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Historically, wars were meant for material gains and even though this perception might have changed in contemporary times, every conflict makes some economic sense to the proponents. In light of this understanding, it suffices to argue that the US went into the 2003 Iraq war for different reasons including economic gains. To qualify this claim, it is important to revisit some of the issues that transpired behind the curtains before the invasion as explored in this paper.
Back in 2001, the then US Vice-President, Dick Cheney, stated that Saddam Hussein’s mercurial and unpredictable policies on oil exports would lead to unprecedented US exposure to disruption, which would throw the country into unparalleled energy price volatility (Noble 31). Such volatility would affect the American economy negatively, and thus, Saddam Hussein’s regime had to fall. Additionally, Cheney indicated that the “need for a substantial overseas American force presence in the Gulf transcended the issue of Saddam Hussein…” (Noble 31). Therefore, the war was not primarily meant for the toppling of the Saddam reign, but for economic gains.
This paper explores how the 2003 Iraq war made economic sense for the US. The paper will achieve this goal by exploring the different avenues through which the US benefitted economically from the war. The US would gain economically from the Iraq war by profiting from the Iraq oil reserves and awarding contracts to American companies, which created employment and improved the GDP.
War for profit
As aforementioned, the US was worried by Saddam Hussein’s unreliability and untrustworthiness based on his erratic policies concerning oil exports. By the start of the 21st century, Iraq had become a key producer of oil, and thus, Saddam would influence the global oil export trends and prices. Therefore, the US sought to privatize the running of oil production and export in Iraq and the only way it could achieve this goal was by toppling Saddam’s regime.
After the war, the Bush administration would then control the oil business by outlining a “broad and protracted American role in managing the reconstruction of the country with a continued role for thousands of US troops there for years to come” (Segell 118). During the pre-war era, Western oil companies could not control Iraqi oil because of the despot president and the country’s laws. Saddam was killed during the war and the US pressurized the new regime to revise the existing legislation to accommodate western oil companies in the running of the oil business in the country. The new law on hydrocarbons, which was drafted with heavy influence from Western oil companies, had a clause detailing the production-sharing agreements (PSAs) (Bilmes and Stiglitz 83).
Under the PSAs, companies like Exxon and Chevron would be allowed to enter agreements on oil extraction for the next three decades. With such companies being involved in the exploration, drilling, and exportation of oil from Iraq, the US would be assured of a constant supply of energy, which is needed for the growth and development of the economy.
After the devastating war process, Iraq needed reconstruction, and the contracts for the process were given to American companies. In his eye-opening chronicles in the book, Fuel on Fire, Muttitt notes that the “most important strategic interest lay in expanding global energy supplies, through foreign investment, in some of the world’s largest oil reserves – in particular Iraq…this meshed neatly with the secondary aim of securing contracts for their companies” (147).
One of the main companies that benefitted from the reconstruction contracts is Halliburton, which interestingly was run by Cheney before he became the vice president. In 2003, the company’s profits grew four times to hit the $50 million mark in the third quarter (Noble 96).
The company provided oil to the US military together with other support services. Boeing also benefitted tremendously from the war. In 2002, the company had made a loss of $59 million, but it would change its fortunes by supplying stealth bombers to the military to record a profit of $183 million a year later. Besides, Bechtel Group Inc. secured different contracts worth millions if not billions of dollars to provide different reconstruction services. Therefore, the war meant economic sense for the US because American companies would get contracts and grow their profits coupled with providing employment back home.
The involved companies operate from the US, and thus, they pay taxes, which improves the country’s GDP. Additionally, the need for a continued supply of goods in war zones means that more employment opportunities come up to support the process, which deals with the unemployment problem. For example, following the Iraq war in 2003, the unemployment rate fell to a negative percentage between 2004 and 2006 (Sherman 36).
Minimal or zero unemployment rates are good for any economy. Such rates mean that the majority of the people have money to spend, which in turn leads to the expansion of the existing businesses and the establishment of new ones. The growth of the business sector means that the economy continues to grow annually. The government records increased revenue both from income tax from the working individuals and other forms of duties levied on different businesses. Besides, the government is relieved from the economic strain of taking care of a growing unemployed population. Therefore, the Iraq war made economic sense to the US, as it would benefit from the outlined areas in this paragraph.
