Policy Tensor

Fighting in the Shadows

In Realism on July 17, 2014 at 5:30 pm

Top-Secret

You know you are old when they start making period dramas about a decade when you were alive. One of the policy tensor’s guilty pleasures is watching a late Cold War-era espionage drama called The Americans. To someone with my interests, all that great power intrigue is irresistible; more so than usual because it is quite credible. It got me thinking about the following question: how does a state deter hostile covert actions by a great power adversary? And more generally, how does the balance of power operate in the shadows?

As far as I can tell, this question has not been investigated by scholars. It is not entirely impossible that theoretical work on this question is classified. That may explain why there is no open source paper on the subject. Although I reckon that it is extremely unlikely to be the case since even more sensitive questions are routinely discussed in academic journals. For instance, the closely related question of congressional oversight of intelligence agencies is the subject of considerable debate. This lacunae is perplexing, to say the least. Perhaps scholars have simply overlooked this question so far. This short essay is just a first pass at the issues at stake.

How does deterrence work against covert operations by rival powers? The central problem is, of course, uncertainty and deniability. Let’s say one of your key scientists working on a promising military technology is assassinated in a car bombing. The most important question that needs to be answered is: who ordered the strike? Even in a bipolar system the answer may not be the obvious one. For instance, during the Cold War, if the target were American, it would be difficult for the US government to be certain that it was a KGB operation and not, say, the handiwork of Islamist terrorists or the Iranians. How, then, can the United States deter the Soviet Union from wreaking havoc in the shadows?

The most obvious response by states faced with covert threats is to enhance their espionage and counterintelligence capabilities. Careful analysis can provide some insight about the origin of covert strikes. For instance, terrorists with revolutionary aims are quite unlikely to not claim responsibility since their primary aim is to broadcast their message. Similarly, the choice of targets could point directly to separatists and others who may have an incentive to destabilize the target state. The sophistication of the operation may rule out all but the most capable intelligence agencies. Covert attacks sometimes carry telltale signatures. Non-state actors have very limited capabilities: they can successfully carry out only certain kinds of operations and not others. Forensic analysis can provide vital clues to solve the puzzle. Yet, such efforts may be largely unsuccessful in identifying the perpetrators. The most likely outcome of such investigation is that some potential sources of trouble may be ruled out, whilst leaving a fairly large number of adversaries in suspicion.

Targeted states can choose to retaliate-in-kind. If the origin of the strike or the source of the threat can be identified with some certainty, states can respond by deploying their own assets against the adversary. This requires the acquisition of offensive covert capabilities. European great powers, especially Great Britain, had been playing this game for a very long time of course. The scale of the Soviet operation itself grew up in response to western efforts after 1917 to destabilize the nascent revolutionary state. Until World War II, the United States’ intelligence apparatus was rudimentary. During the war, covert operations of the Western allies were run by the British. It was quite late in the war, when the extensive covert operations of the Soviet Union came to light, that the United States significantly stepped up its own efforts in the shadows. Initially, these were mostly intelligence gathering operations. Listening posts close to Soviet territory and other aspects of signal intelligence were the first to develop.

Offensive US covert capabilities were quickly developed thereafter to counter existing Soviet capabilities. The Soviets soon responded by stepping up their own efforts. The dynamic of the escalating ‘arms race’ in the shadows was in this respect very similar to the conventional and nuclear arms race between the two adversaries in the Cold War. But the similarities between the three spheres end there. Whereas mutual nuclear deterrence works with near certainty and conventional deterrence works well under certain conditions, the prospects for deterrence in the shadows are much bleaker. Not only is it hard to determine who ordered covert operations, even knowing who did it may not be of much help if retaliatory capabilities don’t exist. If retaliation-in-kind is not viable or seen to be insufficient to deter, a state fearing hostile covert action can threaten to escalate. In that case, successful deterrence depends on the military balance between the adversaries.

If the state enjoys conventional superiority against the adversary, it can punish the adversary by limited military action. After the bombing of a discotheque in Berlin by Libyan intelligence in 1986, the US carried out medium-scale airstrikes against Libya. Similarly, responding to the alleged Iraqi plot to assassinate former President George HW Bush in 1993, the Clinton administration launched punitive airstrikes against the headquarters of Iraqi intelligence. If the state does not enjoy conventional military superiority against the adversary, the threat to carry out punitive military action may not be credible. Iran threatened to respond aggressively to the assassination of Iranian nuclear scientists by Mossad. Given the balance of power between Israel and Iran, the threat wasn’t credible and failed to deter Israel, which continued to carry on with its assassination program.

Even if the state enjoys conventional superiority, nuclear deterrence may make threats to escalate non-credible. Following the terrorist attacks on the Indian Parliament by militants alleged to be on the payroll of Pakistani intelligence, India amassed 700,000 troops on the Pakistani border; to no avail. Given the balance of terror, India’s threat to escalate was not credible. Note that this is due entirely to the compactness of Pakistani territory. Since the Pakistani capital is merely two hundred miles from the Indian border, even a small border incursion is a strategic threat to Pakistan, and a nuclear response always remains a real possibility. Contrast that with India’s northeast: China can take over the region by a limited military incursion without triggering a nuclear response from India.

The options against peer competitors are much narrower. Threats to escalate are not be credible under conditions of military parity and nuclear stalemate. This means that great powers locked in cold wars with each other need to expend more and more resources on espionage and counterespionage capabilities. With war banished from the center of international politics by the rise of nuclear weapons, all the action moves to the shadows. As the cold war periodically heats up and cools down, the rise and fall in temperature will be felt most immediately in the covert sphere. Cold War intrigue was, in this sense, the natural counterpart to the stability of the bipolar world.

A Fool’s Game

In Markets on July 8, 2014 at 4:30 pm

The Dow Jones Industrial Average surpassed 17,000 for the first time in its history last week. The S&P 500 is at an all time high as well. Only the Nasdaq hasn’t surpassed its tech-bubble peak. And its not just the stock market—real estate, high-yield bonds, emerging markets, government debt, fine art—you name an asset and I promise you it’s booming. The latest craze is frontier debt. That is, bonds of dicey governments such as those in sub-Saharan Africa. Credit spreads—the differential in borrowing costs faced by investment-grade and lower-rated firms—are at an all-time low. Overall market volatility has almost never been lower. It looks like the good times are here. Except, they most decidedly are not.

