Monday, September 17, 2007

Ex-Federal Reserve Chairman Says War in Iraq 'Is Largely About Oil'

In an Explosive New Memoir, Alan Greenspan Also Blasts Bush and Congressional Republicans For Mishandling the Economy; Defense Secretary Gates Dismisses His War Criticism as 'Not True'


Former Federal Reserve chairman Alan Greenspan, seen here in March, is back in the limelight more than a year and a half after his retirement, with the release of his memoirs just as the economy is at a crossroads and ahead of a critical Fed meeting. In a commentary on the Iraq war sure to infuriate the White House, Greenspan effecitvely confirmed what many opponents of the war have said all along: That the 2003 U.S. invasion of Iraq "is largely about oil" -- although he admits supporting Saddam Hussein's ouster because he saw him as a threat to the world's oil supplies. (Photo: Chip Somodevilla/Agence France-Presse)

By Skeeter Sanders

"No Blood for Oil!"

That was the principal rallying cry by anti-war protesters during the 1991 Gulf War to oust Saddam Hussein's armies from Kuwait. And it was used again -- albeit to a much lesser extent -- during the massive worldwide protests in the weeks before the 2003 U.S. invasion of Iraq to oust Saddam from power.

But now, the man who for 18 years was the world's most powerful and influential banker has shaken the White House to its foundations by effectively confirming what the protesters have been saying for years: That the prime motive for the present Iraq conflict was oil.

In his long-awaited memoir scheduled to be published today (Monday), former Federal Reserve chairman Alan Greenspan also delivers a damning rebuke of President Bush’s economic policies -- and blasted his fellow Republicans in Congress for making "a major mistake" by not maintaining fiscal discipline.

Greenspan's salvo comes at a particularly critical time, just days ahead of an important meeting of the Fed's governing board, which will decide whether to lower interest rates amid mounting fears that the U.S. economy is on the brink of sliding into a recession.

But it's the former Fed chairman's comments on Iraq that is sure to provoke the most controversy -- which Greenspan readily acknowledges. “I am saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil,” he wrote.

Sure enough, within hours after word of Greenspan's comments was leaked Sunday, Defense Secretary Robert Gates dismissed them as having the same lack of merit as similar allegations made against the 1991 Gulf War.

Greenspan's critique -- and Gates' swift defense -- of the war came a day after thousands of anti-war protesters marched in Washington. A spokeswoman for one of the groups who organized the march said more than 200 protesters were taken into custody, including at least 10 Iraq war veterans, when they attempted to cross a police barrier near the U.S. Capitol.

Greenspan: U.S., U.K. Saw Saddam Hussein as Threat to Mideast Oil Supplies

In his new memoir, The Age of Turbulence: Adventures in a New World, the 81-year-old Greenspan wrote that it was the Bush adminstration's belief that Saddam Hussein posed a threat to the security of oil supplies in the Middle East that was the primary motivation for the invasion.

"Whatever their publicized angst over Saddam Hussein's 'weapons of mass destruction,' American and British authorities were also concerned about violence in an area that harbors a resource indispensable for the functioning of the world economy," Greenspan wrote.

That "indispensable resource," according to the former Fed chairman, is oil. “I supported taking out Saddam, because he was moving inexorably toward taking the world’s oil resources,” he said in a pre-publication interview published today in The New York Times. “Iraq was a far greater threat than Iran to the world scene.”

Britain and the United States have always insisted both the 1991 Gulf War and the current conflict in Iraq had nothing to do with oil. Bush said the aim was to disarm Iraq of weapons of mass destruction and end Saddam’s support for terrorism.

Yet after months of searching -- by United Nations weapons inspectors before the invasion and by U.S. and British troops since then -- no WMDs have been found, severely undermining the credibility of the president's primary rationale for the war.

Gates Disputes Greenspan's Conclusions -- Politely

Revelations of Greenspan's criticisms clearly caught the White House off-guard Sunday, as Press Secretary Tony Snow -- who announced his resignation in August -- worked his last day at the White House on Friday and Bush spent the weekend at the presidential retreat at Camp David, Maryland.

Informed of the former Fed chairman's comments during an appearance Sunday on ABC's "This Week," Gates could muster only a polite response. "I have a lot of respect for Mr. Greenspan, but I know the same allegation was made about the Gulf War in 1991 and I just don't believe it's true," even as he acknowledged that "I wasn't here for the decision-making process that initiated it, that started the war."

The defense secretary went on to say that the war is "really about stability in the Gulf. It's about rogue regimes trying to develop weapons of mass destruction. It's about aggressive dictators," noting that "Saddam Hussein launched wars against several of his neighbors. He was trying to develop weapons of mass destruction, certainly when we went in, in 1991."

In his nationally televised address to the nation Thursday night, the president announced gradual troop reductions in Iraq into next summer, but defied calls for a dramatic change of course, saying the U.S. military role there will stretch beyond his presidency.

Battle Looming on Capitol Hill Over 'GI Stay-at-Home' Bill

Gates said he would urge Bush to veto a bill by freshman Senator James Webb (D-Virginia) that would require U.S. troops returning home from Iraq to spend as much time at home as their previous tour in the strife-torn country -- as long as 15 months.

