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Tilting at Windmills

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September 17, 2007
By: Kevin Drum

GREENSPAN ELABORATES....Alan Greenspan says in his new book that the Iraq war was "largely about oil," but fails to elaborate further. Today, in an interview with Bob Woodward, he explains what he meant:

He said that in his discussions with President Bush and Vice President Cheney, "I have never heard them basically say, 'We've got to protect the oil supplies of the world,' but that would have been my motive."

...."If Saddam Hussein had been head of Iraq and there was no oil under those sands," Greenspan said, "our response to him would not have been as strong as it was in the first gulf war. And the second gulf war is an extension of the first. My view is that Saddam, looking over his 30-year history, very clearly was giving evidence of moving towards controlling the Straits of Hormuz, where there are 17, 18, 19 million barrels a day" passing through.

Greenspan said disruption of even 3 to 4 million barrels a day could translate into oil prices as high as $120 a barrel — far above even the recent highs of $80 set last week — and the loss of anything more would mean "chaos" to the global economy.

Given that, "I'm saying taking Saddam out was essential," he said. But he added that he was not implying that the war was an oil grab.

"No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will."

Let me get this straight. Greenspan dropped a single cryptic sentence into his book implying that the Bush administration's primary motivation for invading Iraq was oil. But now it turns out that he meant only that he thought the most important reason to invade Iraq was to stabilize global oil supplies. That's some sharp writing there, professor.

And anyway, what's up with the Straits of Hormuz stuff? That's a standard wingnut talking point for taking out Iran, but Saddam hadn't had even the remotest ability to screw up the Straits since at least 1991. What is Greenspan talking about?

Kevin Drum 12:42 PM Permalink | Trackbacks | Comments (38)

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AP) 9/14/07-In his new book “The Age of Turbulence: Adventures in a New World,” Greenspan wrote: “I’m saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil.”
AP) 9/17/07-“I was not saying that that’s the administration’s motive,” Greenspan said in the interview conducted on Saturday. “I’m just saying that if somebody asked me, ’Are we fortunate in taking out Saddam?’ I would say it was essential.”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Greenspan wakes up with a horse head in his bed.

Posted by: steve duncan on September 17, 2007 at 12:49 PM | PERMALINK

Everything that Greenspan has done since retiring has involved salvaging his legacy of politically-motivated policy decisions. His testimony in front of Congress destroyed his reputation, let directly to the current crises and has damaged his reputation very much.

Posted by: POed Lib on September 17, 2007 at 12:52 PM | PERMALINK

Agree with Kevin and raising the ante: Saddam not control the SoH as it is bounded by Iran and Saudi, and is a long ways from the tiny bit of Iraq that sits on the Gulf. (Assuming you discount Kuwait, which he claimed because the Brits split it off way back when.)

So while Greenspan may be an economist (albeit a libertarian), he appears to be ignorant about geography, naval strategy and geopolitics.

Posted by: AC on September 17, 2007 at 12:58 PM | PERMALINK

What is Greenspan talking about?

—Kevin Drum

Wet birds do not fly at night.

Posted by: Econobuzz on September 17, 2007 at 1:01 PM | PERMALINK

How much sway do you think the opinion of that financial academic-Jewboy from New York (Greenspan) really would have had with those two oil-rich Cowboys from the prairy (Bush and Cheney)?!

I mean no offense from this folks. But I'm sure Greenspan's view held as much weight in that "chat" as he would have if he was a bowl of borscht.

Posted by: ny patriot on September 17, 2007 at 1:04 PM | PERMALINK

Greenspan is in CYA mode. His backpeddling is the result of the rightwing noise machine, and works to reinforce his initial observation: politically we are prevented from calling a duck a duck. Now he is feeling the effects of trying to call a duck a duck - it is just not tolerated by certain factions of our democracy. You know, the same factions that now want to bomb Iran. Go figure! -Kevo

Posted by: kevo on September 17, 2007 at 1:04 PM | PERMALINK

It was about oil but not the way Dr.Greenspan explains it. The war was procecuted to keep Iraq's oil off the market. Saudi Arabia was very worried that Saddam would flood the market with his oil once the sanctions were lifted. Also Saddam was threatening to sell his oil in Euros instead of dollars.

