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| The economic backgrounds of the Gulf crisis in 199
The economic backgrounds of the Gulf crisis in 199
Wernher-von-Braun-Gymnasium
Kollegstufenjahrgang 1993/95
F A C H A R B E I
T
aus dem Fach
E n g l i s c h
T h e m a : The economic backgrounds of
the Gulf crisis in 1991
V e r f a s s e r : Frank Klein
Leistungskurs : Englisch 20
Kursleiter : StRin Monika
Fritsch
Abgabetermin : 31. Januar
1995
Erzielte Note : .................... in Worten:
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Erzielte Punkte : .................... in Worten:
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(Einfache Wertung)
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(Unterschrift des
Kursleiters)
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Table of Contents
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Preface
During the war in the Gulf, a great variety of points
of view and statements concerning the economic background of that war were
brought forward. It now seems interesting to me to find out more about this
topic and the people who spoke or wrote about it. I am also interested in the
entire story about and around the war and because I missed a lot of information
when it was a topical news, I saw the chance of getting really into the
circumstances of the Gulf crisis and its background by writing this
report.
In the course of time, the Middle East has developed
to a melting pot of people and states with totally different religions and
beliefs. Although there have been quite a number of conflicts in that area
because of this fact in the past decades, the Iran - Iraq war and the crises
which concerned Israel, for example, none of them required the rest of the world
actively to take as much part in as the Gulf war in 1991 did.
This war, which took place from January until March
1991, was fought between Iraq and the allies with the USA as their leader. Like
a lot of other conflicts in the Gulf region before, this one has also been based
on religious differences between the states concerned as it is going to be
presented in the text, although the economic intentions behind the pious
agitations have been obvious.
During the crisis, the argument was brought up that
the whole thing was just ”(...) zur Durchsetzung der
völkerrechtlichen Normen gegen den Despoten Saddam Hussein und für
eine neue Weltordnung (...). Dieses Argument war selbstgebastelt, um die
Tatsache zu verdrängen, daß hier primär wirtschaftliche
Interessen des Westens auf dem Spiel
standen.”[1]
1. Iraq´s offensive against Kuwait: reasons,
means and strategy
To start from the very beginning, one should take
into consideration how everything commenced when Iraq invaded Kuwait within 3
days in August 1991. Saddam Hussein, the leader, or rather dictator of Iraq,
justified that blitz attack with religious motives, although the economic aspect
of his justification was apparent. He accused Kuwait, Saudi-Arabia and the
United Arab Emirates of conspiring with western-orientated Israel and the USA.
He used ”(...) die tiefe Wut der breiten islamischen Massen gegen die
Moderne, gegen einen sozialen und wirtschaftlichen Wandel
(...)”[2] as an
instrument to focus this ”(...) Haß auf den Westen
(...)”2
with all its imperialism, ”(...) Kapitalismus und Kommunismus, Demokratie
und Aufklärung
(...)”2.
Picture of the location of the Rumaila oilfield and the
whole battlefield itself (from: Schwarzkopf, p. 395)
But in the same breath he also gave the real reason
why he condemned his neighbour states in such a hard way. ”Er warf ihnen
vor, dem Irak einen giftigen Dolch [emphasized by the author] in den
Rücken gestoßen zu haben, indem sie die von der
OPEC[3] festgelegten
Förderquoten überschritten, und damit den Ölpreis nach unten
getrieben
hätten.”[4]
For a better understanding, one must know that Saddam Hussein has always been a
fighter for a higher oil price to amortize the debts he got out of the
eight-year war against Iran, which amounted to some estimated $80 million.
Therefore he always postulated a raising price per barrel of oil but stood
fairly alone with this demand. As now the rest of the oil exporting Gulf states
even wanted to force the price to go down, that was too much for Saddam Hussein.
He proclaimed the ”Holy War” against those ”(...) derer
sich Satan vom Scheitel bis zur Sohle bemächtigt
hat.”[5]
But nobody really expected Iraq to attack Kuwait
after it had supported Saddam Hussein with several billions of dollars in the
war against Iran. The general opinion was that he could be kept under control
with money but now, besides his disapproval of Kuwait´s conspiration with
the West and its subversiveness of the ”Arabian Brotherhood”, he
accused Kuwait of stealing oil from the Rumaila oilfield, which is located
between both countries and could be tapped by both Iraq and Kuwait. To be
honest, it has to be admitted here that Kuwait actually did a lot of oil
thievery from the Iraqi part of the oilfield, which of course did not give
Saddam Hussein the right of fighting a crime with another
crime.[6] The line
”Saddam rasselt bloß mit dem Säbel, damit er bei der Debatte
um die Ölpreise gegen Kuwait die besseren Karten
hat”[7]
should be the best expression for the attitude of most countries towards Iraq at
that time.
10 years ago, nobody could have imagined Saddam
Hussein saying that he was ”(...) von Allah auserwählt, die
Führung der muslimischen Gemeinschaft zu
übernehmen”[8],
as he felt before the beginning of the Gulf war in 1991 and maybe still feels
today. 10 years ago, Saddam Hussein rather seemed to be one of the best
representatives of Western ideologies in the Gulf region, when he fought the
”original” Gulf war from 1980 till 1988 against Iran´s
Chomeini.