"It would be extremely difficult for us to manage that," Gates said of the Webb measure. "It really is a backdoor way to try and force the president to accelerate the drawdowns. Again, the drawdowns have to be based on the conditions on the ground."

Appearing on CBS's "Face the Nation," Senate Armed Services Committee Chairman Carl Levin (D-Michigan) acknowledged Sunday that he did not know if the Senate -- which the Democrats and two allied independents control by a razor-thin 51 seats to 49, would be able to muster the 60 votes needed to overcome an almost-certain Republican filibuster and approve the Webb measure. But he said "it has a good chance."

Nonetheless, Levin conceded that supporters of the Webb bill have nowhere near the two-thirds majority -- 67 votes -- that would be needed in the Senate to override a Bush veto. Nor would they have the required 290-seat, two-thirds majority in the House, where the majority Democrats hold 233 seats to the minority Republicans' 202.

"But that doesn't mean we shouldn't fight for what we believe in just because the president may veto it," Levin said. "I think there's enough Republicans who believe we've got to change course but whether they'll vote that way, we just simply don't know."

Greenspan Rips GOP's 'Feeding at the Tough" on Fiscal Matters

The highly respected Greenspan, who retired last year after serving six presidents over 18 years either as Fed chairman or as a presidential economic adviser, also launches a harshly critical attack on Bush’s economic competence in his memoir -- just as the economy is becoming a big issue in the 2008 presidential campaign.

Indeed, Greenspan’s 531-page book will do little to restore faith in the president's claims of economic proficiency at a time when the markets are deeply unsettled by the real-estate sub-prime mortgage meltdown and deepening credit crunch. He excoriates Bush, Vice President Dick Cheney and congressional Republicans over their big spending and lack of fiscal discipline, which resulted in the biggest federal deficits on record.

When Bush and Cheney won the 2000 election, Greenspan writes, “I thought we had a golden opportunity to advance the ideals of effective, fiscally conservative government and free markets . . . I was soon to see my old friends veer off in unexpected directions.”

He flatly rejects the modern GOP mantra that “deficits don’t matter” and says that in the Bush-Cheney White House, “little value was placed on rigorous economic policy debate or the weighing of long-term consequences.”

Bush’s failure to curb spending, Greenspan writes, was “a major mistake” and that while they controlled Congress, the GOP was “feeding at the trough.” The Republicans in Congress "lost their way,” he says. “They swapped principle for power. They ended up with neither. They deserved to lose [the 2006 congressional election].”

He sums up his deep disappointment with Bush. “My biggest frustration remained the president’s unwillingness to wield his veto against out-of-control spending,” Greenspan writes. “Not exercising the veto power became a hallmark of the Bush presidency . . . To my mind, Bush’s collaborate-don’t-confront approach was a major mistake.”

Economic Prediction: Inflation Will Be Harder to Control

Greenspan predicts in his memoir that inflation will be harder to control in the future and that far higher interest rates will be needed to maintain price stability. At some point, he argues, the movement of people from farms to factories in countries such as China will slow, leading inevitably to higher wages and prices.

Economists have been highly critical of Greenspan’s 2003 decision to cut interest rates which, they argue, helped create the housing bubble, the collapse of which provoked this summer’s banking crisis. Greenspan defends the policy.

“We wanted to shut down the possibility of corrosive deflation,” he writes. “We were willing to chance that by cutting rates we might foster a bubble, an inflationary boom of some sort, which we would subsequently have to address . . . It was a decision done right.”

Praise for Clinton, But Dismay Over Lewinsky Scandal

By contrast, Greenspan, now an economic adviser to British Prime Minister Gordon Brown and who describes his own politics as that of a “lifelong libertarian Republican," called President Bill Clinton’s 1993 economic plan “an act of political courage.”

Greenspan makes no secret of his admiration for Clinton, but believes he was undermined by the scandal of his relationship with former White House intern Monica Lewinsky. “President Clinton’s old-fashioned attitude towards debt might have had a more lasting effect on the nation’s priorities," he wrote. "Instead, his influence was diluted by the uproar about Monica Lewinsky.”

When the scandal first broke in January 1998, Greenspan discloses, “I was incredulous. ‘There is no way these stories could be correct,’ I told my friends. ‘No way’.” But later, when Clinton himself admitted the affair, Greenspan says, “I wondered how the president could take such a risk. It seemed so alien to the Bill Clinton I knew, and made me feel disappointed and sad.”

Sharp Viewpoints Also on Ford, Nixon and Reagan

The former Fed chairman also has sharp views on other presidents he has known, judging that there is something abnormal about anyone willing to undergo what it takes to get the job. Gerald Ford, he writes, “was as close to normal as you get in a president, but he was never elected”.

The Watergate tapes, he says, show Richard Nixon as “an extremely smart man who is sadly paranoid, misanthropic and cynical”. He recalls telling a friend who had accused Nixon of anti-Semitism that “he wasn’t exclusively anti-Semitic. He was anti-Semitic, anti-Italian, anti-Greek, anti-Slovak. I don’t know anybody he was pro.”

Ronald Reagan’s ability to joke and tell folksy anecdotes in support of a particular policy represented an “odd form of intelligence.”

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Volume II, Number 47
Copyright 2007, Skeeter Sanders. All rights reserved.