The economic recovery is, in fact, tepid. The US economy is expected to grow a mere 2.1 per cent this year. In the first quarter, it actually shrank by 2.9 per cent. Yes, the unemployment rate has fallen to 6.1 per cent, exactly where it was on the eve of the financial crisis in December 2007. But, as of June 2014, 2.7 per cent of adults who wanted a job were not actively looking for work. Another 3 per cent of the population in working part-time because they can’t find full-time work. Counting the underemployed and the discouraged, the labor market shortfall is 15 per cent. Not that the pre-recession era was all that swell. In December 2007, this shortfall was 12 per cent. 

At $2.1 trillion, corporate profits are higher than ever; accounting for an eighth of US GDP, tying the previous record that was set by the 1942 war economy. The effective corporate tax rate back then was 55 per cent, compared to 20 per cent now. No wonder corporate profits after tax accounted for a tenth of GDP; a new record. Meanwhile, the share of wages and salaries in 2013 was 42.5 per cent; another record low. One could assume that with the going so good for the masters, at least the sky-high equity valuations would be justified. One would be wrong. The Shiller P/E ratio, at 26, is back to pre-recession levels. The forward price/earnings ratio is also back to the pre-crisis bubble years. Amazon, the darling of the stock market, is trading at more than five hundred times its earning per share. The risk premium demanded by investors to compensate them for holding riskier assets is back right down to levels last seen in 2004-2006. Amidst a weak economic recovery, we are witnessing nothing short of a financial boom.

This isn’t quite Tulip mania. Investors—at least the clear-eyed ones—know that assets are overpriced. Yet, they are in no hurry to sell. This is because the financial boom is a foster child of the United States Federal Reserve. And as every child knows, you’d be a fool to fight the Fed. The markets are simply dancing to the Fed’s tune. 

The Fed has followed an extraordinarily accommodative monetary policy for nearly six years. The policy rate has been zero since December 2008. Soon after hitting the zero lower bound (ZLB), the Fed embarked on non-standard measures proposed by Ben Bernanke in 2004. This policy has three components: (1) Forward Guidance: declaration by the Federal Open Market Committee (FOMC) to influence the expectations of market participants; (2) Expanding the Fed’s balance sheet beyond what is required to maintain rates at the ZLB: what’s called Quantitative Easing (QE); and (3) Outright Asset Purchases: intervention in markets of distressed debt and toxic assets to prop up prices in order to prevent banking crises. The Fed’s balance sheet has grown from a few hundred billion dollars to $4.3 trillion. It is now in the process of “tapering”—that is, slowing down the expansion of its balance sheet, which will continue to grow through this fall. Fed officials are mulling what to do with that giant pile in the long run. They reckon they’ll have to keep it. The highly-unusual intervention in various distressed assets, what purists would call “price administration,” has stabilized financial markets. Forward Guidance has been unexpectedly effective. Bernanke’s “taper tantrum” last year prompted a large-scale sell-off of emerging market funds and led to a sharp spike in market volatility generally. The Fed’s clarification calmed the markets and the market response to the actual taper has been quite tame.

BIS figures

Such extraordinary intervention has pushed down the entire yield curve on government bonds, precisely as the Fed intended. Investors’ search of yield has pushed up prices of assets across the board, thereby depressing yields on all assets. The decline of volatility and inflation expectations have increased the risk appetite of investors. The elevated risk appetite of investors has in turn buoyed up demand for lower-rated debt. US firms have increasingly tapped capital markets to exploit record low yields, at a time when many banks have been restricting credit. Gross issuance in the high-yield bond market alone soared to $90 billion per quarter in 2013 from a pre-crisis quarterly average of $30 billion. Since cheap credit has enabled troubled firms to refinance easily, corporate default rates have declined. The depressed default rates have in turn justified tighter credit spreads. Firms are using cheap credit to pay higher dividends, buy back shares and engage in mergers and acquisitions. This has allowed very many troubled firms to look quite dandy. Remarkably, despite the vanishing costs of finance, nonresidential fixed investment by nonfinancial firms is flat, perhaps in light of the economy’s actual prospects. 

It’s clear that the Fed’s bubble economics is causing a major misallocation of capital resources. The notion of price discovery has disappeared from asset and credit markets as prices increasing diverge from fundamentals. Perhaps more importantly, the risk of a major financial bust as the Fed tries to implement an exit from its extraordinarily accommodative monetary policy is getting more and more serious. Based on these considerations, the Bank of International Settlements (BIS) issued a stern warning against delaying policy normalization. Fed Chair Janet Yellen has dismissed such concerns. Krugman is still making fun of bond market vigilantes. The IMF considers the baseline scenario to be a smooth exit. Right, we’ll see about that.

Basically, everyone caught on the floor when the music stops playing is going to pay dearly. This is why smart money has moved into a conservative capital preservation strategy. For instance, the cash component of JP Morgan’s fixed income fund, the world’s largest, is now no less than three-fifths. 

The Fed has painted itself into a corner. There is no smooth exit now. The Fed simply cannot normalize policy without dislocating world markets. And the longer it takes to reverse policy, the worse the dislocation.

“Saddam Must Go”

In Middle East on June 27, 2014 at 7:43 pm

Saddam

 

Obedience is not enough. Unless he is suffering, how can you be sure that he is obeying your will and not his own?

George Orwell, 1984

 

The Bush administration’s public rationale for war was that: (a) Saddam had stockpiles of chemical and biological weapons; (b) he was trying to acquire nuclear weapons; (c) he had ties to al Qa’ida; so that (d) there was a nontrivial probability that Saddam could supply WMDs to al Qa’ida. The Bush administration also hinted strongly that (e) Saddam was behind the attacks on September 11, 2001, with the result that, on the eve of the invasion, half the American public believed this particular bit of nonsense. All of the claims, (a)-(d), were wrong. At least (a) was plausible. The rest were simply fraudulent. These claims were meant to generate support for the Iraq war.  But why, precisely, did Bush want his war in the first place?

