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Monday, September 17, 2007

"The Iraq War is Largely about Oil"

Alan Greenspan explains his comment about oil and the Iraq war:

Greenspan Says Hussein's Removal Was 'Essential', by Bob Woodward, Washington Post: Alan Greenspan, the former Federal Reserve chairman, said in an interview that the removal of Saddam Hussein had been "essential" to secure world oil supplies, a point he emphasized to the White House in private conversations before the 2003 invasion of Iraq.

Greenspan ... made the striking comment in a new memoir out today that "the Iraq War is largely about oil." In the interview, he clarified..., saying that while securing global oil supplies was "not the administration's motive," he had presented the White House with the case for why removing Hussein was important for the global economy.

"I was not saying that that's the administration's motive," Greenspan said in an interview Saturday, "I'm just saying that if somebody asked me, 'Are we fortunate in taking out Saddam?' I would say it was essential."

He said that in his discussions with President Bush and Vice President Cheney, "I have never heard them basically say, 'We've got to protect the oil supplies of the world,' but that would have been my motive." Greenspan said that he made his economic argument to White House officials and that one lower-level official, whom he declined to identify, told him, "Well, unfortunately, we can't talk about oil." Asked if he had made his point to Cheney specifically, Greenspan said yes, then added, "I talked to everybody about that." ...

Greenspan ... added that he was not implying that the war was an oil grab. "No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will."

One more person telling the administration what they wanted to hear prior to the war.

If I had questions about monetary policy, Ben Bernanke is one of the first people I would want to consult. Few, if any people are more knowledgeable about both the theory and evidence, and his recent experience enhances his understanding of how the Fed interacts with financial markets.

But if I want to know about oil markets, how removing a dictator in the Middle East will impact the region's stability, and so on, Ben Bernanke is not the first person I would think of to talk to. He might not even be in the top ten or twenty.

Greenspan was telling members of the administration what they wanted to hear, and I'm sure they used his worries about oil markets to buttress their case for going to war. But I hope Greenspan also encouraged the administration to consult with others who have more expertise on these issues than he has. I'm not sure exactly what or who Greenspan relied upon to draw his conclusions, so perhaps he consulted the experts himself, and given the cherry picking of "facts" that went on perhaps it wouldn't have mattered much in any case, but when war is involved you hope that the best and the brightest are part of the discussion.

    Posted by on Monday, September 17, 2007 at 12:24 AM in Economics, Iraq and Afghanistan, Monetary Policy, Oil, Politics | Permalink  TrackBack (0)  Comments (23)

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