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Iraq: A new way forward?

By Erik Wilkins-McKee

Posted January 19, 2007

So the administration of Pres. George W. Bush has decided that troop numbers are to increase, Baghdad is to be stabilized, and efforts to stem Iranian and Syrian aid to insurgents and militias will be stepped up.

Congressional critics, meanwhile, insist that diplomacy and phased withdrawal would be a better policy, but have no politically effective way to achieve that policy. I believe, but not for obvious reasons, that it is unfortunate withdrawal is not being pursued.

The argument in favor of even a phased pullout is simple; some observers believe that early withdrawal of U.S. forces from Iraq would not lead to a wider war, and instead would give the various groups in Iraqi society an impetus to make peace.

The U.S. presence might be increasing the violence, so leaving could reduce Iraqi, and U.S., casualties. On the other hand, there is a real fear that a wider war would result, spreading instability throughout the region. Thus, while the de facto result of the war so far has been to replace a dominant Sunni minority with a dominant Shiite majority, I think it unlikely that the administration will ever change its strategy and abandon the country entirely.

The chance that the war would spread into a regional Sunni/Shiite conflict might be beneficial, at least in the long term. To qualify that, killing more people is not a good thing. However, the Saudis made clear recently that U.S. withdrawal would lead them to aid the Sunni Iraqi insurgents, at least financially, and that could work as an obstacle to Iran. Likewise, increased instability in the Middle East might lead to an oil shock similar to that of the 1970s — opposite the current decline in oil prices due to a warm winter. A wider war could be the ultimate shot in the arm to move toward independence from oil — not just foreign oil, but oil.

Imagine a scenario in which open civil war in Iraq spreads unrest westward, threatening the Saudi regime. The “risk premium” that commodities traders generally factor into oil prices would go through the roof, and the global economy would take a hit that can’t be minimized immediately by increased production in other countries, some of which are not exactly friendly allies of the United States. Extracting oil from tar sands and shale becomes more profitable, leading to some eventual stabilization in prices, but with the immediate jump in costs, domestic pressure to tap the domestic Strategic Petroleum Reserve grows intense. Rationing might be unavoidable in the near term, as the U.S. considers re-entering Iraq as well as seizing the Saudi Arabian oil fields in an attempt to ensure stability, perhaps asking the United Nations or NATO to help. Can you imagine a better recruiting tool for al-Qaeda than that?

This scenario is probably extreme. But even if the war spread in a minor way, turning into a proxy war between the Saudis and the Iranians, terrorist attacks in both countries would increase the risk premium and the cost of oil. That instability in the region, especially in Saudi Arabia and Kuwait, just might create enough havoc in the markets and the U.S. economy — despite the fact that only 20 percent of our oil comes from the Middle East — to prompt a crash program to shift our energy policy away from oil.

I’m not kidding myself. A wider war that served to strengthen al-Qaeda would threaten us in the short term, at least until we can abandon foreign oil and entirely pull out of the Middle East. Further, if withdrawal were to lead to a wider war, the global economy would not continue along as it is, and the growth of the U.S. economy in recent years would evaporate. People in rural states like Vermont, where driving is unavoidable, would be especially hard-hit, and inflation would take hold nationwide as transportation costs for everything from food to stereos rose. Given the current personal savings deficit and federal government debts of this country, it could be disastrous in a way that no one is currently imagining.

But it’s also true that going along as we are does not much good either, in terms of our domestic or foreign policies. The longer we continue to be dependent on countries we don’t like, or who don’t like us (Venezuela, anyone?), for our energy needs, the greater the terrorist threat, the greater the likelihood of further interventions abroad, the greater the certainty that climate changes already underway will be more severe and long-lasting.

Unfortunately, a wider war and instability in oil markets would not be enough to accomplish a quick transition in U.S. energy policy, because of the structural characteristics of the U.S. economy and settlement patterns. But that’s for a future column.

Erik Wilkins-McKee is a political theorist, writer, and editor. He lives in Putney.