Protracted war bad for world economy

The markets went up and oil prices went down significantly as coalition troops crossed the border to Iraq and encountered nothing more dangerous than flocks of wild camels. For a while, it seemed like the road to Baghdad is the desert equivalent of an American freeway.

But reality set in soon enough. Iraqi resistance started to manifest itself and bogged down coalition troops. Friendly fire and accidents were also happening a little more often than can be convincingly explained. Massive media coverage painted the impression that coalition forces were somewhat surprised at the intensity of Iraqi resistance and the enemy’s use of guerrilla tactics.

Frederik Balfour, a BusinessWeek correspondent reporting from the front wrote that the coalition forces were struck by a foe called overconfidence. "Today’s hard lesson," Balfour observes, "superior firepower is no defense against devious guerrillas, especially when the US troops let their guard down What’s more, I think some of what has gone wrong stems directly from overconfidence, if not downright hubris, on the part of generals and privates alike."

And I might add, on the part of American civilian officials from President Bush and specially Defense Secretary Rumsfeld. It didn’t help when Rumsfeld and his spokesperson Victoria Clark complained that the Iraqis are not fighting fair, with reference to the hide and shoot guerrilla tactics employed by the Iraqis. Look guys, didn’t you hot shots expect them to use guerrilla tactics in the face of the massive force of the coalition? That’s something they should have assumed before they crossed the border. War is never about fairness. War is about winning.

I am sure the reaction of Rumsfeld and company contributed to the quick evaporation of whatever confidence the market and the business sector in general managed to muster when the war started after months of waiting. BBC reports that intensified fighting sobered up some of the traders in stock markets who are betting on a quick recovery. It dawned on business that the fighting on the ground could be very nasty and could be unpredictable and could take longer than many expected.

Late last week, the International Monetary Fund (IMF) made a similar observation. In a semiannual report, the IMF warned that financial uncertainties related to the Iraqi war threaten to stymie a nascent global economic recovery. Horst Koehler, the IMF’s managing director, also told the German magazine WirtschaftsWoche in an interview that "a global economic recession cannot be ruled out" if the Iraqi war proves to be a prolonged engagement.

Specifically, the IMF cautioned that the Iraqi war might lead to higher oil prices, anemic economic growth and depressed investor and consumer confidence, all combining to "reinforce the headwind against global economic recovery." In fact, the business pages of leading world newspapers have reported that some businesses have already begun to feel the impact of the Iraqi war and weaker consumer confidence.

There are those who fear that the Pentagon’s new highly technological strategy that was supposed to "shock and awe" the Iraqi regime to submission may prove to be a familiar misplaced overconfidence that technology will do the job. The first week of the campaign certainly didn’t look like things went according to plans.

US forces were slowed down by sandstorms, guerrilla strikes by fedayeen irregulars, stretched supply lines, friendly fire incidents, and signs that the Iraqis may use chemical and nerve agents. As a result, BusinessWeek reports, Rumsfeld and General Tommy Franks face increasing flak. "The most frequently heard charge: that the US lacks the ground troops for what may turn into a tough, protracted fight in Iraq."

BusinessWeek points out "that wasn’t how things were supposed to play out. Pentagon planners had hoped that a blitz of precision bombing and cruise-missile strikes would sever Saddam Hussein’s ability to communicate with his commanders. A simultaneous land assault would arrive on Saddam’s doorstep with unnerving speed. Isolated and surrounded, Iraqi soldiers were expected to surrender en masse. The US would bring to the battle advantages drawn from the nation’s edge in high technology. Advances in communications, stealth technology, robotics, and precision targeting would act as ‘force multipliers’; that lessen the need for lumbering land armies and big cannons. Some wonder if, just like some ’90s dot-com visionary, Rumsfeld oversold techno-war."

"We’re bogged down in a low-intensity conflict like we would find in any Third World country," Major William Gillespie of the 3rd Infantry told BusinessWeek. "Guys in civilian clothes in pickup trucks are taking shots at us."

Shock and awe…effects based campaign… surgical strike. They all sound good and futuristic and to the technologically inclined, credible enough to convince that the strategy will work. But, as the Microsoft network website Slate asks: "what if the enemies are not shocked or surprised or if they are at first, but then quickly recover and launch their own campaign of shock and surprise?"

The article in Slate continues: "Effects-based‚ theorists talk of the modern US military’s "asymmetric" advantages: We have air power, precision weapons, and speedy data links while the enemy does not. However, the past few days of battle have shown that the Iraqis have their own ‘asymmetric’ ploys: guerrilla militias, intimate knowledge of the terrain, and the willingness to use their own civilians as cover."

What can we say? Welcome to the real world! War isn’t what Hollywood portrays it to be. Everyone is still saying the coalition would win this war decisively in the end. That is probably going to be the case. But in the meantime, the markets are sobering up to the reality that it could be a bloody, drawn out affair.

Technology may provide the crucial edge but more American and British blood and guts will be spilled in full view of prime time television audiences around the world. If Vietnam is a yardstick, I don’t know how much of that gory business of war invading the quiet of their living rooms the American public can take. I am sure Saddam Hussein is betting, the Americans back home cannot take much more than they did in the waning years of the Vietnam war. It does not help Bush, Blair and Rumsfeld that significant segments of their citizens are opposed to the war, to begin with.

Here’s hoping the coalition forces achieve the goal of ending the tyrannical regime of Saddam Hussein. Coalition victory should help (but not guarantee) a turnaround of a world economy now in real danger of recession. But in the end, this is as much a war for the hearts and minds of ordinary Americans as it is of ordinary Iraqis. They are the ones bearing the painful human costs of this war. No wonder the business sector quickly sobered up.

If only it is possible to run and end wars neat and tidy like all those war movies and award winning mini series like Band of Brothers, we can all start bottom fishing the market now. But we are more likely to run out of patience and popcorn watching CNN and BBC before things turn around with the one last bit of good news we need most: the fall of Saddam. Oh well…

Better world

Robert Young Jr. e-mailed me this line.

Wasn’t the world much better when the American president was just having sex not making war?

I forwarded it to Dr. Ernie E, a Pinoy Texan, in Dallas. He loves sending me Clinton-Monica jokes. Here is Dr. Ernie’s reply.

That’s why the US need a woman president. When women get bored, they go shopping. When men get bored, they invade nations.

Monica L should get a medal for saving the world by keeping Clinton entertained. And yes, someone should send Bush a copy of the latest edition of the Joys of Sex, preferably delivered by someone like Monica. And yes, Hillary in 04.

Boo Chanco’s e-mail address is [email protected]