The Game: Rules of Engagement

Note: this is an extremely belated companion piece to an essay I wrote in March, 2003, entitled The Game: Setting up the Board.

The Main Reason for the Invasion

Several reasons have been bandied around for the Iraq invasion, from the Bush administration's string of discredited excuses - Iraq has weapons of mass destruction (oops), Iraq has links to al-Qaeda (oops again - someone tell Cheney), we need to liberate the Iraqi people (didn't actually happen) - to the common charge among antiwar activists that America wants Iraq's oil.

None of these are correct, although exclusive access to Iraq's oil is certainly rich gravy for the United States and Britain. Saddam had signed memoranda of agreement with France, Germany, and Russia exclusively to start selling oil once the sanctions were lifted. (The war voided the agreements, which helps to explain why those countries opposed it.)

World oil production is expected to peak within the decade (see Oil Peak Production: A Local Perspective, and America already imports 65 percent of the oil it consumes. Americans make up 5 percent of the world's people, but consume 25 percent of the world's oil, so there was certainly benefit to gaining control over the world's second largest oil reserve.

Other valid reasons have been bandied around. For example, controlling Iraq allows America to move its contentious bases out of Saudi Arabia, as Paul Wolfowitz explained in an interview. When the PNAC geniuses who decided to invade Iraq were making their plans, they believed this would assuage some of al-Qaeda's reasons for hating America.

However, the major reason for the invasion is that America needed to invade Iraq to stop its own economy from collapsing. Controlling Iraq lets the US ensure that Iraq continues to sell its oil for US dollars, not Euros.

An Empire in Decline

As a number of economists have pointed out, America's in a bad way. It's an overwhelming net importer of money and trade goods; it's running historically massive deficits and debts at all levels of government, consumer, and business; and it's losing the educational and technological edge that made it a great power in the first place.

Consumer debt is at an all-time high, reaching 19 percent of household income last year. Corporate debt has increased four-fold over the past ten years. Corporate bankruptcies keep hitting new records, totaling $263 billion dollars in assets in 2001 and $368 billion in assets in 2002. Total bankruptcies have averaged over 1.5 million over the past three years, an all time high.

America has lost over 3 million jobs since 2001, and long-term unemployment is at its highest level in a decade. (The unemployment rate is actually understated, masked by America's exceptionally high incarceration rate - prisoners are not counted among the unemployed.) "Offshoring" of jobs is expected to escalate in the next several years, but don't expect much from the government. As US Chamber of Commerce President and CEO Thomas Donohue so eloquently put it earlier this year, unemployed white collar Americans should "stop whining."

Close to 40 million Americans live under the poverty line. 11 percent of American families are "food insecure", which means they can't afford to eat regularly. Over a third of American children live in low-income families, meaning they earn up to double the poverty limit. 44 million Americans have no health insurance.

Inflation is going up (4.9 percent this year over 1.9 percent last year), the prime rate is going up (to 5.5 percent next year and 7.5 percent the year after), energy costs are going up, and America's dependence on foreign oil is going up (America imports 63 percent of its oil today). To the extent that the Bush administration has had any energy policy at all, it has served to exacerbate America's energy dependence and make America more susceptible to price shocks.

The housing market has ballooned $3 trillion dollars above the rate of inflation over the past decade, and this bubble will certainly burst sooner or later. In the meantime, homeowners are digging themselves deeper into the hole through home equity lines of credit (HOLECs) and mortgage refinancing.

The federal deficit is running at nearly $500 billion dollars a year, and the federal debt will top $8 trillion next year. That's a debt to GDP ratio of over 65 percent. On top of this, the Medicare/Social Security deficit is over $150 billion a year.

More ominously, America's current accounts balance is running at a record $542 billion dollar deficit, meaning America imports over half a trillion dollars more in goods and services from the rest of the world than it exports.

Earlier this year, the International Monetary Fund warned that foreign lenders might lose confidence in America's external debt and sell off some of their reserves of US dollars. If foreign central banks dump their dollars, it could trigger a run on the currency, leading to a devaluation of the dollar and a sharp, sudden reduction in America's living standard compared to the rest of the world.