During that war, the whole world built up Saddam
Hussein´s weaponry by exporting either weapons or raw material for the
manufacturing of military equipment to Iraq.
At that time, a lot of Western and Western-orientated
governments throughout the world thought Chomeini to be a dangerous and dreadful
menace to the world. That reason has been sufficient enough for many countries
to encourage their companies to do business with Iraq in order to keep it
”as a necessary counterbalance to fundamentalist
Iran”[9].
But instead of using all the weapons given to him to
keep Iran down as he was supposed to, Saddam Hussein did not
”consume” all of his imports. In fact, he just used up a small part
of them and kept the rest; enabling him to play a game of chess with the rest of
the world and even bring it to a stalemate by occupying Kuwait without any
direct consequences apart from the
UN[10] intervention
of course, which was carried out by the allies.
The main problem of that time, however, seemed to be
ignorance: ”Diese Ignoranz ermöglichte es, daß der Westen
während des Iran-Irak-Kriegs den orientalischen Despoten Saddam Hussein
massiv mit Waffen und Finanzhilfe unterstützte, ohne die geringste Ahnung
zu haben, daß man damit zugleich den Aufbau einer Republik der
Angst
förderte.”[11]
As far as the other part of Iraq´s military
arsenal is concerned, it was also built up by a number of countries all over the
world throughout the years. Before and during the first Gulf war, in the late
70´s and early and middle 80´s, the main strategy of the weapon
exporting countries like Germany, France, Italy, the former Soviet Union and the
USA was to help Iraq against ”dangerous” Iran. But after 1988, the
year of the peace treaty between Iraq and Iran, there was no such justification
anymore and it became clear that the Western World simply wanted to increase its
gains by supplying Saddam Hussein with the latest inventions on the military
market.
Germany played a important but still not decisive
role in that war game called
”Make-Quick-Money-By-Providing-A-Weak-Country-With-Important-Military-Equipment”
because other countries also contributed to Iraq´s war machine, some even
to a higher extent than Germany. ”(..) France, Italy, Britain and other
Western nations flooded Iraq with $13.4 billion worth of military equipment
between 1982 and
1989.”[12]
Although new exporting restrictions had been enacted
by many governments to stop the breaking of the embargo put on the imports to
Iraq by the United Nations to prevent the risk of a military and economic
growing of Iraq, only a few companies obeyed those new rules. The majority
continued to send its ”war toys” to Saddam Hussein and to get its
money out of those trades. Together with their governments, they simply closed
their eyes whenever there was a sign of Iraq getting too powerful in relation to
the other Gulf states. Companies, under the protection of their governments
because of economic relations between both of them, were only interested in
making money by sending Western technology to Saddam Hussein and it was quite a
lot of money they made.
The former Soviet Union, for example, provided Iraq
with Scud missiles and since it was a short-range missile, the former GDR
(German Democratic Republic) contributed the technology
which made the missiles reach even more distant targets like Israel and
Saudi-Arabia, two of Iraq´s main enemies. A lot of nuclear, biological and
chemical warfare technology was built up by West Germany, whereas France
supplied Saddam Hussein with Antiship and Antitank missiles. Italy also
participated in building up the nuclear and chemical war machine of Iraq, while
Great Britain constructed hangars for fighter planes.
This list could be continued with many other
countries but the enumration of only these few shows that a lot of companies
just intended to use ”the silence before the storm” to sell their
military goods before it was too late.
The embargo as well as the new laws were mainly
ineffective because in the US, for example, some ”(...) companies received
licenses to export more than $1.5 billion in dual-use goods (military and
commercial) to
Iraq”[13] and
elsewhere governments, in spite of all restrictions, even seemed to encourage
their companies to do business with Saddam Hussein, as German´s Otto Graf
Lambsdorff, then leader of the Liberals and concerned with economic matters, put
it: ”Raketen kann man bekanntlich für friedliche Zwecke einsetzen,
man kann mit ihnen zum Beispiel Satelitten nach oben
bringen.”[14]
Other companies simply exported their goods to
countries not being concerned with the embargo or any restictives and from there
on to Iraq to cover up the way the weapons took.
Saddam Hussein for his part was able to pay for all
the equipment because he had built up his own ”(...) verdecktes,
weitverzweigtes
Finanzimperium”[15]
and put aside at least $10 billion, most of which he got from holding back 5
percent of the proceeds of the sale of Iraqi oil for himself. He was said to
have had (and probably still has) accounts all over the world and to hold stocks
of different companies. It is obvious that this could only have worked by
operating under cover and commissioning mysterious or sometimes even fake firms,
which means that they were not really existing to buy or sell stocks. Those
obscure companies, if they were real at all, in most cases were almost totally
controlled by Saddam Hussein´s intimate friends or relatives.
His strategy after having been armed by and at the
same time against the Western world was to occupy Kuwait and keep it as the 19th
province of Iraq. With that step he intended to change ”(...) die
Kuwaitkrise in einen arabisch-israelischen Krieg
(...)”[16] and
further into an international conflict. While he had to give up his first two
aims, mainly ”(...) dank der israelischen Zurückhaltung
(...)”16,
he had achieved the third one but not to the extent he had intended to. It is
true, indeed, that in the end it actually had turned out to be a multinational
force fighting against him but firstly, he lost the war and secondly, it did not
turn out to be a kind of third World War East versus West, as he had planned it.
