The Magazine

A Foreign Policy Worth Paying For

From the August 18, 2003 issue: But the Bush administration doesn't have a plan for doing so.

Aug 18, 2003, Vol. 8, No. 46 • By IRWIN M. STELZER
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WHEN GEORGE BUSH unfurled his banner of "compassionate conservatism," most critics predicted it would not be long before the conservatism overwhelmed the compassion. They were wrong. Instead, the compassion has overwhelmed the conservatism.

President Bush's compassion now impels him to give tax refunds to people who pay no taxes; free prescription drugs to Bill Gates and Warren Buffet, whose children will no longer be burdened with inheritance taxes; subsidies to already-rich farmers to produce outrageously expensive ethanol to add to gasoline; free insurance protection to utilities that own nuclear plants; tariff protection to inefficient steel companies; and subsidies to auto and coal companies to do research they would otherwise have to pay for out of their sales receipts. It almost--but not quite--makes one pine for the days of that cheapskate, Bill Clinton.

But fear not. In the Micawberesque world of Bushonomics, these are all free lunches: Taxpayers will simultaneously get these and other benefits, and tax refunds, and tax reductions to boot. Never mind that the due date on untold billions in unfunded liabilities lurks just around the corner.

Better still, we are on the verge of getting a restructured Middle East consisting of vibrant, prosperous democracies, and on the cheap. How is this latest feat of economic legerdemain to be financed? Why, with Iraqi oil, of course.

Both Deputy Defense Secretary Paul Wolfowitz and Office of Management and Budget director Josh Bolten managed straight faces when they told a congressional committee that it is impossible to estimate the cost of our nation-building adventure in Iraq.

Of course, if one believes that there is no price too high to pay for a peaceful Middle East--a perfectly credible position--then one need not bother with anything so trivial as estimating the cost of attaining that objective. But, at least so far, the administration has declined to take such a position. Indeed, when former White House economist Larry Lindsey suggested that achieving an enduring peace in the Middle East might be worth the expenditure of 1 percent of our GDP, or about $100 billion, he ran into a firestorm of criticism from White House pols who believe the American people will back any war so long as it is costless.

It turns out that Lindsey may have been a wild-eyed optimist. The administration reckons that the postwar effort to restore security (read: pay our troops) and provide some semblance of public services to Iraq is costing nearly $5 billion every month--and due to rise. And that includes virtually nothing for major rebuilding of the Saddam-shattered infrastructure. When civil administrator Paul Bremer came to Washington to explain to the White House and Congress that a muscular foreign policy isn't to be had on the cheap, and that merely repairing the infrastructure would cost "maybe $100 billion; it's a lot of money," he was sent back to Baghdad with his begging bowl empty. Just get all that Iraqi oil onto the market, he was told, and our foreign policy would be self-financing.

Enter Philip Carroll, our man assigned to Iraq's oil ministry (rumored to have resigned last week). He is guessing that by investing about $2 billion, Iraq can get its exports up to 2.5 million barrels of oil a day by the end of 2004, after satisfying domestic demand, which is estimated to be about 500,000 barrels daily. (All of these figures are estimates: Some say domestic consumption is only 350,000 barrels a day.) That target is about in line with what Iraq claims its prewar output was, but many experts consider it optimistic, given the inability of coalition forces to prevent the looting of computers, the hijacking of the cars and buses that oil field workers need to get to work, and the sabotaging of electric power supplies.

But let's be wildly optimistic and assume that Carroll hits his target, and that profits from Iraqi oil sales come to $20 a barrel. A bit of arithmetic shows that those sales would yield well under $20 billion a year, about enough to cover current outlays on our troops for four months, or to provide funds needed for only one of the many reconstruction tasks, the construction of adequate water-treatment facilities. But certainly not enough to cover reconstruction needs and the $30-$40 billion Iraq needs "to rehabilitate active wells and develop new fields," according to a study prepared for the Council on Foreign Relations and the James A. Baker III Institute for Public Policy at Rice University.