the world's largest swing producer of petroleum. Very complicated situation for the entire world.

The international conclusion (after copious US prompting) was, "military annexation of a small neighboring country in the Arabian Gulf"? Not permissible. Cue : Gulf War I.

Then : An armistice is signed. Saddam "sues for peace" after getting his mechanized army wiped out, and the peace terms involve submittal of his remaining army to demobilization, and cessation of any belligerence towards neighbors. An armistice is a critically important international document to observe. Trash the armistice, and you trash the peace. Or are their contortionists or acrobats around here who wish to argue that a trashed armistice is 'all relative' and it can be trashed without the victor of the previous conflict considering it thereby null and void?

Then : Saddam signs the armistice, and promptly ignores it's every article. Persecution of Kurdish and Shia minorities ensues, atrocities, etc. World turns a complacent blind eye. It's back to "business as usual", with an embargoed Iraq and half it's citizens skewered in permanent limbo. Gassings, atrocities, Uday Hussein going stir crazy in an outburst of despotic emulation of his PAPA. World whistles blithely while looking down it's nose at the UK and US, who are attempting to contain Saddam's mad-dog performance.

Then : Lots of arm-waving at the UN about languishing Iraqi minorities, while the "oil for food" program progresses for ten years, with lots of private corporations in all the major European countries, Russia, and the US pigging out on the lushly lucrative "oil for food" and "legitimate trade" contracts with embargoed Iraq.

Meantime : Saddam's brutal incursions into north and south in his country result in formal "no fly zones" instituted by GB and US to prevent him from massacreing further numbers of Kurds and Shiites.

Then : Global outrage at the cruelty of the no-fly zones and the embargo imposed by GB and US. These, and the failure of all attempts at engaging Saddam in diplomacy to allow the cessation of the no-fly zones - result in growing global outrage at the 'cruelty of GB and US in "imprisoning the Iraqi's" in a desperate limbo without any solution. Starvation of Iraqis imputed to the UK and US exclusively. Saddam and cronies invent new past-times gold-plating their palatial bathrooms.

Cue Forward - after 10 years of increasingly corrupt oil embargo - and the manifest bankruptcy of all attempts at diplomacy - this decade long failure despite strenuous diplomatic initiatives becomes etched into the global awareness. Add a growing chorus decrying the 'brutal impact of the embargo and no-fly zones upon Iraqis' and the 'horrific human cost' gratuitously imposed upon Iraq by UK / US. No constructive alternative ever gets tabled by this Greek Chorus of armchair critics however.

Then : Colossal blunder on the part of Bush and Blair - panic after 09/11 -attempting to "take the bull by the horns" in the morass that is Iraq and it's environs. They don't stop to figure out precisely what bull they think they are taking by the horns, nor how they will conclude what they intend to start. Colossal hubris and overambition to 'fix' the problem - with a manifestly rogue Iraq still sitting there after a full decade of barely contained belligerence.

Saddam's army remains held at bay by embargo's and no-fly zones, and all neighboring countries are bunkered down, as though they were confined in a box with a case of rogue dynamite. Stupidly, Bush and Blair feel that an 'intervention' can fix the situation - concluding this can be done because the first Gulf War in fact succeeded in that it gave Kuwait back it's sovereignty.

Bush and Blair wish to break through the impasse of having maintained constant pre-emptive bomber missions patrolling northern and southern Iraqi no-fly zones for a full decade, while the rest of the world shrugged and assumed that leaving Saddam to his own devices without constraints would have amounted to a 'better solution'. Bush and Blair become seduced by the idea they can 'solve the problem' while the rest of the world wallows in the conceit that "Iraq would not have a problem" if the Brits and the Americans just packed their bags and went home.

Needless to say, the Kuwaitis are probably the only ones who would remain skeptical (translates as hugely unenthusiastic) about that 'leave it to Saddam' approach.

What ensues : Ill fated, poorly conceived and reckless second war with Iraq to finally call Saddam to account for an armistice agreement he's spat on for ten years after invading a neighboring country to annex it's formidable oil reserves to Iraq's. Honorable attempt is made by the Americans and British to institute the first genuinely multi-ethnic Federal government in the entire middle east. Of course it is immediately decried as a "Puppet Government" by the same Greek Chorus that yawned with disinterest through the entire embargo of Iraq for the previous decade.