His fourth aim however, namely to banish all Western and therefore
”evil” influence from the Middle East, had not only been missed but
even been changed into exactly the opposite. Instead of getting rid of it, he
had even contributed to strengthen this ”evil” influence by giving
the UN and the allies a reason to set up military bases in the Gulf and
therefore to spread their ”evil” influence more than ever.
But that ”bad” influence was a vital
necessity for Kuwait after Iraq´s occupation. Kuwait, small and weak as it
was, was suppressed by its new adversary and could have done nothing but wait
for help from an outside nation.
2. The allies´ military intervention in the
Gulf crisis
The USA for its reputation as the
”typical” representative of the West and its ideologies and
best-armed and best-trained strike forces turned out to be this outside nation.
Together with some other countries of the Occident and of the Middle East, it
freed Kuwait from its enemy aggressor by force.
The allies can be roughly devided into two groups:
the ones who only supported the rest with money or logistic equipment and did
not send any troops to Iraq, like Japan and Germany and the others who actively
took part in battle and fought side by side with the USA in the name of the UN,
like Great Britain, France and Saudi-Arabia.
Saudi-Arabia, however, was a exception in that case
because it both paid, together with Kuwait, a large amount of money and fought
in the war by sending soldiers to Iraq as well as permitting the allies to land
their fighter airplanes at airports in Saudi-Arabia.
Although all the allied governments and the UN
pointed out that aggression from one government to another was something
vehemently to be proceeded against and punished and that this was their declared
aim, it became clear very quickly that those praiseworthy intentions were also
mainly directed by economic thoughts: ”(...) Des 1992 abgewählten
amerikanischen Präsidenten (...) George Bush zufolge sollte das
primäre Ziel der USA bei der Kriegsführung die Verteidigung der
Rechtsnormen und der Werte der zivilisierten Welt
sein.”[17]
But this was only a pretence for the allies in order
not to have to reveal the real background to the public. No nation would have
risked either the lives of its soldiers and military equipment or a big amount
of money, if there had not been at least a few economic advantages for the
nation, for example the stability in the Gulf region in order to guarantee a
stable oil price or the belief of some Gulf states in the Western system in
order to guarantee a continuity of the trade with these states.
The thought of a war in the Gulf because of oil
evoked vivid memories of the two oil price shocks in 1973 and 1979 in a lot of
peoples´ heads. Then the oil price multiplied itself by four within a few
months. This had lasting effects on the world economy, especially on the weak
economy of the Third World. By this, the whole world was also confrontated with
its dependance on the oil producing and exporting countries, which to a high
degree were and still are countries from the Gulf region. Most Western nations
lost sight of this dependance and took their prosperity too much for granted,
which to reveal was the intention of the oil producing and exporting countries.
This was one reason for most countries to take part in the Gulf war, either by
only paying for it or even sending troops down there to help the USA.
In contrast to the economic reasons, for most allied
countries there was also the duty of going to war against Iraq because of their
membership to the UN, which could not let Iraq get away with an annexation of
Kuwait and a violation of basic rights without imposing any sanctions on the its
regime.
Nevertheless, there were no plans of killing Saddam
Hussein after a successful intervention because the allies did not want Iraq to
get split up into different areas of different religious groups, which, untill
then, were controlled by Saddam Hussein. Those groups, some of them even
militant, would have again endangered the stability and thus the safety of that
region and its oil. So the allies did not want to jeopardize another war
”Made in Iraq” which might have been even more unpredictable for the
economy than this one was.
The USA, as the leader of the multi-national strike
forces, has not been surprised by the situation of being in this position, for
it knew it had the best military knowledge and equipment of all the allies. But
nevertheless, there had been the problem of identification with this role at the
beginning of war. Whereas there had been no doubt about the fact that the US was
predestined for that role because of its logistic and military presuppositions,
its population did not want to play the ”world police” for other
countries anymore.
The USA, with its 250 million citizens, had so many
other problems but war at that time that it took the population longer than in
any other war it had been involved in before to accept the situation.
”Eine zunehmend tiefe Rezession, eine strukturell kranke Wirtschaft, die
Spätfolgen des Spekulationsfiebers in den achtziger Jahren, ein marodes
Bildungssystem, ein gefährlich labiles Bankensystem und eine international
geschwächte Wettbewerbsfähigkeit. Kein einziges dieser Probleme wird
durch den Krieg
gelöst.”[18]
The USA suffered from a bad recession and one remedy for it seemed to be the
Gulf war. The government saw the chance of solving two problems at the same
time: Firstly, it wanted to protect and, if necessary, restall the balance of
the Gulf region and within the OPEC. Secondly, it thought it could end recession
by reanimating its economy with a war.
Besides, the USA still had not forgotten about the
Vietnam War, which was a bitter pill for it to swallow because it was more or
less the only war in US history which the USA had to admit to have lost. And
since this was the last war the US actively fought in, it was still fresh on the
public mind. Therefore the Gulf war for the US also was the opportunity of
curing itself from the ”Vietnam-Syndrome”, which it succeeded in.
