Challenges of the Iraq aftermath

With the media now giving declining coverage to the war in Iraq, and the letter-writers, analysts and commentators having just about exhausted every argument, for and against, there is very little left but to observe what is now clearly going to be a very long term, confused, and unpredictable outcome to this conflict.

Only the wildest optimist, or the deluded, could have believed there would have been a 'popular uprising' and overthrow of the Saddam Hussein Government, followed by a flowering of 'constitutional democracy' - as initially promoted by the US Government. It had not occurred in some two thousand or more years in the region we now know as Iraq, and there was no particular reason for the complexities of overlapping ethnic, religious, tribal and regional antagonisms to allow a sustainable democracy, as we know it, to occur in the immediate future.

There also seemed to be, at least initially, a quaint thought prevailing in the media that the war could be 'won', ie: reach a definable end, as it was in Kuwait, or in the Falklands, with a clear cessation of hostilities and a handing over of weapons together with a formal declaration of surrender. What now appears to be occurring, as acknowledged by the US, is that 'the war' has simply moved to another phase as the core of the Iraqi forces 'melted away' - and this will result in both longer term instability and urban, regional, and supply-line guerrilla fighting. These underground forces will carry a life-long opposition to the invasion of their country. This all represents a far more costly and dangerous scenario, in that these guerrilla groups have the military capacity and the manpower to carry on a low key conflict for years - even decades - as occurred in Vietnam or, if you do not like that analogy, try Algeria, Chechnya, Sri Lanka, Lebanon, or even Ireland. And the same phenomena is now emerging in Afghanistan.

The Australian Government said it would withdraw from Iraq 'when hostilities ceased' - but what exactly did it mean by 'hostilities'? While a possible slight majority of the electorate appears to have eventually rolled along with Australia's involvement in the conflict, it is very doubtful whether they will support even a token long-term 'army of occupation' or peace keeping role for Australian forces.

That said, it was simply unbelievable that Howard could have said to President Bush, when the 'Coalition-of-the-Willing' forces occupied Baghdad that Australian forces would start packing their bags and all come home. One could expect some vague policy to be announced along the lines of best -intentions / helping with the recovery / civil assistance and administration / re-building of Iraq similar to that undertaken in East Timor. All of which would of course require some Australian military presence for the protection of the civilian administration etc.

The downside of all this is that Australia will be seen to be simply a fig-leaf for a de- facto US military governance of Iraq - for at least a year, or considerably more. All of this represents a huge step into the unknown for Australia [particularly now the USA is attempting to ramp up a conflict with Syria] and one can be sure it will not be favourable to Australia's longer term domestic security, or its international relationships.

Australia could retrieve some of its international image around the world if it were to make a more substantial initiative by providing a continuing and far more generous program of emergency, airlifted medical aid [supplies and trained staff] to the tens of thousands of Iraqi citizens who are still lying wounded or ill in towns and in their so-called hospitals. The Red Cross is pleading for help. As one of only three combatant members of the 'Coalition of the Willing' Australia has a much greater responsibility than those countries that simply issued a media statement of support some weeks ago - for their own blatant political advantage, or worse, a large sum of money. Furthermore such an initiative would also achieve some favourable electoral response here in Australia.

The core issue now being canvassed by the media, however, is the apparent disappearance of political leadership. He has scarcely been seen in almost three weeks. Was he 'decapitated' by the 'Coalition' or is he just lying low to see how things develop? I do not mean Saddam Hussein however, I mean Simon Crean - the invisible man of Australian politics.

With the latest opinion polls showing ratings below 20% - and still falling - it is clear poor Simon has entered the valley of death of Australian politics. Recoveries from this situation are rare, particularly when approval ratings for John Howard are nudging 65+%. As previously forecast in CapitalR the NSW State election was the death knell for Simon Crean. Labor has now been forced to face the hideous truth that if it can romp home in NSW, and be in office in every other State and Territory in Australia, why is it so out of favour at a Federal level? The substantive answer must be in the leadership.

The obvious and cleanest time for a leadership change was five weeks ago, just after the NSW election, when the Parliament was sitting and all the Parliamentarians were gathered in Canberra. But in true Labor fashion the factions spent more time arguing that week about who should get what when they gained Government, rather than who should be the leadership team to ensure they actually obtained Government. But even the most ideologically committed are now perceiving that with the present leadership team - Simon Crean with Jenny Macklin as Deputy leader (God help us!) they could sit in Opposition for a very, very, long time - unless they sort out the leadership issue quickly. The silence from Crean's office is therefore ominous - "Ask not for whom the bell tolls, ��".