No word of qualification is made amongst the wailers, to observe that puppet or not, such a fledgling government would have been the first and only example of a genuinely multi-ethnic government (Shia / Sunni / Kurd coalition federal government? Unheard of!) in existence among any Arab nation in the middle east outside of Lebanon. Rather than the world being intrigued by this progressive albeit fledgling idea, rank "Neo-colonialism" is the hue and cry.

Then : Systematic butchering of Iraqi civilians by nameless "death squads" evenly distributed between Sunni groups (originally Al Quaeda inspired, later autonomous), and Shia groups (originally purely ethnically inspired, later funded and 'prompted' by Shia Iran). Worldwide denunciation of the Americans and the British as the butchers.

Then : Bankrupt America. Heaped with scorn by the somnolent Europeans and all the rest of world opinion, who happily concluded that after Gulf War I if the rest of the world had politely ignored the fact that Saddam promptly tore up the armistice agreement he'd just signed, then everyone could happily 'go home' and Saddam would have miraculously reformed into being everybody's good neighbor.

Summary: In short, Saddam started, and lost Gulf War I, ignored the armistice he signed, held out like a rabid bulldog for ten years while attempting to subdue his minority populations like vermin, and 'the rest of the world' did nothing but heap scorn on the UK and US for having been the sole nations who attempted to keep a lid on this dangerous little tin-pot. The fact that he had systematically flouted the terms of the peace ending Gulf War I is lost in the outrage at the "hardship imposed upon Iraqis" by the UK and US. (Saddam of course would have spared his people all of this hardship had we allowed "laissez faire" to run it's serendipitous course).

Today : All we hear is of the atrocity and gratuitous miitarism of the US (UK is fading out of the picture, the misbegotten second Gulf war having thoroughly trashed Blair's reputation). Virtually no mention whatsoever is to be found in the world, that for a full decade after Saddam's invasion of Kuwait, no other nation was willing to lift a finger to restrain him from rebuilding his army, butchering any minorities that tried to overthrow him in the aftermath of Gulf War I, or staging yet further menace to neighboring countries.

The entire world gazes at the US, in blissfully righteous indignation, fixated upon the US as the sole source and agent of butchery in Iraq - in a state of collective and very selective amnesia, about the full decade of failed armistice and failed diplomacy which preceded Gulf War II. This Greek Chorus of wailers glibly and steadfastly overlook that when Saddam invaded Kuwait, they would all have just as glibly invented reasons why this must be left to stand without their lifting a finger to prevent it.

The paramount guidline for the Greek Chorus is "don't require us to lift a finger, anywhere, for any reason, about anything" while we stand on grand and widely declared principles. If another Kuwait gets gobbled up in the next decade, while the US falls into bankruptcy and national disgrace in the eyes of a glibly righteous world, this same Greek Chorus of nations will watch apathetically, papering over the issue with opaque and endless deliberations upon deliberations at the UN.

May God bless us all as the world runs out of oil. May the US reach a point where it can offer the world some atonement for the blood it's shed in attempting to 'solve' the problem of rogue nations in that part of the world. How do we wish to describe Saddam's annexation of Kuwait? An act of justifiable initiative, which no other nation in the world should have lifted a finger to prevent? Where do you draw the line - in this area, when the rest of us observe one country 'annex' another and no regional nations have the strength to stop it? Are we to believe the Greek Chorus - that the ethical thing then is to stand back and merely observe it passively? That is the 'ethical' thing to do?

It's all down there in that little patch, in a state of permanent seething unrest - scene of multiple wars for the obliteration of the non-Muslim entity in their midst - employed as an endless excuse to distract the poorest elements of their societies from lack of civic progress in their own nations. And now, all through the chronic wars occurring there for sixty years, the Sunni and the newly empowered Shia gaze at each other with stark distrust across the Arabian / Persian Gulf.