The only scholar to have seriously taken up this question is F. Gregory Gause, III.[i] Thorough and meticulous as always, Gause demonstrates unambiguously that the attacks of September 11, 2001 changed the risk calculus of the Bush administration. Before September 11, 2001, the Bush administration was divided between the neoconservatives who wanted to depose Saddam by the use of force—not necessarily by landing a major land army—and those who wanted to continue the existing policy of ‘containment.’ Until September 11, 2001, the status quo ante prevailed. Bush pushed for ‘smart sanctions’ to keep up the pressure on Saddam, but there were no plans to get rid of him by force. Writing about the incoming administration’s foreign policy in Foreign Affairs, Secretary of State Condoleezza Rice compared the regime in Iraq to that of North Korea, saying “These regimes are living on borrowed time, so there need be no sense of panic about them.”[ii]

On September 12, 2001, Bush took aside Richard Clarke, the senior counterterrorism official in the White House, and told him to “look into Iraq, Saddam,” for links to the attacks on the previous day.[iii] This was the beginning of tremendous pressure from the White House on the intelligence community to generate evidence damming Saddam. The intelligence community’s analyzes regarding Saddam’s WMD capabilities and links to al Qa’ida did not change per se. What changed, Gause shows, was the degree of confidence they assigned to their findings.

Prior to September 11, 2001, there was a consensus that Saddam likely still had an arsenal of chemical and biological weapons—an erroneous, although not an unwarranted one. The United States and its Western allies had supplied him with dual use weapons during the Iran-Iraq war, and Saddam’s liberal use of these weapons against the Iranians, Kurds, and Shi’a rebels was quite well known. There were disagreements within the intelligence community about whether or not Saddam was seeking a nuclear deterrent, although there was a strong consensus that he was not even close to acquiring one. No agency claimed that Saddam had ties to al Qa’ida. After September 11, 2001, without any credible new intelligence—except for faulty reports which was quickly demonstrated to have been fabricated—US intelligence agencies upgraded their assessment that Saddam possessed  chemical and biological capabilities from “probably” to with “high confidence”; similarly, they now asserted with “moderate confidence” that Saddam was seeking a nuclear deterrent. Despite tremendous pressure from the White House, the American intelligence apparatus could not be brought to produce any reports tying Saddam to al Qa’ida.

Gause claims that in the aftermath of September 11, 2001, principals in the Bush administration convinced themselves that Saddam could supply chemical and biological weapons to Islamist extremists who had just demonstrated the capacity to strike the US homeland. The decision to go to war then followed from a strategy of security maximization captured precisely by Dick Cheney’s 1 per cent doctrine: “if there was a 1 per cent chance” of al Qa’ida gaining the capability to strike the US homeland with WMDs, then, “we would have to treat it as a certainty in terms of our response.”[iv]

Claims that Saddam had ties to “Islamic terrorists” were pure fabrications—they rested on Iraq hosting an office of Hamas, like half-a-dozen other countries in the region, most of them American allies. Moreover, Saddam’s primary concern was regime security. Islamist militants posed a significant threat to his regime. He was simply not going to arm them, even with rifles. How, then, did Bush et al. fool themselves into thinking that Saddam posed a serious threat? Gause thinks that they did so due to a well-understood psychological bias—the tendency to look for evidence for confirmation of already held beliefs.

What Gause is essentially saying is that the Bush administration was predisposed to believe that Saddam posed a security threat to the United States. But why was the Bush administration so predisposed? After all, Saddam saw Islamists as a significant threat to his regime, especially armed extremists ones. Neither was Obama bin Laden favorably disposed towards Sadddam. In fact, al Qa’ida had emerged from the holy war in Afghanistan, wherein it had been bankrolled and armed by the CIA, the Saudis, and the ISI. Moreover, 11 of the 15 plotters of September 11, 2001, were known to be Saudis. Why would the Bush administration not suspect the Saudis or the Pakistanis of abetting the terrorists?[3] Why Saddam?

There would be nothing to explain if getting rid of Saddam was in the American interest in a straightforward realist sense. This was clearly not the case. Iraq was a regional power of some weight that went a long way towards balancing Iran, reducing the need for the United States to commit military and diplomatic resources in the gulf. The popular answer—that the US was interested in Iraqi oil—comes in three variants.

Hypothesis 1. Bush wanted American oil companies to take over Iraqi oil fields. All the major oil producers had nationalized their oil fields in the 1970s. There was no possibility of awarding ownership of the Iraqi oil fields to western companies. Moreover, this was understood by principals in the Bush administration, as well as by all security and energy analysts in the United States.

Hypothesis 2. Bush wanted the US to control access to Iraqi oil. This is a more sophisticated version. Controlling access to Iraqi oil could credibly provide the United States leverage against major importers in Europe and Asia. Still, United States’ veto over access to gulf energy resources depended on US military preponderance in the region—it could stop the flow to anyone as long as it controlled the sea lanes.[4] The exercise of this veto does not even require friendly regimes in the region, nor does it require military bases in any of the three major states. Indeed, US’ veto over gulf energy would be equally effective if it was following a policy of ‘triple containment.’[5] In any case, Saddam could’ve been brought in from the cold quite easily.

Hypothesis 3. Bush wanted to turn Iraq into a swing producer and thereby undermine the Saudis’ hold over the oil market. This version makes much more sense. The ‘oil for protection’ deal with the Saudis—whereby the Saudis maintain 2 million barrels a day of excess capacity to moderate the price of oil, and the United States protects the House of Saud—makes the United States, at least somewhat, dependent on its junior ally in the Persian Gulf. Whenever the Saudis have followed policies antithetical to American interests, US foreign policy elites have tried to figure a way of reducing US reliance on the House of Saud. The emergence of another swing producer would certainly end the Saudis’ stranglehold on the oil market. Due to the distribution of oil deposits, only Iran or Iraq could serve that role. A thaw with the Islamic regime in Iran being out of the question, Iraq was the only option.[6]

Again, however, there was always the considerably easier option of bringing Saddam in from the cold and developing Iraqi oil resources with the help of Western oil firms. Saddam could be expected to keep a lid on Kurdish and Shi’a nationalism, while serving as bulwark against Iran. If this was the real reason for Bush’s decision, whycome this alternative—one that was guaranteed to work—not even on the table??

