President Bush and Iraq: The off balance-sheet war

It's a fair bet that Karl Rove, Bush's chief of staff, didn't think his boss would resign over the Enron scandal, even if the connections between the corrupt power company and the Republican hierarchy reached all the way to the Oval Office. Could he have imagined, however, that Enron would completely disappear from the headlines on the eve of the midterm elections? For sure, the grubby paws of many Democrats, equally eager to feed at the Enron trough, gave Bush and his friends some breathing room; the Washington sniper has also played an unwitting role in the Republican issue-avoidance strategy. The main cause of America's distraction, however, is the supposedly imminent threat from Saddam Hussein, which has pushed corporate malfeasance to the background and made it harder to criticize the Commander-in-Chief.

I wonder, though, if there aren't some Enron-ish overtones to the current round of saber-rattling towards Iraq. While Enron's criminal actions were played out in fiendishly complex financial schemes, they were based on a simple principle: Move around money and debts in a way that disguises your losses and exaggerates your gains. Perhaps the most surprising thing about the Enron scam is not that one company behaved so outrageously, but that more corporations haven't admitted their own dedication to this principle. Corporate America in the 1990s, emboldened by deregulation and lax governmental oversight, has taken 'creative accounting' to new levels: Companies regularly inflate their earnings reports or disguise their losses in the hope that they can insulate their stock price from poor results.

So what does this have to do with the proposed war on Iraq? For one thing, it's an open secret that the sudden need for 'regime change' in Baghdad has much to do with the American economy, especially energy policy. Iraq sits on the world's second-largest reserve of oil. Saudi Arabia, the nation with the largest reserves, has become a less reliable U.S. partner since 15 of its citizens helped to kill 3,000 Americans on Sept. 11. The Bush administration has placed an unprecedented emphasis on the safeguarding of energy resources as a cornerstone of national security policy and was particularly angry at the failure of Congress to approve its plans for new drilling in Alaska. Behind the rhetoric about Saddam's weapons of mass destruction, then, lies a simple motive for war: The United States wants a partner in the region to guarantee the uninterrupted flow of oil.

By my reckoning, Bush is cooking the books in two ways with his Iraq policy. First, he's misleading the public by arguing that the showdown with Saddam is about nuclear, biological and chemical weapons, rather than about oil. If you've read the sensational account of Khidir Hamza — the Iraqi exile who claims to be 'Saddam's bombmaker' — you'll know about the technical obstacles that stand between Saddam and the acquisition of a nuclear weapon. Given the assessment of UN inspectors in late 1998 that the Iraqi nuclear program was completely defunct, Bush's outlandish visions of a nuke-wielding Saddam are extremely unconvincing.

However, the Bush administration continues to refer to the military threat from Iraq, and to move the economic motives for a U.S. attack 'off the balance sheet,' as they used to say in Houston.

Even if some members of the Bush administration (including Dick Cheney) have been more open about the need to secure energy resources through proactive foreign policy, this conceals yet more Enron thinking. While it's true that America's cozy relationship with the House of Saud has largely ensured the flow of oil to the U.S. since the Second World War, the price of gasoline hardly reflects the true cost of America's energy policy. American support for tyrannical or undemocratic regimes in the Middle East and elsewhere inevitably creates more resentment towards the U.S., which then provides a justification for greater spending on the American military and intelligence services. As with Enron, the costs of this increased government spending are largely hidden from the consumer: Gas prices won't reflect the $400 billion or so which Bush proposes to spend next year on the military. (This figure is right up there with Cold War spending.) However, Americans will eventually pay the price for the creative accounting, either in higher taxes or through the many negative consequences of the ballooning national debt.

You can't blame Bush for following the Enron playbook; after all, it made many Texans very rich indeed, even if ordinary folks got screwed in the process. In the case of Iraq, though, it's particularly incumbent on us to know the true cost of American intervention — in military expenditures, and the lives of both Americans and Iraqis — before the scam goes down. This means we have to keep close tabs on the Bush administration, and do the math for ourselves. Nicholas Guyatt, a graduate student in the history department, is from Bristol, England. He can be reached at nsguyatt@princeton.edu.