The lesson for the rest of the world, as the oil markets tighten further, will be to understand what they had best do, when the next crisis down there occurs. The UN "peacekeepers" constructively engaged in Southern Lebanon are a joke, of a hypocritical magnitude guaranteed to usher in further conflict precisely where they were entrusted to guard the peace. Something in this UN mechanism for peace is broken. Only the determinedly disingenuous decline to observe how the UN "Peacekeepers" are led around like domesticated goats and ducks by the Iran funded Hezbollah. That is the face of the UN's future in that region. Then, when trouble comes round once more, the Greek Chorus will have to stop it's singing and wailing, and climb in with it's own solutions.

[BiscayneSunrise]

Re: An Obama Presidency Could Sever Gulf States US Dollar Peg?

Luke,

Tens of thousands of lives may have been grist for the critics but they have been grinding that axe for some time. Excellent point on your part about the "Greek Chorus" having to come up with their own solutions. I don't think there were ANY better solutions and Bush will likely be redeemed by history.

I also want to tell rj1 that he was right about the Saudis as they related to Iraq. He was right. Saddam was not that much of a threat to the Saudis, even benefited the Saudis being that they were both Sunni and engaged in the Muslim cold war against the Iranians. Like the mention of tens of thousands of lives, I overstated my point a little, my apologies.

Increasing Iranian/Shia influence in Iraq does probably make the Saudi's a little nervous. But the Saudi's are allied with the US and the US is showing it has the staying power in the Gulf to make that alliance mean something.

[Guest]

Re: An Obama Presidency Could Sever Gulf States US Dollar Peg?

Biscayne -

You know I see things in line with you on a lot of these points. However I seriously doubt the US has staying power in the Gulf for much longer. The fiscal problems here domestically are approaching the point where effective ability to continue projecting power has at least a credible risk of 'vaporizing' at some point as the USD implodes. You are extrapolating the near future with far too much normality in your assessment of the US's true fiscal condition. It seems incredible, but I firmly believe in the rule regarding what appears to be blatantly obvious - 'if a trend appears to not be able to sustain itself much further, it probably indeed can't'.

If the above unsustainability theory turns out to be true, the (gruesomely) interesting thing will be to observe rather the onrush of a far more toxic group of 'nation-interests' in the Gulf as the dollar peg to oil breaks. People love to decry what they impute to be "grossly venal US interests", but they have not seen anything approaching true venality yet - if the empowerment of some of that region's regional players is increasingly left unchecked - that's when we'll really be treated to a spectacle. I know lots of people here don't believe that. Their continuing education on that potential will come at the expense of a frightening degree of global instability, as the large reserves of global energy left are all there.

Don't rule this out. The dollar peg to oil is one of the principal 'pegs' allowing the dollar to continue commanding sufficient credit to maintain the US ability to continue projecting anything near it's current dispersed power.

When that peg breaks, we may witness a shocking debilitation of the US's ability to project strategic force, although I will concede the Gulf is probably the last region in the world from which the US will willingly retire. If the US, under the populist mandates of a Democratic 'housecleaning' after the 2008 elections, does anything precipitous in terms of withdrawal from Iraq or the solidity of it's security commitments in the Gulf, ( I make no comment on whether this is a good or a bad thing for America - although probably net bad for small countries like Kuwait), the resulting balance of powers around Iraq and in the Gulf could exhibit some shocking "tectonic" changes in a short period of time.

We 'have not yet seen' what happens when a superpower's currency enters the final spiral into worthlessness, but the 'vacuum implosion' of the Soviet Fleet, and Soviet armed forces gives a hint of the potential scale of such decline. It's entirely possible to some extent to see a comparable effect for the US. "Unfunded liabilities" in the US alone may cause such an inflationary spiral that the US armed forces effectively take a major hit.

With all the warts on the US countenance - the world will get a nice wake up call to how much "nicer" the incoming powers to replace this US retreat will really be - once you get a chance to examine their aspect "up close and personal".

[BiscayneSunrise]

Re: An Obama Presidency Could Sever Gulf States US Dollar Peg?

Not a pretty thought, at all, but a very realistic one.

[c1ue]

Re: An Obama Presidency Could Sever Gulf States US Dollar Peg?

Lukester,

The collapse of the Soviet Union did cause a major deterioration in conventional military power, but the looming threat of all those nukes kept plenty of money flowing into Russia for years afterwards.

I'd anticipate something similar for the US: no active resistance but a steady diet of sops to keep the bombs and missiles in their storage facilities.