Confessions of Repentant Hawk

One hardly hears much about Iraq’s impact on the US Economy and Equity markets. Since tonight’s Presidential debate will focus on Foreign Affairs and National Security, a review of our past analyses on Iraq and its likely impact on the markets is past due. Iraq is the Wild Card: It impacts the cost of oil, America’s standing in the world. It has been undercutting the sense of stability that is necessary for global trade.

Three months ago I wrote: “The Neo-Conservatives hawks who pressed for the invasion of Iraq failed to create an adequate strategy for a post-war period. This created an opportunity for insurgents to cause havoc and mayhem; With the handover to the Iraqi Ruling Council a few days early, the planners have gotten one right for a change. The insurgents will be denied an opening to thwart sovereignty for Iraq.”

That marginally positive view turned out to be far too optimistic. As I wrote that in June, the CIA was reaching the exact opposite conclusion: conditions in Iraq were bad and deteriorating rapidly. Subsequent events have shown the CIA’s assessment was far more prescient than my own.

My original analysis of the invasion was based on the potentially positive domino effects. As we wrote in March 2003, it was never about WMD or Hussein as a ‘threat’ to the region; Rather, it was all about eliminating potential negatives: Saudi oil fields falling into the hands of Fundamentalists; Our securing Pakistani Nukes, and lastly, brokering a deal between the Israelis and Palestinians. I am chastened by how inaccurate those expectations were.

None of these goals have been accomplished. While the potential benefits of intervention in the Middle East were significant, the incompetent execution of the post-war period raised new problems. It has become a debacle. Further, I find it unconscionable that the basic military lessons of Viet Nam – give the Pentagon what its military planners ask for, and do not micro manage the war – were mostly ignored.

The first of three presidential Debates are tonight, and it will be about Foreign Affairs. Everyone expects Iraq and terrorism to be topic A. From the incumbent, I’d like to hear a frank assessment of what went wrong, why the best minds from the Pentagon and State Department were not listened to, and what will change if he wins a second term. From the challenger, I’d like to hear specifics as to how he can extricate us from this quagmire.

I do not expect much on either count . . .

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