Similarly important was the fact that Iraq, due to a
lot of mostly Western countries, as mentioned above, was enabled to build its
own nuclear bomb. The
CIA[19] found out
that Saddam Hussein was on the verge of finishing the bomb. This of course would
have had serious consequences on the world´s political and economic status
quo. One just has to imagine Saddam Hussein blackmailing the rest of the world
by threatening it with the nuclear bomb. It would have led to catastrophic
states. That was the situation the USA, like all the rest of the world, wanted
to keep from coming into existence and therefore had to intervene.
Domestic policies also played an overwhelming role in
the background of the war. All political leaders in a democracy long for
re-election and try very hard to reach this aim. That was just what George Bush,
then President of the United States of America, did. During the Gulf crisis,
however, it became clear that war was not the best way to lead a nation out of a
recession.
Nevertheless, it cannot be denied that the armament
of the allies by American companies and the outbreak of the Gulf war
”(...) on Day One sent stocks skyrocketing
(...)”[20].
Especially the stocks of the armament industry jumped to a higher price level
within a few days.
Raytheon in Massachusetts, for example, the producer
of the Patriot anti-missile missiles, those ground-to-air missiles which were
needed to intercept the Scud missiles heading for Israel and Saudi-Arabia,
profited from this war-boom. But not only the preparations for this
war ”(...) accelerate[d] America´s recovery from
recession.”20
Likewise it is important to mention that, after
discovering that Scud missiles were already produced in more than twelve other
countries, the Pentagon, the US Department of Defense, declared that new
missiles and anti-missile-misslies had to be built, ”(...) die Schutz
vor Raketenangriffen aller Art von wo auch immer
bieten.”[21]
While the actual conflict had not been over yet, the USA found another positive
aspect of it, namely the opportunity of getting prepared for the next war with
even better and more accurate weapons. The war in the Gulf, where ”(...)
der Irak zu einem Testgelände für ein Arsenal modernster Waffensysteme
wurde”[22], had
introduced a small boom for the armament industry and had made the companies
think about more effective weapons to fight with in this new era of high tech
war.
But despite all high tech shows in the Gulf, one
important factor should not be forgotten, whose consequences and influences on
the outcome of war and therefore on the world economy made up a big part of the
whole planning and organization of the intervention, that is time. The length of
the war has been decisive for the sort and extent of the consequences: a short
war could have been followed by the re-election of the President of the USA,
whereas a long crisis surely would have ”punished” the
”Western warlord”. A short war could also have brought some positive
atmosphere into the economy, helping it to overcome recession, although it had
to be clear that the war would not have solved the rest of the American problems
which had been, as shown above, quite a few.
George Bush had to end the conflict successfully
within only a few months and, without further ado, strengthen the American
economy in order to absolutely succeed in that situation. For those reasons, he
had to fight on two fronts: on the front line in the Gulf and on the home front,
which was almost as important as the actual battle in Iraq. The population at
home, more than the soldiers who simply had to do their jobs, had to be
convinced of the accuracy of home-made weapons and the necessity of the war. The
government knew of the importance of mass media as an instrument to provide its
population with daily pro-American and pro-war material such as pictures showing
American missiles and bombs hitting, for example, the entrance of a Iraqi
building without killing any civilists. So not only the military industry
profited from the war but also the US media. ”Seit (...) [Kriegsausbruch]
haben sich die Einschaltquoten mehr als
verdoppelt”[23],
was the comment of news channel Cable News Network (CNN), for instance, whose
correspondents voluntarily stayed right in the eye of the storm, namely Bagdad,
to keep their viewers in touch with the latest news from the battle field.
In spite of all these efforts, President Bush did not
manage to remain in office, although he won the Gulf war in less than two
months, which once again proves the fact that ”Politiker, die Kriege
beginnen, (...) in den seltensten Fällen dafür belohnt
[werden] (...)”[24]
3. The economic
consequences
With those pictures taken from US fighter planes over
Iraq, the USA wanted to strengthen its reputation as a powerful nation. Rumours
about the ”(...) ökonomische and technologische Dekadenz der USA
(...)”[25] were
widely spread and prompted some countries to doubt the position of the US as a
great power.
At the time of war, the US economy was in a deep
recession with a high unemployment rate (6-7 % in 1991) and a high federal
budget deficit which amounted to approximately $300 billion.
But not only the USA had to deal with this problem:
countries all over the world complained about economic problems. Therefore this
war seemed to be an opportunity for a lot of governments to suggest to their
peolpe that there was a beam of light at the end of the dark tunnel of
recession. The rising stocks of the first day even seemed to prove this
statement and made capitalism appear cold and ruthless.
But only one day after the stocks skyrocketed, the
euphoria was slowed down by Iraq´s attack on Israel and it became clear
that one had to wait for the outcome of the war to make any further advances in
foretelling the development of the world economy. During the war,
”uncertainty, anxiety and high oil prices have depressed consumer spending
and business investment, worsening the recession. (The Commerce Department
reported (...) that the
GNP[26] dropped 2.1
percent in the fourth
quarter)”[27]
of 1991. In general, this was also true for the other allies, who all had to
deal with a weak economy and vague future prospects.
