Wednesday, 19 March 2008

It's the War, Stupid!

US Economic Crisis: Bush blames sub-prime loans, experts blame the war

Switzerland promptly gave the diplomatic finger to Washington following criticism over Bern's recently signed gas deal with Iran, saying it did not need US permission to make decisions about its foreign policy.

Responding to accusations from the Bush administration and Israel that the US$42 billion agreement violated the spirit (but obviously not the substance) of the third round of United Nations sanctions against Tehran over its nuclear program, Foreign Minister Micheline Calmy-Rey said Switzerland was an independent country and quite capable of making its own strategic decisions.

"It was refreshing to hear somebody, particularly a European country, speak of their national sovereignty and right to act as an independent nation," legal affairs analyst Edward Spannaus told PressTV News.

"In this case," he said, "the Swiss Foreign Minister said they were successfully mixing diplomacy and business, and that this policy of engagement was part of their dialogue with Iran on human rights. Now, not only is that a more sensible policy than what is being carried out by the Bush administration, but it is their right to do that."

Attempting to influence countries to follow the "spirit" of the sanctions, as well as the sanctions themselves, effectively adds an extra layer of penalties on the target nation, penalties not approved by the Security Council.

"I think the US can only add as much pressure on these countries as they are willing to accept," Spannaus said. "There are legal experts in the US who say the deal does not even violate US sanctions law which allows for these types of contracts. So therefore, the State Department here has to resort to talking about the spirit of the law."

Other political and economic analysts believe the United States should not even be in the sanctions business.

"Sanctions are an act of war, an act of imperialism," said Professor Paul Sheldon Foote of California State University. "America should not be imposing sanctions. America's political leaders say this is a country for capitalism, for free enterprise and for democracy. Sanctions should play no part in that. We had a Republican candidate for president, Ron Paul, who strongly denounced sanctions. Any true Republican and any true capitalist will have no part of sanctions."

And according to Spannaus, there are plenty of people in the United States who agree.

"There is not a lot of enthusiasm in the United States for these types of sanctions," he said.

"There is a group in Congress called the Dialogue Congress which favors engagement. There are business groups opposed to sanctions. We've got sanctions on dozens of countries around the world. It is a foolish policy, it doesn't work. Business groups here say we are only cutting off our nose to spite our face."

Sanctions, an instrument designed to exert economic hardship on a target nation, frequently have the opposite effect. It often hardens the target country's resolve to resist what they usually perceive as bullying by more powerful or arrogant nations.

Spannaus cited Cuba as a classic example of the self defeating nature of sanctions.

"For almost 50 years the United States has had a trade embargo on Cuba. It hasn't changed Cuba, it has been totally unsuccessful."

However, the sanctions have cost the United States investment opportunities in the island. Those investments would have generated revenues and jobs. With the US economy "in sharp decline" according to Treasury Secretary Henry Paulson, those are revenues and jobs that the United States sorely needs.

President Bush, for his part, has narrowed his vision and puts all the blame on the slump in the housing market.

"For certain it is a challenging time for our economy," he said with disarming understatement, "You know that, I know that, a lot of Americans understand that. In the short run the strains on the economy have been caused by the turmoil in the housing market which required focused and decisive action. And that is exactly what the Federal Government is doing."

With many economists predicting the United States is heading for a long and hard recession, a softening of the sanctions regimes would attract much needed revenue through trade. It would also, as the Swiss model shows, open up channels for dialogue.

Dialogue, they say, could well have prevented the muddle headed decision to attack and occupy Iraq, five years ago this month.

"There are some economists like Stiglitz who are talking about the ultimate cost of the war in trillions of dollars," Foote told PressTV News, "The supporters of the administration try to say this is an inexpensive war and the real problem [with the economy] has been the mortgage market. In any case, Americans need to be smart enough to understand that the war benefits only a small number of defense contractors and vested interests and is hurting the livelihoods, the income and jobs of everyone else. This war needs to cease."

Foote doesn't lay the blame for the current economic crisis solely on the war in Iraq, but did put it at the top of his list.

"The US economy has had problems now for many years and for many reasons. The war is a reason. The breakdowns in control of corporations, the bad lending in the financial markets are others. There are a lot of reasons," he said.

But his recipe for averting financial meltdown also began with the war.

"What needs to be done is ending the war in Iraq and spending that money on infrastructure, investing in new kinds of industries," he said, "That will lead to long term competitive jobs for people in America."

George Bush inherited a budget and current account surplus when he came into office. The next tenant of 1600 Pennsylvania Avenue will inherit at least two ongoing wars, a mind boggling national debt, and an economy in an utter shambles.

And unfortunately, Foote expressed no confidence anything will change for the better next January.

"Well the problem is that if the next one elected is a Democrat, they're going to want bigger spending and even more deficits," he said. "And if John McCain is elected, he wants endless wars and occupation of countries for the next hundred years. We don't have a good scenario with any of the current leading candidates for President."

Original pubulication: Ohmynews International,

Reproduced on: American Chronicle, The Democratic Underground, OpEdNews,

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