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Media Pulse A Swale Day The Institution of Kindness |
| Not Such a ‘Lovely’ War, After All! | |
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by Dara Nair | |
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Along with the rest of the world,
when Gulf War II started, there was a burst of euphoria in the
community. The bottom line for any business is profit. If businessmen and traders turn into do-good lotus eaters, that’s what everyone will be eating soon—roots and herbs. |
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The Indian economy is no exception. Along with the rest of the world, when Gulf War II started, there was a burst of euphoria in the community as if it was the best possible thing to have happened for business and trade. The Indian capital markets jumped exuberantly, Central Ministers with economic portfolios threw out such impromptu remarks as "the Gulf War won’t affect India", "our exports won’t be harmed", and "India has adequate buffer stocks of crude and other imported essential commodities to last out the war," and business bodies waxed joyous over the opportunities inherent in the rebuilding of a devastated country. One problem. All these optimistic forecasts were based on a single, unsubstantiated, unwarranted and totally wrong assumption—that, given American military superiority, the Iraqis had no chance of holding out and, in just a manner of days, the U. S. coalition would be in control of Iraq and the ‘reconstruction pie’ would be up for grabs for world business. There were two basic flaws in the assumption on which the optimism was based. One, that military might was decisive and, two, that the Iraqi people were so fearful of Saddam’s uniformed goons that they would welcome a change of regime. Military might is, no doubt, a crucial factor in overcoming an enemy but it does not give immunity to the mighty against death and injury. The impression that was deliberately created by the American military machine was that the formidable U. S air strike capacity would carpet-bomb all resistance out of the Iraqis without putting its own forces at risk. The fact that no country can be conquered only from the air (proved most recently in Afghanistan) was soft-pedalled by the U. S. Administration and supported by a lapdog media. It is on the ground that a battle is ultimately decided and, on the ground, it is motivation and desperation that counts for more than military technology. The U. S. could convince the American people into believing that their husbands, brothers and sons would come back heroes. Unfortunately, as early as the fifth day of the Gulf War, the body bags started reaching American and British shores. Most Americans, even before the war started, when Bush was at his belligerent best, could not understand why Saddam was being targeted. So Saddam was a cruel despot who cared little for the well-being or even lives of his people of which thousands of Iraqi exiles are living proof, but why was Bush so convinced that he represented a threat to America? Weapons of mass destruction? What weapons—even the U. N. inspectors could not find any and neither could the U. S. coalition troops after six days on Iraqi soil. Anti-war demonstrations, sit-ins, rallies were held in different parts of America from Hollywood to the White House gates. And these are now expected to become more widespread as American war deaths mount and the number of American POWs in Iraqi hands increase. Meanwhile, the rest of the world was even more disturbed and agitated, even though their husbands, sons and brothers were not in the war. They just did not want a war: never, ever again. Killings, torture and atrocities against women and children are widespread around the world even when no wars are in progress, and needed no help from a totally unnecessary war, to say nothing of the economic hardships it would entail. And that brings us back to the short-lived euphoria of business and trade. Stock markets crashed around the world, following the perception that the Gulf War II was no adventure where the good cowboys always won without any loss to their side. As reports of deaths in the U. S. coalition forces began to spread and American war prisoners were exhibited on Iraqi Television, it began to dawn on even the most gung-ho of Americans that the war was serious. It was not fun and games. U. S. debacles in Vietnam and Korea did not have as sudden and intense an effect because they were not "television wars". A televised war has much more immediacy and poignancy. The world economy went into near panic. In India, Dalal Street dived 78 points on March 25 after it was proved that the Americans were not going to have a cakewalk. Money started flowing into safe government bonds that had no takers just a few days back, the mighty dollar fell worldwide and, in India, the rupee became stronger. The Indian travel and airline industry, which had never quite recovered after 9/11, has come to a grinding halt. Outbound and inbound traffic has fallen by a third and tourist bookings are being cancelled wholesale. Exports to the Middle East are at a standstill and western India port workers are almost idle. Hundreds of crores of rupees worth of confirmed export orders (especially wheat and rice for the Middle East markets) have been cancelled with huge losses to Indian exporters. And there are no silver clouds. The economy will be headed a long way south before it turns around. Ultimately, the war will end but there will be no real winners. The likelihood is that the U. S. coalition forces will gain a formal victory in Gulf War II. This will result in a knee-jerk uptake in the capital markets of the world, but it may not be sustainable because the war may have ended but the battles will be more bitter. Reconstruction of a war-torn economy is, no doubt, a wonderful and profitable opportunity for almost all sectors of industry and trade. But, as it affects the aftermath of Gulf War II, America will make sure that the bulk of the rewards (and the oil) go to its own economic sector with a few handouts, of course, for its coalition partners such as Britain and Australia. India is not likely to gain much, although because of its proximity to the area, its service industry may get a boost. But exports are not expected to rise. Even today, there are reports that U. S. grown rice and wheat will replace Iraqi imports from Asian countries. Thus, even our traditional exports may be hit. Another development, specific to India, which has little to do with the Gulf War except indirectly, is the rising rate of inflation. From a low of below 2 per cent, the present fiscal (2002-2003) expected to close at around 6 per cent. The last official announcement in the third week of March 2003 (there is an approximately two week lag) put inflation at over 5 per cent. As the effects of the aftermath of the Gulf War start trickling in (especially crude prices because Saddam is torching Iraqi wells), the inflation rate may go up further. The Indian Government is sitting on an enviable pile of foreign exchange, no doubt, but is very miserly when it comes to spending it (as it is in the case of releasing grain stocks from its bursting godowns). Thus, the Government is likely to allow prices to rise which will pose a threat to the present low credit rate regime. Patriotic sentiment (often fanned by self-serving politicians) will not allow a defeated country to quietly accept a regime change (no matter how badly needed) if it takes place by imperious diktat of another country. Iraqis may experience a great sense of relief at no longer being under Saddam’s dictatorship, but that does not mean they are going to salute the Stars and Stripes. At least, not for long. In World War II, the allied troops liberated France and Germany, the very two countries which are now the most vociferously opposed to Operation Iraqi Freedom. In the case of a country with a volatile history of military adventurism like Iraq (it invaded and fought Iran for eight years and then tried to annex Kuwait and failed both times), the national psyche is much more vulnerable. Iraq may not have been ‘best buddies’ with its neighbours or other Islamic nations but, then, the U. S. A. does not lack for enemies in the Muslim world. It’s just added one more or, more correctly, added to the animus of one more. America might celebrate victory in Iraq but for a long time to come Americans are always going to be looking over their shoulder when they go for a walk. |
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The
business and trading sectors of the world economy have often been
faulted 