I will show that the option of bringing Saddam in from the cold was simply never considered by US foreign policy elites. Relations with Iraq were ‘personalized’: any easing of economic sanctions  and military pressure was ruled out as long as Saddam remained in power. Moreover, US policymakers would not accept a transition to a more representative government in Iraq. They waited for twelve years for a coup d’état. With no coup forthcoming, they let “Iraq stew.” There was simply no coherent strategy to deal with the possibility that Saddam could stay in power indefinitely.

I will argue that US’ Iraq policy between August 2, 1990, and September 11, 2001, was inconsistent with foreign policy realism. It was not raison d’état that dictated US policy. Rather, Iraq came to play a central role in the domestic political economy of US foreign policy. The maintenance of near-Cold War era levels of military spending and forward deployment of US forces were now justified by the need to contain “rogue states,” with Iraq at the top of the list.  Iraq policy thereby became a litmus test for politicians and foreign policy advisors to prove their cred, supplementing the unwritten rule for aspirants to high office being “strong on Israel.” Given the discourse surrounding Saddam, principals in the Bush administration either bought the drivel, or found it to be the point of least resistance to launch a much more ambitious, and misguided, foreign policy agenda; probably both.

“Our kind of guy”

Westminster announced in 1968 that it would be ending British military presence east of Suez by 1971. In the process a string of small states in the gulf which had hitherto been British protectorates become independent. The three regional powers—Iran, Iraq, and Saudi Arabia—immediately started jockeying for influence. The only question in the White House was whether the Shah should manage gulf affairs alone or the Saudis should get a say as well. The US settled on a “twin pillar” strategy: gulf affairs were to be managed by the Shah in consultation with the Saudis.[7] Saddam remained a Soviet client, although no threat to the Iranian dominated regional order during this period of moderation in the gulf.

The Islamic revolution in Iran at the end of the decade upended the regional order overnight. The revolutionary rhetoric emanating from Tehran made explicit the threat, already implicit, of a mass-based revolution in the region. The Saudis, the richest but militarily the weakest of the three poles, supported Saddam’s belligerence against the nascent Islamic republic. Instability in Iran briefly catapulted Iraq to the top of the regional military pecking order. Saddam seized this window of opportunity to invade the nascent Islamic republic. Washington, deeply worried about the revolutionary threat to the oil monarchies, quickly became Saddam’s primary patron and backer—supplying it with military hardware, munitions, and dual use chemicals.[8]

After the initial successes, the reverses came quickly and steadily. Given the distribution of war potential, Washington knew that the longer the war went on, the higher the likelihood of an outright defeat for Saddam. The United States escalated the flow of weapons and munitions, and turned a blind eye to Saddam’s liberal use of chemical weapons. Finally, American naval might had to be brought to bear—the tanker war of ’87-88—to persuade Iran to sue for peace. During the eighties, while Saddam was gassing the Kurds, the Shi’a, and the Iranians, he was “our kind of guy.”[9]

“What we say goes”

With his government’s coffers emptied by war and the collapse of oil prices, Saddam looked around frantically to shore up his position. He picked a dispute with Kuwait, accusing the Kuwaitis of exceeding their quota and driving down the price of crude. He demanded a $10 billion loan from the Kuwaiti emir and threatened to annex oil fields on the Kuwaiti side of the border. In one of the most curious incidents in American foreign affairs, when Saddam more or less informed the American Ambassador to Iraq April Glaspie about his plans to invade Kuwait, she responded by stating that she “was not sure it would warrant a US response.” This, however, was not Glaspie’s mistake alone.

On July 24, 1990, the State Department clarified that the US did not have “any defense treaties with Kuwait, and there are no special defense or security commitments to Kuwait.”[v] On July 25, 1990, the same day as the infamous Glaspie-Saddam meeting, the Ambassador-Designate to Kuwait, Edward Gnehm told the Senate Foreign Relations Committee that “Iraq was merely trying to intimidate a small country.” Two days before Saddam invaded Kuwait, John H. Kelly, Assistant Secretary of State for Near Eastern and South Asian Affairs, informed Congress that the United States considered the Kuwaiti-Iraqi border dispute to be the two countries’ private affair. After the invasion, an unnamed senior administration official told the New York Times that the US government was expecting Saddam to seize a limited border area:[vi]

I can’t see the American public supporting the deployment of troops over a dispute over twenty miles of desert territory, and it is clear that the local countries would not have supported that kind of commitment. The basic principle is not to make threats that you can’t deliver on.

Saddam misunderstood the Boss’ green light and overran all of Kuwait; and, in effect, threatened Saudi Arabia—which, of course, he dared not invade for it was sure to invite a military response from the United States. He offered to serve as America’s chief ally in the gulf, promising the free flow of oil at $25 per barrel.[10] Saddam was offering himself as the gulf’s policeman.[11] Washington was not going to accept Iraqi hegemony in the gulf as a fait accompli. This was seen as gross insubordination. Bush quickly issued an ultimatum demanding that Saddam unconditionally withdraw all Iraqi forces from Kuwaiti territory or face the Boss’ wrath.

Saddam thought he was in a good position to negotiate, but he was miscalculating for the second time. He was about to discover the converse to the “basic principle”—once you threaten someone with the use of force, you have to deliver or risk losing your credibility.[12]  Washington quickly came around to the use of force to reverse Saddam’s occupation of Kuwait. Saddam’s offer of withdrawal was ignored by the Bush administration, and suppressed in the American press. Here, finally, was a chance to kick the ‘Vietnam Syndrome’ for good.[13] The war was meant to demonstrate the new freedom of action for the United States in a unipolar world, and establish the credibility of the American commitment to maintain the territorial order in the gulf by the force of its arms. Saddam had miscalculated his way into a war with a newly-minted hyperpower. Bush was not about to waste an opportunity to establish the most basic principle of the New World Order: “What we say goes.”[vii]

“Rise up against your dictator”

As Iraqi forces were getting hammered in Kuwait, the CIA-run radio station, The Voice of Free Iraq, exhorted the people of Iraq to rise up in revolt against their brutal dictator.[viii]

Rise to save your homeland form the clutches of dictatorship so that you can devote yourself to avoid the dangers of the continuation of the war and destruction. Honorable sons of the Tigris and the Euphrates, at these decisive moments of your life, and while facing the danger of death at the hands of foreign forces, you have no option in order to survive and defend the homeland but to put an end to the dictator and his criminal gang.

