Economic Fallout From a War in Iraq: String in the Tail

President Saddam Hussein of Iraq may have another weapon of mass destruction in his armoury – the economic effects of war. Changes in oil prices and the cost of conflict might just produce regime change in Saudi Arabia and recession for us all.

The World Today
7 minute READ

Critics of military intervention in Iraq sometimes allege that the dispute is really about oil. The response is usually defensive, along the lines that troops will be sent to risk their lives for more high-minded objectives like upholding the authority of the United Nations in relation to weapons of mass destruction and human rights.

Yet the potential conflict must be, in significant part, about oil and economics. It is neither irrational nor unworthy to put them at the centre of the debate.

British Foreign Secretary Jack Straw has acknowledged as much. The futures of Iraq and its Gulf neighbours are important, because of oil, in a way that those of Uzbekistan, Zimbabwe and Peru are not.

One doesn’t have to be a conspiracy theorist to note that US net oil imports of around 10.6 million barrels per day are at their highest level ever and increasingly from the Gulf. Government projections show them growing substantially.

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