In this situation, especially Germany got into dire
straits since on the one hand its companies helped Saddam Hussein to build up
his war machine and made a lot of money by doing so and on the other hand its
government later was asked to pay for the damage and the injuries partly caused
by weapons ”Made in Germany”. But ”statt eindeutig zur
Golfallianz zu stehen, erweckte sie [annotation: the government] den
Eindruck, Deutschland sei nur beim Geschäftemachen an vorderster
Front.”[28]
In this context, one has to mention the so-called
”Gulf war syndrome”, a reaction of the human body to the preventive
medicine the governments gave to their soldiers to protect them from Saddam
Hussein´s biological weapons given to him by the West, such as viruses and
bacteria causing infectious diseases. The effects on the human body of most of
those preventives had not, and if, not fully been tested when the war broke out,
so that in a lot of cases soldiers became a sort of ”laboratory
animals” for the military. They wanted to find out more about the medicine
in actual battle situations, so they thought the opportunity of the Gulf crisis
suitable for a kind of medical experiment on their own soldiers, not caring
about the consequences. After the war, a lot of soldiers were neither able to
continue their jobs in the army nor to find a job anywhere else to live on. The
government just paid them a small amount of money when they left the army but
that was hardly enough to make ends meet. Therefore the soldiers accused the
government of not having informed them properly about the risks of those
preventatives. The compensation, which has to be paid in some cases, now of
course is a financial problem for the countries because they do not have enough
money to support their former soldiers.
Despite all economic speculations about the oil price
after the crisis and the oil-related consequences on the economy, there was one
fact all nations thought about right from the beginning and which became really
obvious on the day the fighting in Iraq ceased: the reconstruction of
Kuwait´s destroyed industries and oil refineries.
All the allies hoped to belong to the group of
authorized nations which were allowed to help Kuwait in rebuilding its state.
After the successful freeing of Kuwait, most of its infrastructure and
communication network had been destroyed, mainly by retreating Iraqi troops. The
costs of the reconstruction of Kuwait were estimated at some $100 billion, it
was said to be the biggest investment program since World War II, where the
”Marshall-Plan” coordinated the rebuilding of destroyed Germany.
This of course meant ”Big Business” for
the companies and one can guess that every country wanted to take part in it.
But the Kuwaitis carefully selected the participating countries because they saw
it as a reward for the liberation of their country. Great Britain, France and
the other allies got some orders from Kuwait but the USA, of course, got the
biggest piece of the cake. Raytheon, for instance, producer of the Patriot
missiles, delivered airport equipment, whereas IBM, Motorola and AT&T were
commissioned to build up a new communication system with modern computers and
telephones. And even before the intervention had begun, the U.S. Army Corps of
Engineers had already entered into a contract about $45 million with Kuwait to
supply it with water and electricity after the war. Detroit´s Big Three,
General Motors, Ford and Chrysler, provided Kuwait with vans and trucks.
As far as the financial power of Kuwait was
concerned, there had been no doubt about the fact that it might not have been
able to pay all the contractors. It was said that Kuwait´s foreign fortune
amounted to nearly $100 billion, raised, similar to Iraq, by saving 10 percent
of the profits of the oil sales and controlled by the
KIO[29]. Kuwait then
was (and probably still is today) shareholder of companies like British
Petroleum (BP) and Daimler-Benz. But it did not want to sell all of its shares
to get the money for its reconstruction since this would possibly have evoked a
new crisis on the, at that time, very instable stock markets of the world. It
rather wanted to raise the money by credits and therefore hoped that,
considering its actual financial situation, there would be enough credit offers.
Kuwait wanted to pay back those credits by continuing
to sell oil which of course made it necessary to repair its destroyed oil wells
and refineries. Already the quenching and rebuilding of those was a $10 billion
business, where, among others, also Red Adair, the world´s most famous
fire-fighter, had his fingers in the pie.
The main part of the reconstruction business was
given to the winners of the Gulf war, namely the USA, Great Britain, France and
Saudi-Arabia. The other allies, who only paid for the war, were hardly
considered. ”Wir haben erkannt, wo unsere Freunde sitzen und wo
nicht”[30],
was Kuwait´s only comment on its distributing of the contracts for the
reconstruction. ”Zwar werden Unternehmen wie BMW, Mercedes-Benz und
Porsche bei der Ersatzbeschaffung für die von den Irakern gestohlenen
Luxus-Autos nicht übergangen. Doch vom eigentlichen Boom fällt nichts
ab.”[31]
Some companies in Germany and Japan claimed that
their governments were responsible for this development and the loss of some
very lucrative businesses with Kuwait because they hesitated to take a clear
position in war politics or even showed no interest at all. This gave the USA
and the other allies the opportunity, ”(...) den Aufmarsch als eine
internationale Dienstleistung zu organisieren, über die nun abgerechnet
wird.”31
Since they risked lives and machines on the front line, it seemed only suitable
to ask the passive members of the alliance to pay for that.
War costs were valued at $60 billion or even more,
still a vanishing amount of money in comparison to the costs of the Vietnam War,
for example, which were around $570 billion or even World War II with its $3.1
trillion, both counted in today´s US dollars. ”In January the
unofficial buzz was that the United States wanted the Saudis and Kuwaitis to pay
about 60 percent of the war´s costs, the Japanese 20 percent, and the
Germans and Americans the rest. Well, of the $54.6 billion in pledges to the
United States, 67 percent ($36.8 billion) comes from the Gulf states (mainly the
Saudis and Kuwaitis), 20 percent ($10.7 billion) from the Japanese, and nearly
all the rest ($6.6 billion) from the
Germans.”[32]
This means that ”(...) the U.S. percentage may be
zero”32
or that the USA even gained a profit out of the
war, depending on what one counts, ”(aids to Kurds? debt forgiveness for
Egypt?)”32.