They did, in very large numbers. The intifada began with Iraqi troops returning from Kuwait. Saddam faced simultaneous mass uprisings from the Kurds in the north and the Shi’a in the south.[14] The central government lost control of half the country. Bush instructed the US military to not to chase the fleeing Iraqi forces all the way to Baghdad as they went about their turkey shoot in southern Iraq. Shi’a rebels groups reached out to American troops seeking weapons seized from Iraqi forces. But the Americans had been ordered to turn them down. Later, President Bush and National Security Advisor Scowcroft explained the logic of backing away from supporting the uprising: [ix]

While we hoped that a popular revolt or coup would topple Saddam, neither the United States nor the countries of the region wished to see the breakup of Iraq. We were concerned about the long-term balance of power at the head of the gulf.

Under the watchful gaze of General Schwarzkopf, Saddam put down the intifada with characteristic brutality; killing somewhere between 25,000 to 200,000; not that anyone counted the dead bodies.[15] After he was done putting down the intifada, Saddam moved to drain the marshes around the Shatt al Arab, were as many as 10,000 Shi’a insurgents had taken refuge; an act of environmental terrorism that all but destroyed the Marsh Arabs ancient way of life.[x] “The single most important reason for the failure of the Iraqi intifada,” in Gause’s impeccable analysis, “was the decision of the United States, which occupied considerable parts of southern Iraq as the rebellion was occurring, not to support it.”[xi]

“Iraqis will pay the price”

In the administration’s thinking, it was only a matter of time before there was a coup against Saddam.[16] New York Times’ chief foreign affairs correspondentThomas Friedman reported that Bush’s policy “is to allow President Hussein to restore the central government’s control over Iraq in the short run. Afterward, [officials] say, the United States can use an arms embargo and economic pressures built into the United Nations cease-fire resolution to encourage Iraqis to replace Mr. Hussein with a more mainstream figure.”[xii] But there was an obvious contradiction here: Saddam was destroying all domestic opposition to his rule; a contradiction that was immediately noticed. “It is rather anomalous to say that Saddam is going to fall in the long run, even if he is allowed to crush his opposition in the short run,” opined Peter W. Rodman, Henry Kissinger’s special assistant in 1969-1977, and until recently on Bush’s National Security Council.[xiii]

On May 21, 1991, President Bush declared “at this juncture, my view is we don’t want to lift these sanctions as long as Saddam Hussein is in power,” echoing John Major’s May 11 statement that he would veto any lifting of sanctions as long as Saddam was in charge. In further clarification, the incoming Director of Central Intelligence, Robert M. Gates said, “All possible sanctions will be maintained until he is gone”; Iraq “will be nothing but a pariah state” as long as Mr. Hussein rules; and that “Iraqis will not participate in post-crisis political, economic and security arrangements until there is a change in regime.”[17] Adding, “Iraqis will pay the price while he is in power.”[xiv]

As the dog days approached, there was a growing sense in the administration that Saddam must go. By the end of September, Saddam was kicking out UN inspectors which he claimed—accurately—included CIA agents. The administration denounced these claims as “ludicrous.” President Bush threatened military action. Meanwhile, an administration official let the cat out of the bag:[xv]

True, [Saddam] won’t be a real military threat to anyone for years. But you have to think in the long term and base your policy on worst-case scenarios, even if you don’t believe they’re going to happen.

Coalition forces had completely destroyed Saddam’s offensive capabilities. American airstrikes had bombed Iraq’s infrastructure to the ground. The American assault had deliberately targeted civilian infrastructure. For instance, Iraqi electricity production had collapsed to a tenth of what it was before the war. The United States had delivered on its pre-war promise of bombing Iraq back to the preindustrial era. Iraq was now militarily the weakest of the gulf powers. Saddam was no longer a threat to anyone but the Iraqi populace.[18] Moreover, the erosion of Iraqi power had only just begun.

“It’s not personal”

Precisely a week before taking office, under prodding from reporters, Clinton mused that if Saddam “wants a different relationship” with the US, then “all he has to do is change his behavior.”[xvi] Adding that he is not “obsessed” with Saddam.[19] The backlash in the media the next day was entirely predictable. The administration was not about to bring in Saddam from the cold, “if for no other reason,” opined Leslie H. Gleb in the New York Times, “they know this would mean political suicide.”[xvii] Still, signs of hope continued to flicker. The Pentagon said on February 3 that the Iraqis “had changed their behavior.”[xviii] In mid-February, Saddam reached out to Clinton for a reset, and went out of his way to cooperate with UN inspectors. By the end of March, Clinton was saying he wanted to “depersonalize” the conflict with Iraq. The New York Times reported on March 29, 1993, that “The United States and Britain have begun to move away from their insistence that the trade embargo against Iraq cannot be lifted while President Saddam Hussein remains in power.”[xix]

These early moves towards bringing Saddam back in from the cold came to an end right quick after the infamous Iraqi plot to kill President George H.W. Bush came to light in May. There was no evidence of Saddam’s involvement, despite the administration’s claims. But the break in diplomatic momentum was immediate and permanent. US ships fired 23 Tomahawk cruise missiles at the headquarters of Iraqi intelligence in Baghdad. It was not the first time since 1990 that the US had punished Saddam with cruise missiles, nor would it be the last.