Posted by: bobbob on September 17, 2007 at 1:05 PM | PERMALINK

I guess it was politically inconvenient in 2002-03 to talk about oil and the Straits of Hormuz too. So instead Bush and Cheney and Powell and all talked about "WMDs" and "9/11" instead. Greenspan's backpedalling really doesn't change anything, does it?

Posted by: Ethel-to-Tilly on September 17, 2007 at 1:10 PM | PERMALINK

Someone must have gotten to Greenspan, as his explanation sounds like backing and filling to me.

His initial statement that the administration's motivation for starting the Iraq war was essentially about oil seems perfectly reasonable. Consider the Iraqi oil field maps that Cheney's energy task force was poring over in 2001, the whole administration's pedigree straight from the oil industry, the concern for protecting the oil ministry after the invasion (about the only thing in Baghdad that was protected), and the fact that Kissinger (an advisor to the current administration) was arguing for a military invasion of Saudi Arabia as far back as 1975 (see Harper's, March 1975 issue - Kissinger writes under the pseudonym Miles Ignotas).

It is also worth noting that the Bush and Blair administrations insisted on hyping the Hussein's suppposed WMDs in the years before the war in order to keep the UN sanctions in place. If the sanctions had been lifted, Hussein would probably have opened up the Iraqi oil industry to companies from countries other than the US or Britain. Hence, the rush to war in March 2003 even though weapons inspectors were in the country, gaining wide access to suppposed WMD sites, and finding nothing. If the inspections had been allowed to continue, China, Russia, and France might have insisted that a review of the sanctions be done. Each of those security council members had interests in Iraqi oil contracts that would become profitable in the sanctions were lifted. So Bush had to go in before the inspectors found the answer to the WMD question and endangered the sanctions.

Invading for the oil is the only reason that makes sense from the point of view of US national interest. Who in the US really cares about Iraqi democracy? We were happy with Hussein all through the 1980's. We want the oil.

Posted by: McCord on September 17, 2007 at 1:22 PM | PERMALINK

Read Krugman's take-down of Greenspan on the tax cuts of 2001. He's at his snarkiest best.

Posted by: MaxGowan on September 17, 2007 at 1:24 PM | PERMALINK

That's a standard wingnut talking point for taking out Iran, but Saddam hadn't had even the remotest ability to screw up the Straits since at least 1991. What is Greenspan talking about?

Funny what waking to a horse's head in your bed will do toward getting you to "clarify" earlier statements.

Posted by: Thumb on September 17, 2007 at 1:27 PM | PERMALINK

"Saddam hadn't had even the remotest ability to screw up the Straits since at least 1991. What is Greenspan talking about?"

Coming from the Saddam caused 9/11 and has nuclear weapons crowd, this theory doesn't really sound all that off base.

Posted by: VJ on September 17, 2007 at 1:33 PM | PERMALINK

That's some sharp writing there, professor.

The man is a complete idiot. First his faith that the Invisible Hand will bring about the magical appearance of a replacement for oil is stupid beyond the extreme. Of course, it is also standard econ dogma that markets are able to circumvent the laws of physics, so it's hardly unique.

Second, did you see his 60 mins interview? After talking about how the five GOP POTUSs he served under were idiots, and how WJC was a brilliant and most capable POTUS, he was asked if he would consider voting for a Dem in 2008. His response: he is a Republican and will vote Republican. That would be a egregious thing to say in most elections, but in the current race where Dems have an overabundance of riches to select from amongst the POTUS candidates while the GOP is trying to figure out which dolt will be least embarrassing, it is criminally stupid. In short, Ali G is saying that all he cares about are tax cuts, even at the sake of the future of our country.