In any case, there were still all the contracts with Kuwait for
the reconstruction
after the war, so that, counted altogether, the USA probably profited from the
war.
For the other allies, especially the ones who had to
pay for the war, this posed the problem of raising the money for it. They mainly
had two opportunities of covering their surplus of costs: to increase their
taxes or to borrow money from foreign countries and with it to increase their
national debt. ”Die Konjunktur bekommt in beiden Fällen einen
Dämpfer: Höhere Steuern schöpfen Kaufkraft ab, höhere
Staatskredite treiben den Zins und gefährden dadurch die Bau- und
Investitionsgüterindustrie.”[33]
Another important consequence of the ”(...)
Persian Gulf
conflagration”[34]
was, of course, the development of the oil price. A rising or dropping of it
would have equally affected all Western nations, so it was a major request of
all of them to keep this development under control. The Gulf crisis itself even
was called the ”Great Oil
War”35
once, referring to its importance for the stability of the barrel price .
Before the beginning of Operation Desert Storm, the
oil price used to be at around $30 per barrel but ”(...) plunged by $10 to
$21.44 a barrel on January 17, 24 hours after Desert Storm
commenced.”[35]
This stood in contrast to most predictions which foretold a rising oil price,
for the loss of Iraqi and Kuwaiti oil was seen as a safe indicator for an
increase in price. But after the ”(...) fears that a Mideast conflagration
would cause an economy-wrecking energy
shortage”35
had been banned, it became clear very quickly that a short supply of crude would
not have bothered the Western nations in the short view, for the strategic
reserves of oil were all filled up to the brink of their capacity.
Those reserves could, in general, last up to 6
months, so most nations felt themselves secure from any major fluctuation of the
oil price. The two oil shocks gave the initiative to build those reserves, which
in the USA, for example, is called the Strategic Petroleum Reserve (SPR) and
contains 586 million barrels of oil.
But it was not even necessary ”(...) to call up
the oil
reserves”[36]
because Saudi-Arabia replaced Iraq´s and Kuwait´s production almost
all by itself. It increased its own production from about 5.3 million to 8.2-8.5
million barrels a day and so made up nearly 75 percent of the lost exports. The
other 25 percent were substituted by Iran, Venezuela, the United Arab Emirates
and other OPEC countries.
Although there was at first the risk of Saddam
Hussein´s missiles hitting Saudi-Arabian oil wells or refineries and
therefore having further effects on the world economy, the inaccuracy of
Iraq´s weapons and the high tech defense arsenal of the allies prevented
any bad consequences. But even if one or two refineries within the range of
Iraq´s missiles in Saudi-Arabia had been hit, it would still have had no
results on its production because it took precautions against that case, for
example to fill up tankers with oil and store it that way.
But since it took the allies only 50 days to free
Kuwait, there was no need of using much of the ”(...) stocks of 3.6
billion barrels (...)” ”(...) the industrialized world [was] sitting
on
(...)”36.
During the war, the oil price kept relatively stable at around $20. That was
rather positive for the economy in most countries because it dampened inflation
and caused banks to lower interest rates which helped the local economy to
overcome the recession.
But there were also negative consequences. The
increased energy consumption because of the low oil price encouraged a lot of
countries to go on with the wasting of energy, for instance, not caring about
the environmental pollution.
When the war was over, the OPEC wanted to cut back on
the daily oil production by 5 percent to avoid ”(...) the great oil
glut”[37]
because the oil tanks had been filled up during the war. The increased daily
production of 23.5 million barrels during the war should have been reduced
because it was an almost 10 percent surplus of the amount that was actually
needed in the months after. Besides, it was the intention of the OPEC to raise
the price from $18 to $21 and stabilize it before it might have dropped further
on and endangered world economy.
During the crisis, all OPEC members increased their
production, some, like Saudi-Arabia, even to such an extent that analysts
postulated a much higher cutback in production to bring at least a little bit of
stability into the oil market. The biggest problem the oil cartel had to cope
with was the unyielding
position of Saudi-Arabia, which, as mentioned above, expanded its production
more than any other Gulf state and then refused to decrease it because it saw
its economic and political chances in the Middle East. Its chief enemy, Iraq,
had been defeated and thus the Saudis became the most considerable and
influential member of the OPEC.
In former times, Saddam Hussein always threatened
Saudi-Arabia and Kuwait because of their striving for lower oil prices. But
after the downfall of Iraq, Saudi-Arabia was able to control the OPEC in a
certain way. After the Organisation had announced that it wanted to reduce
production, Saudi-Arabia simply refused to do this and announced in return that
it even wanted to increase its own production from 8 million to nearly 12
million barrels per day in the next few years.
Although the USA have always aimed at becoming partly
independent of imported crude, the relationship between those two winners of the
Gulf war still grew stronger during Operation Desert Storm and therefore the
economic relations did not allow the US to dissociate itself from its dependance
on Mideast oil, which they wanted to achieve by supporting their own oil
industry and exploring still unused space in Alaska. But the USA were no
exception in that case. The whole world was and still is dependent on oil from
the Middle East. About 40 percent of the total oil production came from the
Persian Gulf and this amount even grew up to 50 precent in recent years. But
since that region was and will always be an instable system of religion,
fundamentalism and hatred which endangers the safety of the world and its
economy, the search for new oil wells or rather oil substitutes has to be
continued and supported by the countries concerned.
