2007 September 17 Monday
Greenspan Deluded On Saddam Threat To Strait Of Hormuz

Former Federal Reserve Chairman Alan Greenspan is in the news with quotes coming from his new book The Age of Turbulence: Adventures in a New World. Mostly the quotes are about how the Bush Administration is fiscally irresponsible and Dick Cheney has fallen away from his past support for fiscal restraint. But Greenspan's comments about how the Iraq war is about oil have generated even more controversy.

Greenspan, who was the country's top voice on monetary policy at the time Bush decided to go to war in Iraq, has refrained from extensive public comment on it until now, but he made the striking comment in a new memoir out today that "the Iraq War is largely about oil." In the interview, he clarified that sentence in his 531-page book, 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."

Greenspan, that man who gets such enormous amounts of praise and respect as supposed central bank wizard, is saying that it was essential to take out Saddam in order to protect the oil supplies of the world. Think about that for a second. Saddam tried to invade Iran and take over Iran's oil fields. He failed. He tried to take over Kuwait and we booted him out. If George H. W. Bush's administration had been more awake they could have prevented that invasion with a well worded threat and they could have destroyed Saddam's invading forces with air power if they'd gotten ready for the invasion when Saddam started dropping hints.

As for Saddam taking over Saudi Arabia: Wasn't going to happen. The US Air Force and US Navy fliers could have used the opportunity for target practice by taking out Saddam's tanks as Iraqis tried to roll over the desert of Saudi Arabia. In a nutshell: Saddam lacked the means to take over the Gulf oil countries. First his military was damaged against Iran and then much more severely in the war over Kuwait. Then his military decayed even further under an embargo that included occasional air strikes by US and British aircraft. By the time George W. Bush took office Saddam had been defanged and he knew it.

Aside: The Middle Eastern governments have inflated their official reserves and they have far less reserves than they claim to have. So there's less oil in the Middle East to protect and less US economic interests at stake in the Middle East than you'll hear commonly claimed.

Lest you think that Greenspan really meant something else he has been kind enough to tell the Wall Street Journal about his delusion that Saddam posed some sort of threat to the Strait of Hormuz.

Tell me about your views on the importance of deposing Saddam.
My view of the second Gulf War was that getting Saddam out of there was very important, but had nothing to do with weapons of mass destruction, it had to do with oil. My view of Saddam over the 20 years … was that he was very critically moving towards control of the Strait of Hormuz and as a consequence of that, control of the oil market. His purpose would be very much similar to [Venezuelan President Hugo] Chavez’s actions and I think it would be very dangerous for us. So getting him out to me seemed a very important priority.

I try to be polite about individuals. But the invasion of Iraq was a huge mistake and any prominent figure who makes lame arguments about the invasion must not go unchallenged. Saddam was moving towards control of the Strait of Hormuz? I'd be embarrassed to say something so obviously wrong. One doesn't need to do fancy calculations or read tons of history books or follow complex theories to know that Saddam was not moving toward control of the Strait of Hormuz. That's nuts. But where is this coming from? If Greenspan had this view 20 years ago then one can't blame it on senility. So what is going on? Can someone explain this? Is Greenspan overrated in general? Or is he only good at some narrow specialty and foolish about much else?

Greenspan is another example of a general problem we face: We are poorly led. We give our elites - especially our political elites - far too much respect and deference. These people are nowhere near as competent as they make themselves out to be. The really talented people in America are in investment banks and Silicon Valley start-ups. They aren't in Washington DC in high government positions. Though I bet there are some smart people on K Street manipulating the yahoos in government.

We mostly are better off if the sharpest people are in venture capital-funded start-ups and investment banks. The private sector generates the wealth. But we need some small handful of sharpies in key positions of power who can recognize when nonsense is being spoken and say no to stupid policies.

Share |      By Randall Parker at 2007 September 17 11:15 PM  Elites Betrayal And Incompetence

Kenelm Digby said at September 18, 2007 2:38 AM:

What really fascinates me is how 'our' power people are so ignorant of the first, most basic tenets of economics.
The point is that of even if Saddam managed to 'monopolize' at the very most 50% of the world's oil reserves, the oil sitting in the ground is completely useless to him unless there is a buyer willing to exchange hard cash for that oil, therefore a little reasoning telles us that even if Saddam managed to somehow 'embargo' this oil, it will hurt him at least as much as it hurts the potential buyers of the oil, also by the basic laws of supply and demand, if Saddam 'restricted' oil exports to boost the price, other non-middle eastern producers would surely step in to caoitalize on the situation and boost their own revenues.