What was most irritating about the interview, however, was the way Leslie Stahl and Andrea "Mrs. Greenspan" Mitchell kept giggling at what a nerd Ali G is. I wanted to pull the string hanging from their backs... "math is hard".

Posted by: Disputo on September 17, 2007 at 1:35 PM | PERMALINK

Mr. Greenspan is polishing his reputation, like others from this administration, at a time when it is clear that everything that was sold as shinola is merely shit.

His language structure is perfect for that. I'm sure if you looked closely enough you could find to a recipe for making gold from lead.

However, the fact remains, his tenure at the Fed will be remembered as the period when the American economy was crippled beyond repair.

GWB may be obtuse enough to imagine that history will vindicate him, but Mr. Greenspan has seen the future and it will not praise anyone who participated in government on this one-way trip to to dust-bin of history.

Now that the outcome of the debacle is clear, all of the parties who could have had significant effect on the public opinion in current time, are coming out with their own secret "hair on fire" stories.

They were and are opportunistic toadies working for a wilfully ignorant, incompetent and corrupt adminitration. They too will decorate the hall of shame.

How many of these people had the courage to resign due to their principles? Were their prospects so dim that they were afraid they would be on the street, homeless?

No, it was too easy to remain sucking on the poisoned tit and nodding drowsily in agreement with the dismemberment of America.

Who could have seen how badly it would all come out? Not the small people locked in the small bunker of their mindset. But it sure is a renumerative starting point to write their memoirs, ala "Fog of War".

There is blood on their hands, like MacNamara, that cannot be washed out.

Posted by: Neal on September 17, 2007 at 1:44 PM | PERMALINK

That would be a egregious thing to say in most elections, but in the current race where Dems have an overabundance of riches to select from amongst the POTUS candidates while the GOP is trying to figure out which dolt will be least embarrassing, it is criminally stupid.

Indeed it is, and great post. Not to drag it off topic, but this reminded me, your fellow voter in the 2004 Illinois Senate race: When Alan Keyes announced, it occurred to me that this is the first race in which he's not bringing down the credibility of the GOP compared to the other Republican candidates.

I mean, next to which one of them does he look really bad?

Posted by: shortstop on September 17, 2007 at 1:45 PM | PERMALINK

Is there more than one Strait of Hormuz? http://en.wikipedia.org/wiki/Strait_of_Hormuz

The right-wingers must know of some super-secret additional "Hormuzian" straits that Iraq can virtually control.

OK, end of sarcasm. Having passed through the Strait on numerous occasions, and given the enormous strategic implications for the U.S., it's annoying to keep seeing it misreferenced - even by the Fed.

Posted by: Drew P on September 17, 2007 at 1:46 PM | PERMALINK

That's some sharp writing there, professor."

If you want good writing, avoid people who looked up to Ayn Rand.

Posted by: Cap'n Phealy on September 17, 2007 at 1:48 PM | PERMALINK

Greenspan – the guy who told us we needed to cut taxes or else we would pay off the national debt, and that would be bad! The guy who got in Clinton’s face about limiting spending, and then rolled over completely while his favorite compassionate conservative spent money like a drunken sailor. Greenspan is vastly over-rated. His performance during the Bush administration clearly demonstrates he is just another partisan hack. Besides, anybody at his age who still likes Ayn Rand is clearly a fool.

Posted by: fafner1 on September 17, 2007 at 2:01 PM | PERMALINK

Get back in there and that sell that book, Al!
SELL! SELL! SELL!

Posted by: ny patriot on September 17, 2007 at 2:06 PM | PERMALINK

"What is Greenspan talking about?"

Sounds as though, there were some lively menage, er weekend parties by Alan, Andrea and Kissinger. Has Herr Doktor written all over it.

Posted by: thethirdPaul on September 17, 2007 at 2:23 PM | PERMALINK

I'm glad that I didn't have lunch yet.

Posted by: Disputo on September 17, 2007 at 2:43 PM | PERMALINK

bobbob has it right, if we wanted Iraqi oil we could just buy it. The problems were limiting the amount Saddam could put on the world market and his plan to sell his oil in euros. We have succeeded on both fronts.