What is starting to exercise the minds of the more perceptive analysts and commentators is the wider "geo-political" implications of the Iraq war, and the wash-over effects on Australia. For starters, there are the economic downturn side-effects. With US think-tanks talking about ten, and even twenty years of international tension and terrorism, the international travel and tourism industry has already imploded - initially in Europe, and now in the USA with all of its major carriers in various stages of financial administration or even bankruptcy. And this downturn has flowed on into the US civilian aircraft building industry, hotels, tourism activities, and the economy in general. And now it is impacting on Australia.

The USA's Federal Reserve is now hinting at a zero interest rates regime and the flooding of funds into the US economy in order to forestall a prospective longer term recession. All of this on top of massive tax cuts in the USA. This would have to be the greatest pump-priming exercise in US history.

With much of the international finance world entering what could be a longer term minimal interest rate environment, the nuances and micro-effects of economic theory need to be substantially revised, if not re-written.

Obviously, for example, the desire to save is reduced when effective interest rates are now around zero on an after- tax basis. Investment and superannuation funds in Australia are actually recording negative returns - an alarming prospect for the millions of Australians who are relying on what were basically insufficient investment returns anyway. The implications for Australian society are immense, yet there is a thunderous silence from the Government and bureaucracy who have resorted to their well-established role of being a disinterested bystander to these historical events. Labor could have seized the opportunity here, but again, it is saying and doing nothing.

It is, however, all good news for the armaments industry. It is due for a boom, particularly in those countries outside the 'Coalition of the Willing' ie: France, Germany, Russia, and China, and several of the former members of the former USSR which have large armaments industries. Of great interest to many countries will now be the acquisition of longer-range battlefield-domination weapons, mobile anti-aircraft weapons, electronic counter-measure equipment and night-operating equipment - all of which would considerably raise the cost of any 'pre-emptive interventions' into their countries, which now seems to be 'the new world order'.

And one can forget about those agreements on preventing the spread of intermediate and longer range missiles. They will now be top of many countries' shopping lists [including Australia, according to the latest musings of Defence Minister Hill]. Kim Jong Il in North Korea is offering a complete repertoire of these missiles, to suit every need of the discerning purchaser - strictly cash of course, no cards accepted. And for some there will be renewed focus on acquiring nuclear weapons. The beginnings of the 21st century are thus likely to see a major arms race around the world. This has big implications for Australian budgetary policy, industry programs, and social welfare policy. Already cut-backs in industry support programs are occurring. Whatever happened to that 'peace dividend'?

And France, with its great sense of history [and frustrated ambitions], has seized the moment to develop new alliances and understandings with Germany, Russia, and China - not to mention a renewed and expanding presence in the Asia-Pacific region, Africa and South America. Bi-lateral trading arrangements will be increasingly influenced by geo-political understandings, and this will be the new face of international trade. NATO has effectively collapsed and new European defence arrangements and understandings are emerging. Where is the Australian Government's thinking and guidance to Australian business on these momentous developments? Apart from an unearthly policy silence from Canberra, the bureaucracy in Canberra is still waffling on about 'free trade' and 'level playing fields'.

Trade Minister Mark Vaile's recent opening speech to the Free Trade Agreement negotiating delegation visiting from the USA did not bode well for a tough Australian negotiating position. He referred to 'long term alliances', 'loyalty', and 'friendships' with the USA etc. as if this would create the basis for a better deal. This would not count for much with the US side as his subsequent visit to the USA revealed. If there is one thing at which the Americans excel, it is the exploitation of business opportunities. They know the value of a dollar, where-as the Australian side seem to think they are developing some facet of a new international free trading environment.

In the little that is leaking out from the 'in-secret' negotiations, the USA is outlining complex product-by-product detailed rules of origin [and related component-by-component procedures] proposals for manufactured goods which will generate such large non-tariff barriers that few Australian exporters will attempt to complete the administration. And all of this has to be placed in the perspective of the microscopic share of USA's imports provided by Australia. So much for 'free trade'.

05 May 2003

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