“Let Iraq stew”

US containment of Iraq had six elements, three authorized by the UN Security Council, and three illegally carried out by the United States and the United Kingdom. The multilateral effort consisted of weapons inspections, trade embargo, and asset freezes. Alongside, the United States and Britain imposed no-fly zones in northern and southern Iraq, conducted intermittent airstrikes and cruise missile strikes inside central Iraq, and engaged in covert efforts to overthrow Saddam Hussein. The UN Special Commission for the Disarmament of Iraq (UNSCOM) was established to ensure that Saddam gave up chemical, biological, and nuclear weapons capabilities and missiles with ranges of more than 150 kilometers. Within three years, it had achieved considerable success, with UNSCOM inspectors reporting that Saddam had complied with all provisions.[20]

Under UN auspices, Iraq was subjected to the most onerous sanctions in history, whose lifting could be vetoed by the permanent members of the UN Security Council. The humanitarian consequences of these sanctions on the Iraqi populace would soon become evident. Already in 1991, a team of lawyers and health specialists from Harvard found that the 55,000 more children had died in the first four months of 1991 than in the comparable period the previous year.[xx] By 1996, UNICEF was estimating excess child mortality at half a million since the war. The vindictive nature of the sanctions is clear from the list of prohibited items that included pencils, sanitary towels, water purification chemicals, medical swabs, gauze, syringes, medical journals, surgical gloves, surgical instruments, dialysis equipment, toothpaste, toothbrushes, toilet paper, nail polish, and lipstick. Dennis Halliday, the UN administrator for the oil-for-food program launched in 1996, resigned in horror, going so far as to use the g-word: [xxi]

Because Washington, and to a lesser extent London, have deliberately played games through the Sanctions Committee with this programmed for years—it’s a deliberate ploy. For the British Government to say that the quantities involved for vaccinating kids are going to produce weapons of mass destruction, this is just nonsense. That’s why I’ve been using the word ‘genocide,’ because this is a deliberate policy to destroy the people of Iraq.

Still, the United States made it clear that would be no easing of sanctions as long as Saddam remained in power. In a speech given on March 26, 1997, the new Secretary of State Madeline Albright explained:

We do not agree with the nations who argue that if Iraq complies with its obligations concerning weapons of mass destruction, sanctions should be lifted. Our view, which is unshakable, is that Iraq must prove its peaceful intentions. It can only do that by complying with all of the Security Council Resolutions to which it is subject.

Is it possible to conceive of such a government under Saddam Hussein? When I was a professor, I taught that you have to consider all possibilities. As Secretary of State, I have to deal in the realm of reality and probability. And the evidence is over-whelming that Saddam Hussein’s intentions will never be peaceful.

The no-fly zones became an excuse for a continuing air war against Iraq that went largely unreported in Western newspapers.  On January 12, 1993, British and French warplanes operating from Saudi Arabia joined a much larger American fleet from the carrier Kittyhawk in attacking targets inside Iraq. This was followed by a volley of cruise missiles a week later. Soon after coming into office, Clinton fired another barrage of missiles in retaliation for the alleged Iraqi plot to kill George HW Bush. In October 1994, he ordered the deployment of 30,000 American troops into Kuwait when Iraq started amassing troops on the border. Intermittent airstrikes continued through the 1990s, culminating in a several months long secret air war in 1999. On August 13, 1999, the New York Times reported that American and British pilots had fired more than 1,100 missiles in the previous 8 months.[xxii]

While the arms inspectors were more or less successful in defanging Saddam and the sanctions bled Iraq to the bone, Anglo-American covert efforts and military pressure utterly failed to prompt a coup against Saddam.[21]

The policy consensus

The Council on Foreign Relations sponsored an independent task force in 1996 to evaluate US gulf policy of ‘dual containment,’ which filed its report in July 1997.[xxiii] It could see no reason to change policy:

Although there are real costs involved in maintaining Iraq’s pariah status, it is difficult to see how any policy in the military sphere other than continued containment can be adopted so long as Saddam remains in power.

They recognized that US relations with Iraq had always been personalized: “In practice, the administration made it clear that it had no intention of dealing with Saddam Hussein’s regime, and seemed content, for lack of a better alternative, to let Iraq stew indefinitely.” Instead of depersonalizing the policy, the task force recommended that the United States should “openly assert that it will not under any circumstances deal with the regime of Saddam Hussein.” In fact, there was never any coherent policy for the eventuality that Saddam could survive:

The unpleasant reality may be however, that Saddam remains in power indefinitely. The United States needs to formulate and articulate a coherent policy toward Iraq for thiseventuality. [Emphasis mine.]

The recommendation that the US formulate a policy for the possibility of Saddam’s continued survival betrayed the fatal flaw in the policy consensus. As far as the US foreign policy elites were concerned, Iraqi generals were responsible to get rid of Saddam. As long as they failed to launch a successful coup, the strangulation of Iraq would continue. Yet, what American interest was being served by this policy was never spelled out.[22] For good reason: it did not exist. As Iraq bled, Iran became relatively more powerful in the gulf. This meant that US forces had to be deployed permanently in the gulf to balance Iran, at the cost of $100 billion a year, according to an authoritative estimate by the RAND corporation.[xxiv] Moreover, the presence of US forces on the Arabian peninsula was undermining the stability of the oil monarchies. Indeed, it was precisely the presence of American troops that made al Qa’ida turn on the United States and the House of Saud. A more counterproductive gulf policy is hard to imagine. But sure enough, Bush Jr. would find it.

Why so vindictive, Uncle Sam?

During the Cold War, the domestic populace was sufficiently frightened to bankroll an enormous military apparatus and support the forward deployment of American forces in remote corners of the globe. Under the guise of containing the “ruthless conspiracy of the Kremlin,” the United States could project its power around the world in the interests of Western capital without much ado. As the Soviet Union began its precipitous decent from superpower status in the late-1980s, high officials in the American military began anticipating domestic pressures for curtailed military spending and calls to ‘bring the boys home.’

The idea was that since force reductions were inevitable, the military should take the initiative and propose to reduce active duty strength from 2.1 million to 1.6 million troops, and plan for a 25% cut in military spending. US global primacy required the maintenance of a military apparatus that could intimidate any state in the international system contemplating any challenge whatsoever. If Congress could only be persuaded to retain at least three-fourths strength, it would have to be suffice. Still, in the absence of any real threats, it was hard to see how US taxpayers could be persuaded to bankroll the required apparatus.

Powell was at a loss. “I’m down to Castro and Kim Il Sung,” wailed the Chairman of the Joint Chiefs of Staff. The solution that was hit upon in the Pentagon was to inflate the threat posed from Third World tyrants against whom domestic public opinion could be mobilized relatively easily. Now that the threats could “no longer be laid at Kremlin’s door,” perhaps Americans could be frightened into paying by the “rogues’ gallery”? Bush was persuaded by Powell weeks before Saddam’s invasion of Kuwait. Officials quickly began talking about the threat posed by the “military sophistication of Third World states.” This was basically what would evolve into the ‘rogue states’ doctrine.