Posted by: Th on September 17, 2007 at 2:58 PM | PERMALINK

bobbob has it right, if we wanted Iraqi oil we could just buy it.

Of course we can always buy oil on the spot market. The point is gaining control of oil by locking it up in long term contracts.

Posted by: Disputo on September 17, 2007 at 3:14 PM | PERMALINK

"if we wanted Iraqi oil we could just buy it."

That's true. Oil only has value to Iraq if they can sell it. But the point of invading is not to assure access to Iraqi oil (we'd have access in any case on the oil market), but who gets the profits. By invading, we can ensure that American and British companies get the profits, not the Hussein government or oil companies from other countries who were negotiating deals with Hussein's government.


Posted by: McCord on September 17, 2007 at 3:43 PM | PERMALINK

Apparently Greenspan suddenly stopped being a genius again when he stepped back off the party line.

Posted by: harry on September 17, 2007 at 4:10 PM | PERMALINK

When Alan Keyes announced, it occurred to me that this is the first race in which he's not bringing down the credibility of the GOP compared to the other Republican candidates.

My first reaction was that the ILGOP is so fricking racist that 1) they couldn't find a white Republican to run against Obama who wouldn't end up looking like a racist, and 2) they couldn't find a single African-American in IL who they felt comfortable with, and so they just decided to give up and tried to turn the whole thing into a circus.

Posted by: Disputo on September 17, 2007 at 4:31 PM | PERMALINK

Actually, I was talking about Keyes announcing for the 2008 presidential race, but looking back, I didn't write that so good. I meant: compared to the guys vying for the GOP nomination right now, Keyes seems only slightly crazier than most.

Still, your points are correct. Almost all of Illinois had the same reaction in 2004.

Posted by: shortstop on September 17, 2007 at 4:43 PM | PERMALINK

Mr. Greenspan is polishing his reputation

Didn't someone post a comment here recently that there is Southern saying that you can't polish a turd?

Posted by: Bob M on September 17, 2007 at 5:28 PM | PERMALINK

Twenty old style Saddam dollars to anyone who can rationally explain why

a) Greenspan thought that Saddam would hurt the US by dramatically increasing the price of oil and charging oil in euros rather than dollars (US)

b) Could Saddam change the price of oil all by himself?

c) what is wrong with charging euros instead of dollars (US) ?

Posted by: Dr WU-the last of the big time thinkers on September 17, 2007 at 5:46 PM | PERMALINK

People on the left have gotten really excited about Greenspan's comment but my first impression was that he was not being critical in any way of the fact that this war is about oil.

Posted by: e. nonee moose on September 17, 2007 at 5:59 PM | PERMALINK

An oil market priced in Euros rather than $s establishes a reference currency. Iran threatened to do the same thing.

Posted by: TJM on September 17, 2007 at 6:21 PM | PERMALINK

Dr. Wu; the fear was not that Saddam would drive up the price of oil but that he would flood the oil markets driving down the price which hurts the oil companies and Saudi Arabia. He could have influenced the global price if he changed production significantly, but it was not likely he had that ability. If oil was priced in euros instead of dollars, the dollar slide against the euro would have added to the increase in oil prices to the US. According to Grandfather, the dollar slid 53% against the euro since Saddam announced he was changing currencies. That would have made for a pretty hefty price increase in dollars even if world prices of oil did not change at all in euros.

Invading a country is a pretty expensive way to win oil contracts. I can't imagine there is a very good return on investment.

Posted by: Th on September 17, 2007 at 6:46 PM | PERMALINK

Greenspan said it himself.

The Bush administration said "we don't talk about the oil" - that is what Greenspan said on 60 Minutes.

Only Greenspan talked about the oil - that was a big no-no - but didn't we expect that Greenspan would back off. This administration doesn't play around with traiters. Did Greenspan really want the Joe Wilson, Valeria Plame, Hans Blix and France treatment?