Even during the Clinton boom years, where the federal government ran large surpluses, the macro numbers were bad and deteriorating steadily. If not for the Fed's careful management of interest rates, the economy might have toppled at any of several points over the past decade. Right now, only the rock bottom interest rates and massive, shot-in-the-arm dividend tax cuts are keeping the economy afloat at all, since middle income earners are willing to go into hock to maintain a growth in living standard that's no longer driven by rising incomes.

Petrodollars to the Rescue

Right now, the only thing stopping this is the fact that every country in the world needs US dollars to buy oil.

In the 1970s, the United States cut a deal with OPEC whereby countries had to buy oil for US dollars. As a result, other countries need to maintain large reserves of US dollars, which absorbs the massive annual outflow of dollars and props up the value of the dollar against other currencies. In fact, when the price of oil goes up, more US dollars are absorbed, which keeps the currency afloat.

Since America has gotten out of the manufacturing business, the only thing it still exports are little green pieces of paper, Until now, other countries have had no choice but to buy those pieces of paper. The US dollar has been slowly but steadily depreciating against other currencies through the sheer size of the current accounts deficit, but there have not been any shocks - yet.

Flash back to 2000. Iraq leader Saddam Hussein announced that he would no longer trade oil for US dollars. Instead, he sold oil for Euros. As a result, he benefited from the 17 percent gain the Euro made against the dollar over the next two years.

If Saddam had been left in place, the sanctions against Iraq had been lifted, and Iraq started trading large volumes of oil for Euros, it would tip the balance for other oil producing countries, which would look enviously at Iraq's large gains against their steadily depreciating dollars.

Once OPEC made the switch from dollars to Euros, it would be nothing short of disastrous for the US economy. Worst of all, Iran and Syria were already floating the idea of switching to Euros in 2000. The US absolutely had to make sure this didn't happen. The only way to do this was by invading Iraq, ousting Saddam, and installing a friendly client regime to restore Iraq's oil exports to the petrodollar standard.

This also sent a clear message to the other oil-exporting nations. Just to be on the safe side, the Bush administration also leveled a series of very public threats against Iran and Syria before and during the Iraq invasion. Needless to say, they got the message.

(Aside: since his election, Hugo Chavez in Venezuela has been trading oil directly for material and equipment instead of US dollars. It's no wonder he regularly has to fend off CIA-sponsored coup attempts.)

The Neoconservative Agenda

Having lost the economic advantage, America has only its unprecedented military power to fall back on (America single-handedly accounts for about 40 percent of total global military spending). The neoconservatives running the Bush administration are ideologically committed to using military supremacy to effect global dominance.

Their concern goes far beyond actual security - defending America against foreign attacks - and extends to using US military muscle to protect America's interests. The definition of a threat to America's interests is frighteningly broad, encompassing countries that: refuse to allow American companies to exploit their resources or labour forces; make economic or policy decisions which hurt the American economy (like Saddam's decision to sell oil for Euros); aspire to attain economic or military dominance in their own regions, in direct competition with American global dominance.

The neocons believe in pre-emption, the doctrine of extrapolating potential threats to American supremacy and moving pre-emptively to ensure that those threats never have a chance to materialize. Even where military power isn't used, neocons believe that the ability to project military power anywhere gives America the leverage it needs to pressure other countries into doing its will.

This is why they're so committed to the weaponization of space. USAF Space Command wants to control the "ultimate high ground of US military operations" to develop "a viable, prompt global strike capability" that enables "instant engagement anywhere in the world." (

However, the neocons know that the public at large isn't nearly as gung-ho about global supremacy as they are. Americans do not want America to use its power to increase and entrench its global control. Polls consistently show that Americans want America to share power with other countries.

The terrorist attacks of September 11, 2001 were a tremendous boon to the neocons. From that point forward, they had only to link their aggressive foreign policy to public fears of terrorism in order to get a carte blanche from citizens who would otherwise oppose such military adventurism. Hence the Iraq invasion, under the ridiculous pretense of a "War on Terror", when Iraq had nothing to do with the attacks, no connection with the terrorists, and no capability to deliver its own attacks on America.