Before the 2003 Iraq war, the US economy had suffered significantly following the emerging scandals in the energy sector with the Enron case taking the helm. The numerous scandals coupled with the fragile American spirit occasioned by the 9/11 attacks dented the investors’ confidence in the US energy sector, which triggered a fall in the value of the dollar. In his chef-d’oeuvre book, The Little Book of Stock Market Cycles, Hirsh notes that the American spirit had been crushed after the 9/11 terrorist attacks, which led to the falling of the stock market prices (46).
Therefore, the Bush administration needed to restore the investors’ confidence by winning the Iraq war. From history, winning a decisive war boosts the stock market, and the Iraqi war strategists understood this aspect clearly. For instance, after the Pearl Harbor attack in 1941, the Dow Jones Industrial Average fell drastically only to recover to pre-war levels of 150 in 1945 following the many victorious assaults by the US and its allies.
In essence, after the allied victory marking the end of the Second World War, the stock market hit the 200 mark, which was the highest point after the 1928 Great Depression (Hirsh 28). The relationship between winning wars and thriving stock markets hinges on the view that such victories prompt spending and investment, which in return boosts the economy. This theory worked as corporate profits soared between 2003 and 2007 before the 2008 financial meltdown. According to Sherman, the GDP grew steadily from 2003 and peaked in 2004 before dropping slightly by 2007 (35). Therefore, the Iraq war affected the US economy positively through increased investments, job creation, and consumption resulting in GDP growth.
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Besides, the war would have a long-term effect of saving millions of dollars that were hitherto dedicated to containment in the region. Saddam Hussein was allegedly developing weapons of mass destruction, which would ultimately threaten world peace. Therefore, to avoid such confrontations, the US had dedicated over 30,000 troops, tens of ships, and hundreds of aircraft to patrol the area (Muttitt 118). The long-term effects of such patrols and surveillance would be more than the total cost of the war in 2003.
Additionally, Saddam Hussein was accused of being a sympathizer the al-Qaeda. In essence, the US believed that Saddam had been financing the terrorist group from 1992. Therefore, by eliminating one of the al-Qaeda financiers, the US would save billions of dollars that would have been spent in the future fighting the group. In short, the US envisioned that it would achieve a significant milestone towards winning the war against terror, which is a costly affair.
Finally, the US envisioned that the war would bring economic liberation to the Iraqis, who had lived under Saddam Hussein’s authoritative rule for long. The US has been touted as the world leader in the promotion of freedom around the globe. This freedom involves the belief that governments should create an enabling environment for citizens to enjoy civil liberties. Before the 2003 invasion, Iraq had been dealt with numerous economic sanctions, which affected is economic status significantly.
Consequently, the Iraqis could not enjoy economic progression due to the sanctions and the authoritative rule of Saddam Hussein. Therefore, the US thought that toppling Saddam Hussein would usher a new era of socio-economic and political soundness to allow economic emancipation of the citizens. If the country prospered, then its citizens would enjoy economic development, which would achieve the US agenda of an empowered world where people enjoy freedom.
The 2003 Iraq war has been branded the “war of choice” because Saddam Hussein did not attack the US or its allies. The US went to the war under the guise of dethroning the despot president at the time, but the main agenda was to liberalize the oil business in the country and open the Gulf region to free trade. The US would gain economically by controlling the oil business in Iraq through American companies. The companies involved in the reconstruction process after the war would be American, and thus, they would benefit the US economy. Back in the US, employment opportunities would be created due to the continued need for the supply of goods on the battlefront.
On the other side, winning the war would instill confidence in the US economy and reassure investors to continue investing in the country. In the long-term, the US would avoid the costs associated with patrolling Iraq under the Saddam regime. Moreover, the Iraqis would be liberated economically by toppling the authoritative rule. Therefore, economically, the war made sense for the US-based on the issues highlighted in this paper.
Bilmes, Linda, and Joseph Stiglitz. The Three Trillion Dollar War: The True Cost of the Iraq Conflict, New York: W.W. Norton & Company, 2008. Print.
Hirsh, Jeffrey. The Little Book of Stock Market Cycles, Hoboken: Wiley, 2012. Print.
Muttitt, Greg. Fuel on the Fire: Oil and Politics in Occupied Iraq, New York: The New Press, 2012. Print.
Noble, Holcomb. Cheney’s War Crimes: The Reign of a de Facto President, Bloomington: Author House, 2013. Print.
Segell, Glen. Disarming Iraq, New York: Pantheon, 2004. Print.
Sherman, Howard. The Roller Coaster Economy: Financial Crisis, Great Recession, and the Public Option, New York: Routledge, 2015. Print.