Kenelm Digby said at September 18, 2007 2:44 AM:

Another point, why isn't the disasterous 'diplomacy' and efficency shown by the then US ambassador to Iraq, April Glaspie (no doubt an affirmative-action hire - talk about the absurdity of sending a woman as ambassador to an Arab nation), ever discussed as a very big contributing factor to Iraq War 1 ?

Anon said at September 18, 2007 5:58 AM:

I think when Glaspie was asked by Saddam Hussein if it was OK with the US if he invaded Kuwait, she replied that the US was fine with it. I find that hysterical for some reason ("...by the way President Hussein, would you like some more pie?" I wish I had been a fly on that wall, I can only imagine the conversation). He may have been a sonofabitch, but he was our sonofabitch. Colorful, hands-on type of guy and a brave individual.

Wolf-Dog said at September 18, 2007 8:27 AM:

For the record, the highly esteemed Greenspan, was a disciple of Ayn Rand, who was a very tough person.

It is also possible that April Glaspie was instructed to encourage Saddam to attack Kuwait because it was clear (at that time) that the main ambition of Saddam was to obtain nukes in large quantities. Had Saddam not invaded Kuwait with our manipulation, then it would have been impossible to stop him from becoming immeasurably more dangerous with dozens of nukes later. In that sense, Glaspie did the right thing.

Anon said at September 18, 2007 9:32 AM:

And speaking of nuclear programs, it looks like the Syrians are experiencing some delays in their alternative energy development program:


momochan said at September 18, 2007 1:39 PM:

What dismays me about this opinion of Greenspan is that even if he had been right, the real weakness would have been our economy's dependence on the Straits of Hormuz. Taking out one dictator who happens to be holding the weak link in your chain does nothing to solve the problem of that weak link.
The logical direction that his opinion should have taken him would have been to urge diversification of energy supply. It's just astonishing that he didn't think this through.

Gary Glaucon said at September 19, 2007 4:01 AM:

What? You expected him to say that we invaded Iraq to protect his tribe's interest?????

Robert Hume said at September 19, 2007 7:43 AM:

Yes indeed. I'm sorry to say that Greenspan is trying to divert attention from the only real reason for the Iraq war, protection of Israel. Not that, in the long run, that will be its effect.

The only real way to protect Israel is to get the settlers out of the occupied territories and conclude an area-wide peace treaty. Continuation of the occupation of the West Bank, and now, of Iraq by ourselves, just extends the time span in which terrorists have to convert more (ethnic German!) recruits, some of whom may enable them to acquire a nuclear bomb. See Robert Pape's book "Dying to Win" which shows that the cause of the recruitment of the most committed terrorists, suicide terrorists, is occupation of a homeland by an army of a democracy of a different religion. This includes Hindu Tamil suicide terrorists resisting occupying Buddhist Sri Lankans.

Wolf-Dog said at September 19, 2007 12:49 PM:

The evacuation of the Jewish settlers will not change anything. Even the 1949 borders are not accepted by most Palestinians: Hamas came to power in Gaza by means of legitimate elections, not a military coup, and this happened after Israeli army pulled out of Gaza, and all the Jewish settlers of Gaza were evacuated. And yet increasingly more powerful rockets are being fired from Gaza which does not contain any Israeli presence, into the interior of Israel. By the way,Jewish enclaves in West Bank existed even during the Ottoman Empire, and certainly before the Ottomans, but evacuating these Jewish settlements of West Bank is certainly a price that Israel offered to pay, in exchange for a two state solution (without further war.) For the record, the "Hebron Massacre" occurred in 1929, when that region was under British control after the Ottoman Empire lost World War I. In the city of Hebron in the West Bank, where Jews were suddenly slaughtered by their Palestinian neighbors, due to intermittent intolerance. Sometimes there was friendly tolerance, and sometimes there was intolerance. That area of the world has always been disputed territory, without clear lines of demarcation. Some kind of compromise is needed, but it must be two-sided.

BretDavis said at September 19, 2007 1:23 PM:

You are just going to have to get used to the idea that nobody in this whole wide world is as smart as you are.

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