Project for a New American Century

In 1997, the neoconservative Project for a New American Century (PNAC) wrote a Statement of Principles that extolled America to "increase defense spending significantly, ... challenge regimes hostile to [America's] interests and values," and "accept responsibility for America's unique role in preserving and extending an international order friendly to our security, our prosperity, and our principles." Ultimately, PNAC wants America to achieve "global leadership" in order to "shape a new century favorable to American principles and interests" (PNAC Statement of Principles).

Here's a partial list of PNAC members, taken from the PNAC web site. It's a long list, but please take the time to go through it, and note the number of high-ranking US government officials, both present and from the Reagan Administration.

Also included are a number of high-level editors and columnists for prominent American journals and magazines. The people who run the country and the people whose editorial decisions strongly influence reporting in the country share many of the same values - values that fall to the right of the public as a whole. As a result, the public receives a version of events that serves the power structure, and the public is pulled along by the propaganda.

In 2000, PNAC released its master policy paper, Rebuilding America's Defenses, which calls for America to maintain "global US pre-eminence, precluding the rise of a great power rival, and shaping the international security order in line with American principles and interests."

Don't underestimate this group's influence. Under the present Bush administration, which is packed with PNAC members, it doesn't take long for the think tank's recommendations to become government policy.

PNAC also demanded that America pursue regime change - as well as maintaining an ongoing military presence - in Iraq, stating:

"The need to respond with decisive force in the event of a major theater war in Europe, the Persian Gulf or East Asia will remain the principal factor in determining Army force structure ... it is essential to retain sufficient capabilities to bring them to a satisfactory conclusion, including the possibility of a decisive victory that results in long-term political or regime change", and "the need for a substantial American force presence in the Gulf transcends the issue of the regime of Saddam Hussein."

As former Treasury Secretary Paul O'Neill, former anti-Terrorism czar Richard Clarke and others have made clear, the Bush administration had its sights on Iraq as early as January 2001. Right from the start, they planned to topple Saddam Hussein and remake the Middle East. September 11 was the perfect red herring and they've exploited it for all it's worth.

Other Neocon Sightings

In 1992, when Dick Cheney was Bush I's Secretary of Defense, his two undersecretaries, Paul Wolfowitz and "Scooter" Libby, wrote the "Defense Policy Guidance", a position paper for post-Cold War policy. When it was leaked to the New York Times, the backlash was so severe that Cheney to re-write it. Here's an excerpt of the original draft:

"Our first objective is to prevent the re-emergence of a new rival [after the collapse of the USSR]. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power...[W]e must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role." (

Richard Perle was the Chairman of the Defense Policy Board (a civilian advisory group reporting to the Deputy Secretary of Defense) before an conflict of interest scandal forced his resignation. Back in 1996, he wrote a paper for an Israeli think tank called "A clean break: a new strategy for securing the realm" (, in which he promoted "removing Saddam Hussein from power in Iraq". The theme of the paper was a call for Israel to move away from the concept of "comprehensive peace" and towards a more aggressive "balance of power" strategic model in which a country should seek to achieve security through decisive power superiority rather than through multilateral negotiations. This reasoning percolates right through neocon foreign policy.

In 1998, Paul Wolfowitz and Zalmay Khalilzad (former Taliban Lobbyist and Unocal consultant, now Special Envoy to Afghanistan) wrote articles for the Weekly Standard under the topic "Saddam Must Go: A How-To Guide."

Also in 1998, a number of war hawks, including Wolfowitz, Khalilzad, Donald Rumsfeld, and Richard Perle, wrote an open letter to President Clinton urging "a comprehensive political and military strategy for bringing down Saddam and his regime."

Finally, let's not forget Zbigniew Brzezinski's warnings to policy makers: "[T]he pursuit of power is not a goal that commands popular passion, except in conditions of a sudden threat or challenge to the public's sense of domestic well-being," (The Grand Chessboard, pp.35-36) and "as America becomes an increasingly multicultural society, it may find it more difficult to fashion a consensus on foreign policy issues, except in the circumstances of a truly massive and widely perceived direct external threat." (ibid, p. 211)

A lesson well learned.

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