A further consequence of the Gulf crisis had to be
experienced by a number of different companies and industries not directly
involved in the war. A lot of airlines, for instance, had to deal with growing
numbers of people who cancelled their flights to the Gulf or to those attractive
holiday resorts like Turkey or Greece because they were afraid of Iraq´s
missiles or attempts on hotels by radical Muslims or other terrorists and
militant groups. The hotels and restaurants there were just as much affected as
the travel agencies all over the world.
But also restaurants and public institutions in other
countries, which were not directly threatened by Saddam Hussein´s missiles,
had to suffer from the war because it affected the mood of the people and
therefore their spending habits. The yearly carnival season in Germany for
example, which took place during the Gulf war, had to renounce some of its
parties because the government did not want the public to celebrate parties
while there was fought a war in another part of the world. So the turnover which
normally came from those parties grew smaller and affected restaurants and the
food and beverage industry.
For other businesses the war was a predecessor for
the following boom. The people made more use of the railway system because many
companies adviced their employees to take the train instead of taking the plane,
considering the higher risk of an attempt on an airline. The telecommunication
sector also boomed because of the war since more and more people wanted to hold
their conferences via video. The services which provide people with bodyguards
or take care about the security of companies had to work at full capacity.
But the serious problems undoubtedly towered over the
positive effects of the war: ”Die Milliarde Dollar am Tag, die der
Waffengang am Golf nach Schätzungen Tag für Tag kostet, erhöht
weltweit das Inflationspotential. Mit den Preisen steigen die Umsätze - und
es kommt zur Scheinblüte durch
Inflation.”[38]
The more political but still economic intention of
the allies after their ”crusade” against Iraq was to keep up or
rather restall the stability in the Gulf region. Since Kuwait itself wanted to
rebuild its post-war state after democratic rules and with new technological
equipment and thus saw the war as an opportunity and even advantage for it, the
only problem for the allies remained Saddam Hussein.
They did not kill him, for he was necessary to
preserve the stability in his own country, although he endangered the balance of
the Gulf Region in general.
On the one hand, it would have seemed arrogant of the
Western world to deal with the problems of other countries and to think of
having to find a solution for its problems.
On the other hand, it would have been necessary to
help the Middle East, considering its economic importance for the rest of the
world. Stating a democracy in Iraq seemed the best solution but at the same time
also the hardest to reach. Admittedly, the total exchanging of a countrie´s
regime and system succeeded once, namely in changing Germany into a democracy
after 10 years national-socialist system.
But Germany cannot be compared with Iraq. As it was
mentioned at the beginning, the main difference of the Gulf countries is
religion. In every country there are different groups of followers of those
religions. Of course it is not that there were no different pious beliefs in
Germany either but at least their followers did not fight against each other and
killed people of ”the other side”. This was and still is exactly
what is happening between radical groups in Iraq and even between whole
countries in the Gulf region.
A war normally shakes the whole system of a country
and might even bring it to a downfall, which would give room to a new one. But
even if the allies had managed to build up a democracy in Iraq, there would have
still been the problem of dealing with the thoughts and values of the people.
That was easy in post-war Germany because most of the people had seen the
disadvantages of their former regime and therefore wanted to change it. But this
was not the case wih Iraq.
Firstly, Saddam Hussein remained head of state and
continued his way of ruling the country and thus did not admit any change of the
system.
Secondly, it would surely have been very difficult to
change the thoughts and assets of the Iraqis since most of them were and still
are totally convinced of their religion and their form of state.
So the Western world, for which the Middle East was
still is a big petrol station, only had the alternative of threatening Iraq with
another war to keep it from further aggression to other Mideast countries for
the sake of a stable oil price and from continuing to work on the nuclear bomb
and endangering the security and stability of the whole world and its economy.
Literature
•
A., S., CNN: Kanal für Krieg und Krisen, in: WirtschaftsWoche, Nr.
5,
25.01.1991, p. 39.
•
Bar auf die Hand, in: DER SPIEGEL, 15/1991, p. 125 - 126.
•
Buderi, R./Riemer, B./Rossant, J., Is it finally time to call up the oil
reserves?,
in: Business Week, January 28, 1991, p.
35.
•
Dentzer, S./Pomice, E./Impoco, J./Black, R. F., The war and the
recession, in
U.S.News & World Report, January 28, 1991, p. 46
- 48.
•
Deysson, Ch., Selten belohnt, in: WirtschaftsWoche, Nr. 5,
25.01.1991,
p. 36 - 42.
•
Egan, J./Pomice, E., What the money markets will do next, in: U.S.News
&
World Report. January 28, 1991, p. 48 -
49.
•
Fischer, M., Konjunktur: Giftige Mischung, in: WirtschaftsWoche, Nr.
6,
01.02.1991, p. 97.
•
Ginsburg, H. J./Ruess, A., Geist aus der Flasche, in: WirtschaftsWoche,
Nr. 4,
18.01.1991, p. 14 - 20.