Warner's leaving, Hagel's leaving, Chafee anounced today he's leaving the GOP and you know that the word is out - the GOP is completely corrupt but it'll take more that denouncing the party to save anything of the Repug Party if indeed there is anything worth saving.

These men know the party is corrupt and that is WHY they are leaving. I wonder if David Brooks and NRO will figure it out - and who cares if they don't? Not that they have been writing for conservative politics anymore - it all Bushism defense completely irregardless of what conservative voters think. It's all about the Bush.

Posted by: Me_again on September 17, 2007 at 9:18 PM | PERMALINK

"Invading a country is a pretty expensive way to win oil contracts. I can't imagine there is a very good return on investment."

It's a fantastic investment when you (the super wealthy owners and executives of oil and war related businesses) reap the profits both from the war and from the oil contracts but they (the American and Iraqi people 99.9+% of whom aren't you) pay for the war.

I frowned pretty strongly at that "the best president of the last 30 years was a democrat, and the worst presidents and congresses were republican, but oh yea, I'll be voting for whoever the republican is on the ballot" line.

Reminds me of my grandmother's complaints about the US collecting information on citizens (though she actually had no idea how far it has gone already, she was worried about national ID cards, which are ridiculously trivial compared to the commercial db's they have been accessing since 2001) saying it was just like nazi germany yet enthusiastically voting for bush in 2004.

Their brains are fossilized in their skulls. Information goes in and occasionally even gets stored but has no effect on behavior.

It's the kind of thing that makes me think that a maximum voting age might seriously be a good idea. If I am like these people at 65+ I shouldn't be allowed to vote!

Posted by: jefff on September 17, 2007 at 9:39 PM | PERMALINK

Over 30 posts and still none of the usual resident right-wingers stepping forward to defend someone whose economic spruiking provided a veneer of credibility for the Administration's crackpot ideas. Greenspan deserves to live long enough to see his economic reputation ripped to tatters in both the professional and the public media.

Posted by: number6 on September 17, 2007 at 11:05 PM | PERMALINK

Greenspan certainly is the master of doublespeak. It wasn't about oil, but it is about oil? It wasn't about WMDs but they thought it was?

Here he says "My view of the second Gulf War was that getting Saddam out of there was very important, but had nothing to do with weapons of mass destruction, it had to do with oil". http://blogs.wsj.com/economics/2007/09/17/qa-greenspan-on-bubbles-saddam-cheney-and-bernanke/

Whoa! It had NOTHING to do with WMDs? Then Bush lied didn't he?

Nope because here we read, (Matt Lauer) "Liberal bloggers are having a field day with this. They're saying, 'Here's a Republican saying the administration lied about the reason to go to war.' Is that a spin? Is that fair?"

(Greenspan) "It's utterly unfair."

...

(Lauer)"The administration went to war saying it was all about weapons of mass destruction."

(Greenspan) "I believe that they believed that. I'm not saying that they believed it was about oil". http://rawstory.com//news/2007/Greenspan_Lefty_bloggers_totally_unfair_with_0917.html


Oh what a tangled web we weave...

Posted by: Tangled Web on September 17, 2007 at 11:42 PM | PERMALINK

By 2003 Saddam had not threatened anyone for 12 years, was weakened by sanctions, and contained. He was a punched-out palooka.

Posted by: bob h on September 18, 2007 at 7:27 AM | PERMALINK

"And anyway, what's up with the Straits of Hormuz stuff? That's a standard wingnut talking point for taking out Iran, but Saddam hadn't had even the remotest ability to screw up the Straits since at least 1991. What is Greenspan talking about?"

The problem back in 2000+ was that the sanctions regime was rapidly collapsing. That meant that Saddam would soon be free to sell all his oil and spend as much as he wanted on his wmd programs and building up his military in general.

If Iraq came in to possession of nukes, there was no telling what might happen. That is why even Clinton and Gore had called for regime change.

Posted by: bobo the chimp on September 18, 2007 at 11:50 AM | PERMALINK
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