Economic Surge to Reduce the Importance of Politics

Fareed Zakaria is one of the few pundits worth reading on the issue of Iraq, Afghanistan and Middle Eastern violence. In his article, "The Surge That Might Work" (it appears with different titles in the WaPo and Newsweek) he argues that the economy is what needs a surge as it can dampen the violence and politics by constructively occupying the time of the population.

From the article:

We are now fighting a war intelligently in iraq.The only problem is, it's the last war, not the present one. The United States has gambled all its efforts on a troop surge that tackles the conflict that defined Iraq from 2003 to 2005-the insurgency-rather than the civil war now raging across the country. Worse, in trying to solve yesterday's problem we are exacerbating today's. In Baghdad, Shiite militias have melted away.

Almost all U.S. military operations are now directed against Sunni insurgents. If those are successful, the picture could look less violent in six months, but it will be a dangerous stasis. A senior U.S. military officer, who is not allowed to speak on the record on these matters, said to me, "If we continue down the path we're on, the Sunnis in Iraq will throw their lot behind Al Qaeda, and the Sunni majority in the Arab world will believe that we helped in the killing and cleansing of their brethren in Iraq. ..."

Zakaria prefers that money be injected into some of the old state industries that were junked in a fit of market ideology when the CPA came into power. The instant removal of them from the local economy had far reaching effects; Fakaria cites the state controlled fertilizer plant shutdowns decimating local agriculture.

Unemployment in non-Kurdish Iraq remains close to 50 percent, which helps explain why so many young men are joining gangs, militias and insurgent groups. For the moment at least, democracy in Iraq has sharpened the country's divisions. Capitalism and commerce can make them less relevant. That is the lesson of many conflict-ridden countries from Northern Ireland to Mozambique to Vietnam.

To Fakaria prosperity dampens the importance of politics, and consequently the need or desire to pursue politics through violence.

Of the original 193 state enterprises, 143 could be restarted soon, says Brinkley. Management and workers are desperate to get jobs. The problem is money. Brinkley points out that his next target, a ceramics factory in Ramadi, is only waiting for two generators before it can reopen. They cost $1 million each. But funds for this purpose are hard to find. Washington has pledged more than $18 billion to fund "reconstruction" in Iraq but will not appropriate a cent to start up state-owned Iraqi companies. The Iraqi government has billions in oil revenue of its own but is so dysfunctional that it cannot move a new project through the system. So the factory is idle. A major global consulting firm has reviewed Iraq's state-owned enterprises and estimated that it would cost $100 million to restart all of them and employ more than 150,000 Iraqis-$100 million. That's as much money as the American military will spend in Iraq in the next 12 hours.

Just to add to the fiscal mismanagement from the current Administration - is this article. Money handed out off the back of trucks with no accountability. Unbelievable.

cam
Permalink, Economic Surge to Reduce the Importance of Politics, Feb 2007, cam
Guy: Priming the pump: Although it is probably politically unpopular to say so in the modern era (and it somewhat flouts the current \"free trade in words but not in reality\" regime), I think there is something to be said for \"priming the pump\" of economies in certain circumstances through directed subsidy.

I probably wouldn\'t advocate it without a good deal of thought in Australia, but certainly the strong growth of the Asian economies in the latter half of last century was partly a result of some pump-priming by the governments in question.

Australia\'s solar power / photovoltaic industry is probably the best example I can think of off the top of my head where maybe a bit of a hand from the government might be in the nation\'s (and arguably the world\'s) interests.

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