•
Hammer, J./Breslau, K., The German Connection, in: Newsweek, February 4,
1991, p. 57.
•
Kriegskosten gegen Null, in: DER SPIEGEL, 10/1991, p. 122 -
124.
•
Krumrey, H./Thelen, F., Saddams Fremdenlegion, in: WirtschaftsWoche,
Nr. 7, 08.02.1991, p. 16 - 26.
•
Longman: Dictionary of Contemporary English, Berlin und
München,
Langenscheidt KG, 1987
2.
•
Marshall, E., War With Iraq Spurs New Export Controls, in: Science, Vol.
251,
February 1, 1991, p. 512 - 514.
•
“Mein Vetter in Bagdad”, in: DER SPIEGEL, 5/1991, p. 24 -
27.
•
Nach oben geschossen, in: DER SPIEGEL, 7/1991, p. 111 - 113.
•
Rauch, J., War Profiteers, in: The New Republic, June 17, 1991, p. 12 -
14.
•
Samuelson, R. J., Don´t Worry About The Cost, in: Newsweek, February
4,
1991, p. 63 - 65.
•
Schlote, S., Unternehmen: Die Stimmung wackelt, in:
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•
Schwarzkopf, H. N., Man muß kein Held sein, München, C.
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•
Sheets, K./Cook, W. J., Get ready for the great oil glut, in: U.S.News
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50.
•
Tibi, B., Die Verschwörung • Das Trauma arabischer Politik,
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Deutscher Taschenbuch Verlag GmbH & Co. KG, 1994
2.
Ich erkläre hiermit, daß ich die Facharbeit
ohne fremde Hilfe angefertigt und nur die im Literaturverzeichnis
angeführten Quellen und Hilfsmittel benützt habe.
........................................., den
......................
..............................................
Ort
Datum Unterschrift des
Schülers
[1] Tibi: Die
Verschwörung •
Das Trauma arabischer Politik, p. 274
[2] Ginsburg/Ruess in:
WirtschaftsWoche, Nr. 4, p. 14
[3] according to Longman
• Dictionary of
Contemporary English, p. 723: ”Organization of
Petroleum Exporting Countries; a
group of countries that produce oil and plan together how
to sell it”
[4] Schwarzkopf: Man
muß kein Held sein, p. 389 f
[5] Ginsburg/Ruess in:
WirtschaftsWoche, Nr. 4, p. 14, emphasized by the authors
[6] according to Tibi, p.
306 f
[7] Schwarzkopf, p. 392,
emphasized by the author
[8] Ginsburg/Ruess in:
WirtschaftsWoche, Nr. 4, p. 14, emphasized by the authors
[9] Hammer/Breslau in:
Newsweek, February 4, 1991, p. 57
[10] according to
Longman, p. 1148 : ”United Nations (Organization); an
international organiza-
tion to which nearly all the countries in the world
belong, and which tries to make sure there
is peace in the world and that all countries work
together to deal with international problems”
[11] Tibi, p. 94,
emphasized by the author
[12] Hammer/Breslau in:
Newsweek, February 4, 1991, p. 57
[13] Marshall in:
Science, Vol. 251, p. 512, emphasized by the author
[14] DER SPIEGEL,
5/1991, p. 25, emphasized by the author
[15] DER SPIEGEL,
15/1991, p. 125
[18] Deysson in:
WirtschaftsWoche, Nr. 5, p. 39
[19] according to
Longman, p. 173: ”Central Intelligence Agency; the US
government depart-
ment that collects information about other
countries, esp. in secret”
[20]
Dentzer/Pomice/Impoco/Black in: U.S.News & World Report, January 28, 1991,
p. 46
[21] DER SPIEGEL,
7/1991, p. 111, emphasized by the author
[22] Deysson in:
WirtschaftsWoche, Nr. 5, p. 37
[23] S.A. (initials)
in: WirtschaftsWoche, Nr. 5, p. 39
[24] Deysson in:
WirtschaftsWoche, Nr. 5, p. 42, emphasized by the author
[25] Deysson in:
WirtschaftsWoche, Nr. 5, p. 37
[26] according to
Longman, p. 443: ”Gross National Product; the total
value of all the goods and
services produced in a country, usu. in a single
year”
[27] Samuelson in:
Newsweek, February 4, 1991, p. 63
[28] Krumrey/Thelen in:
WirtschaftsWoche, Nr. 7, p. 16
[29] Kuwait
Investment Office: the Kuwaiti institution which controls and
watches over the fortune
and shares owned by Kuwait
[30] DER SPIEGEL,
10/1991, p. 124, emphasized by the author
[31] DER SPIEGEL,
10/1991, p. 123 (f)
[32] Rauch in: The New
Republic, June 17, 1991, p. 14
[33] Schlote in:
WirtschaftsWoche, Nr. 9, p. 23
[34] Egan/Pomice in:
U.S.News & World Report, January 28, 1991, p. 48
[35] Sheets/Cook in:
U.S.News & World Report, January 28, 1991, p. 49
[36]
Buderi/Riemer/Rossant in: Business Week, January 28, 1991, p.
35
[37] Sheets/Cook in:
U.S.News & World Report, January 28, 1991, p. 49
[38] Fischer in:
WirtschaftsWoche, Nr. 6, p. 97, emphasized by the author
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