To serious security analysts it was always clear that there was no threat to the United States from these states. The combined GDP of these “rogue states”—Iraq, Iran, Libya, North Korea, and Cuba—never exceeded that of California, Texas, or New York.[23] Even if they were to obtain nuclear weapons, they would not constitute a real threat to the US: nuclear deterrence applies a fortiori to countries that cannot guarantee the survival of their nuclear deterrent against a disarming counterforce strike.[24] But public opinion is not the same thing as serious analysis.

In the constellation of rogues conjured up to justify policy, Saddam played a special role. Having just attacked a powerless neighbor, with a human rights record remarkable even by regional standards and a history of chemical weapons use, and with a million men under arms to boot, Saddam was a PR wet dream for proponents of global primacy. When, in 1994, Anthony Lake spelled out the administration’s doctrine in Foreign Affairs, the focus was clearly on Iraq.[xxv] The essay articulated the administration’s “dual containment” policy in the gulf—the US would contain both Iraq and Iran instead of letting them balance each other—justified in terms of the rogue states doctrine, which had by then become the organizing principle of US foreign policy.

Domestic political considerations required that the debate be restricted to how best to contain these rogue states, not whether containment was called for at all. If some foreign policy analysts questioned the wisdom of the basic thrust of US policy, there is no evidence of it. Very many, of course, criticized the hyper-vindictive nature of the sanctions, and recommended that they be lifted. The position that there was, in fact, no threat from any rogue states to US interests was never articulated. Specifically, no mainstream analyst argued that it was in the US interest to bring Saddam in from the cold. Presumably, analysts who could contemplate such blasphemy had already been weeded out of the mainstream.

Although he could’ve hardly foreseen it, Saddam had walked into a perfect storm. The demonization of Saddam continued throughout the nineties, well after opposition started mounting among Western allies. By the mid-1990s, even the gulf monarchies began pressing for accommodation, recognizing that Saddam was no longer a threat and the suffering of Iraqis at the hands of their patron was undermining their own support base. What critics everywhere failed to recognize was the central role Saddam had come to play in the domestic political calculus of US foreign policymaking.

Thus, when George Bush went about “searching for monsters to destroy,” Saddam was the most tempting target.[25] That Saddam had played no role in the attacks on September 11, 2001, was not a major hindrance in an elite foreign policy culture that had long-ago lost sight of realism.[26] Iraq was chosen because it offered the path of least resistance. With the neocons firmly in the saddle, the United States launched on an ill-considered policy to reconfigure the Middle East by force. In their flights of fancy, the question was after heroically liberating Iraq, whether the US should turn left into Syria or right into Iran. In the end, the Bush revolution in foreign policy was an unambiguous failure for the United States, with the price, as usual, paid by the Iraqis.[xxvi]

————
[1]

“Saddam Must Go” was the cover of the November 17, 1997 issue of the Weekly Standard.

[2]

This essay will not consider the logic of the neoconservative agenda. 

 

[3]

We were to later find out that bin Laden himself was hiding all these years in a suburb of the city that hosts Pakistan’s military headquarters.

[4]

The strategic implications of the dependence on oil were clear before World War II. The oil weapon was deployed against Germany and Japan during the war. The veto now serves to keep China in line. Only two great powers, Russia and the US, had large oil deposits of their own, making them immune to an oil embargo.

[5]

This is hardly outlandish. For instance, if the Saudi monarchy had been deposed during the nineties and replaced by an anti-American theocracy, the US would almost certainly have followed a policy of triple containment. Although the absurdity of the enterprise would’ve become rapidly apparent, perhaps prompting a thaw with Saddam.

[6]

The geopolitical interests of the US and Iran are quite aligned. A thaw with the Islamic republic was out of the question unless the Iranians moderated their stance. This is happening as of writing. Consequently, a strategic realignment in the gulf may be in the offing.

[7]

The policy was designed to assuage Saudi fears. The Shah was unambiguously the gulf’s policeman until his overthrow, and the chief ally of the United States in the region.

[8]

Curiously, German firms supplied most of the dual use chemicals. See Hippler, Jochen. “Iraq’s Military Power: The German Connection.” Middle East Report 168 (1991): 27-31.

[9]

An expression used by President Reagan for General Suharto, another murderous thug and Washington’s client throughout his reign. Noam Chomsky uses it as short hand to describe Washington’s strong preference for pro-Western, pro-Business Third World dictators.

[10]

The price of crude was skirting single digits, so $25 a barrel was in no way a bargain.

[11]

Had Saddam learnt how to behave with the boss, he would’ve been a good replacement for the Shah as the gulf’s policeman. Of course, Saddam had long been posturing as the leader of the Arabs who could stand up to the West. His belligerence against Israel did not help matters in Washington either. In the event, all this could’ve been forgiven if Saddam had played his cards right. The emir of Kuwait had offered a $9 billion loan, and the Saudis had agreed to pony up $1 billion. The United States had made it clear that it would allow Saddam to annex a couple of islands—Warba and Bubiyan—in the gulf and a couple of oil fields on the Kuwaiti side of the border. Instead of taking what was on the table, Saddam recklessly overplayed his hand. There is no room for such blunders in world affairs.

[12]

Baloney, of course. Still, it continues to be a cardinal principle of US foreign policy. This is why foreign policy elites were so angry when Obama backed down from punishing Assad for using chemical weapons.

[13]

Bush had already celebrated the fall of the Berlin Wall by invading Panama seven months earlier to get rid of Noriega; another thug who had been a US client for decades but dared to disobey the boss. Noriega was handled by Bush Sr. himself during his CIA days.

[14]

Shi’a soldiers had fought for Saddam against Shi’a Iran. Similarly, a significant number of Sunnis were involved in the rebellion. However, the central government never lost control of the predominantly Sunni parts of the country. Even though the rebellion itself wasn’t sectarian, the central government’s response certainly was. Saddam dispatched all-Sunni battalions to hunt down Shi’a insurgents in southern Iraq.

[15]

Robert Fisk gives a figure of 200,000. Human Rights Watch’s more conservative estimate was 25,000-100,000. By all accounts, Saddam had exceeded the achievements of the Butcher of Hama.

[16]

Administration officials believed, incorrectly, that Saddam could not survive politically after such a thorough military defeat. Regime security was always Saddam’s top priority. He had designed the security apparatus very deliberately to minimize the possibility of coups. Indeed, all Western machinations to engineer a coup came to naught. Every organization bankrolled by Washington was infiltrated by Saddam’s security agents.

[17]

Making for excellent credentials in Washington, of course. President Obama’s decision to retain Gates as the Defense Secretary was calculated to project the image that the President was “strong on defense.”

[18]

Recognizing that Saddam posed no threat to gulf security yet advocating an aggressive policy of containment required no small degree of double-think among security analysts.

[19]

Reporter: But you don’t take the view that there can be no normal relations with this man or with Iraq as long as he is in power? Clinton: Based on the evidence that we have, the people of Iraq would be better off if they had a different leader. But my job is not to pick their rulers for them. I always tell everybody, “I’m a Baptist; I believe in deathbed conversions.” If he wants a different relationship with the United States and with the United Nations, all he has to do is change his behavior.

[20]

In six years, UNSCOM inspectors had presided over the destruction of 40,000 chemical shells, 700 tons of chemical agents, 48 long-range missiles, an anthrax factory, a nuclear centrifuge program, and 30 warheads.

[21]

If this was indeed the goal of the intermittent air campaign against Iraq. The pretense was always that Saddam was not complying with UNSC provisions. But the Western allies were not being serious since they kept moving the goal post. In the end, Saddam realized that they would never be satisfied and threw out the arms inspectors for good. This is what prompted the secret air war in 1999.

[22]

That Saddam would survive indefinitely was the baseline scenario after he crushed the intifada.

[23]

Current GDP figures are: Iraq $210 billion, Iran $514 billion, North Korea $12 billion, and Cuba $61 billion, for a combined $797 billion for the rogue’s gallery; while those of the three biggest US states in 2009, when the US economy was in a deep recession, were: New York $1,093 billion, Texas $1,244 billion, and California $1,891 billion.

[24]

This is a big problem for states with small territories who cannot disperse their arsenals to thwart disarming counterforce strikes, thus undermining the effectiveness of their nuclear deterrent. In particular, it applies to Israel and Taiwan, two states that have threatening neighbors, yet cannot guarantee their survival even with nuclear weapons.

[25]

In 1821, John Quincy Adams had warned Americans against venturing abroad in search for monsters to destroy.

[26]

In an open letter, eight hundred security scholars warned against this adventure. The signatories included all the stars in the realist pantheon, from Kenneth Waltz to John J. Mearsheimer.

————

Endnotes

 

[i]

Gause, F. Gregory. The International Relations of the Persian Gulf. Cambridge: Cambridge UP, 2010.

[ii]

Condoleezza Rice. “Promoting the National Interest,” Foreign Affairs. Vol. 79, No. 1, (January/February 2000).

[iii]

Clarke, Richard A. Against All Enemies: Inside America’s War on Terror, p. 32. New York: Free, 2004.

[iv]

Quoted in Suskind, Ron. The One Percent Doctrine: Deep Inside America’s Pursuit of Its Enemies Since 9/11, p. 62. New York: Simon & Schuster, 2006.

[v]

Elaine Sciolino and Michael R. Gordon. “Confrontation in the Gulf; US Gave Iraq Little reason Not to Mount Kuwait Assault,” New York Times. September 23, 1990.

[vi]

Ibid.

[vii]

President George HW Bush. NBC Nightly News. February 2, 1991.

[viii]

Quoted in Fisk, Robert. The Great War for Civilization: The Conquest of the Middle East, p. 793. Harper Perennial, 2006.

[ix]

Bush, George, and Brent Scowcroft. A World Transformed, p. 489. New York: Knopf, 1998.

[x]

Emma Nicholson. “Barbarity in Iraq’s Marshland,” New York Times. August 28, 1992.

[xi]

Gause, The International Relations of the Persian Gulf, p. 117.

[xii]

Thomas L. Friedman. “After the War; Decision Not to Help Iraqi Rebels Puts U.S. in an Awkward Position,” New York Times. April 4, 1991.

[xiii]

Ibid.

[xiv]

Patrick E. Tyler, “After the War; Bush Links End Of Trading Ban To Hussein Exit,” New York Times. May 21, 1991.

[xv]

Andrew Rosenthal. “The Bush-Hussein Duel; U.S. Aides Admit Iraq Is No Armed Threat But Say That Control Must Be Established,”New York Times. September 26, 1991.

[xvi]

“The New Presidency; Excerpts From an Interview With Clinton After the Air Strikes,” New York Times. January 14, 1993.

[xvii]

Leslie H. Gleb. “Foreign Affairs; Iraq Balancing Iran?” New York Times. January 17, 1993.

[xviii]

Thomas L. Friedman. “U.S. Asserts Iraq Changed Behavior,” New York Times. February 3, 1993.

[xix]

Paul Lewis. “U.S. and Britain Softening Emphasis on Ousting Iraqi,” New York Times. March 29, 1993.

[xx]

Patrick E. Tyler. “Health Crisis Said to Grip Iraq In the Wake of War’s Destruction,” New York Times. May 22, 1991.

[xxi]

Edwards, David. “An Interview With Denis Halliday,” Media Lens. May 16, 2000. Web. Accessed June 28, 2014.

[xxii]

Steven Lee Myers. “In Intense But Little-Noticed Fight, Allies Have Bombed Iraq All Year,” New York Times. August 13, 1999.

[xxiii]

“Differentiated Containment: U.S. Policy Toward Iran and Iraq,” Council on Foreign Relations. July 1, 1997.

[xxiv]

Crane, Keith, et al. Imported Oil and US National Security. Rand Corporation, 2009.

[xxv]

Anthony Lake. “Confronting Backlash States,” Foreign Affairs. Vol. 73, No. 2, (March/April 1994).

[xxvi]

Daalder, Ivo H., and James M. Lindsay. America Unbound: The Bush Revolution in Foreign Policy. Brookings Institution Press, 2003.

 

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