Exclusive Q&A With Jude Wanniski Of Polyconomics, Inc. Re: Iraq

It is hard to find a person of influence with a neutral opinion of Jude Wanniski, Founder and President Of Polyconomics, Inc. The 60-something year old Roman Catholic political economist is simultaneously one of the most controversial and important thinkers to have burst onto the American political scene in the last few decades. Credited as both the leading apostle of supply-side economics and the most ardent defender of "lost-causes" (which he half-jokingly credits to the Biblical root of his first name) the brilliant, politically-incorrect former associate editor of The Wall St. Journal, finds himself alternately in and out of the good graces of the American political and economic establishment. At no time has this been more true than today.

Due to his prescient analysis of the U.S. stock market and American electorate, parallel to his friendship with the Nation Of Islam's Minister Louis Farrakhan and a boisterous yet persuasive defense of Iraq; Jude Wanniski, at this hour, finds himself to be a small political version of the irresistible force and the immovable object. The power elite just can't seem to live with him or without him.

Referring to himself as "radioactive," with sobriety and good humor, the author of the classic, The Way The World Works, finds himself simultaneously publicly scorned and privately sought-after by an ecclectic mix of some of the most influential figures in Washington D.C. and New York City, who through one route or another, make their way to www.polyconomics.com - the popular website of the sometimes-audacious, sometimes-shy, but always prolific writer.

BlackElectorate.com publisher, Cedric Muhammad, recently conducted a rare and wide-ranging exclusive interview with Jude Wanniski - his friend of nearly six years. The two discussed the political economist's unique worldview, as it relates to the subject that is on everybody's mind and lips, to one degree or another - the probability of war between the United States and Iraq; the roots of the conflict; and its economic and geopolitical impact and consequences.


Cedric Muhammad: What does the term you use - the "Saddam Stock Market" mean?

Jude Wanniski: It means that for the last two months, the prospect of war with Iraq, or peace, has overwhelmed the other forces that bear on Wall Street. The financial press has been noting "concern" about Iraq, but I've been alone at Polyconomics in noting the dramatic moves up and down in the Dow, Nasdaq and S&P500 with optimism and pessimism on the war issue. The market hit bottom in early October when, for the first time, President Bush said he would include "diplomacy" as a means of getting Saddam Hussein to "disarm." As he made concessions to the Senate Democrats on using the United Nations, instead of by-passing the UN and bombing straightaway, the market continued to regain the 1000 points it had lost in September and the first days of October as Mr. Bush seemed determined to go it alone and have a war. A war without UN support would, I'm positive, cause a crash of the stock market unlike any we have seen in our lives. Businessmen around the world would pull in their horns, preparing for an outburst of Islamic terrorism coming not from governments, but from individuals acting on their own, or with Al Qaeda, as suicidal vigilantes. As long as we act with the support of the Security Council, there will be little risk of increased political terror aimed at disrupting commerce here.

Cedric Muhammad: Are we still in a "Saddam Stock Market?"

Jude Wanniski: Now that the weapons inspectors are back in Iraq, there is less risk of war. We did see the market lose 175 points on Nov. 26, the day before the inspectors went back in. There were widespread reports Iraq was already causing difficulties. But when Hans Blix, the chief inspector, announced the first day of inspections were without incident - that Iraq was cooperating - the market gained 255 points. The chances of war anytime soon are now being seen as minimal.

Cedric Muhammad: Does Iraq have weapons of mass destruction?

Jude Wanniski: Absolutely not. The only thing we assume they have are materials that could be used to develop chemical or biological weapons. These are for the most part "dual-use" materials, chemicals which are used everywhere in the world for peaceful purposes, but which can also be diverted to making weapons. But it is extremely difficult to develop "weapons" out of that material. Iraq tried and failed in the 1980's to do so, but did not succeed. The US Army, I'm told, does not even consider chemical weapons "mass destructive," because they have such a small kill rate - 2% I'm told by the Army War College. It is also tricky, if you spray out a gas and the wind shifts it back on your own troops. Iraq used mustard gas against Iran, which we may have helped supply them with because we did not want Iran to win. But the recent CIA report indicates it was not as deadly as had been assumed and Iraq stopped using it in the last several months of the war because they found it ineffective compared to conventional weapons.

The only real "weapon of mass destruction" is a nuclear weapon and everyone agrees Iraq has not developed a nuke, and really never came close to developing one. It never got out of the laboratory stage in the years when Iraq was actually trying to develop a nuke to match Israel's arsenal of nukes. President Bush continues to say that Saddam Hussein is trying to get a nuke, but if he made the slightest move in that direction, we would be able to tell from out spy satellites. That's because he would have to have a much bigger complex than a little laboratory. And the amount of electric power he would need to run a weapons plant would be so massive that it could not be hidden.

Cedric Muhammad: The news media reports Iraq was maybe months away from developing a nuke in the 1980's. They say Hans Blix, who was then with the International Atomic Energy Agency (IAEA), was fooled and declared Iraq "nuclear free." Couldn't he be "fooled" again?

Jude Wanniski: Iraq did have a clandestine nuke program in the 1980's, but it was a total failure. The idea it was only "months away" from a nuke came from an Iraqi nuclear scientist, a defector named Hamza, who has since been discredited. Hamza himself has admitted he had no such knowledge, but had read about this in the western media after he defected in 1994. The Iraqis spent tons of money to produce the required amount of highly-enriched uranium (HEU) to make even one small nuke - several hundred pounds, I'm advised - and we know they only managed a few grams. Blix was not responsible back in those days for anything other than checking to see Iraq was not diverting the fissile material it had acquired as a signator to the Non-Proliferation Treaty. In the current inspection process, Blix has all the tools he needs to make sure there is no clandestine program. The only way Saddam could get a nuke is if some other country gives him one.

Cedric Muhammad: If not to prevent the development and proliferation of weapons of mass destruction what is the goal of U.S. Foreign policy toward Iraq, from Bush 41 to Clinton to Bush 43?

Jude Wanniski: There are several different interests involved, kind of an anti-Iraq coalition. The primary one, going back to 1988 when Iraq defeated Iran in the Gulf War, has been the Israeli Lobby, which never expected little Iraq to defeat Iran, three times its size in population. Israel feels safe with the only nuke in the Middle East and has worried that Iraq would get one and balance Israel's. The estimates are that Israel has 200 nuke warheads, but who knows? If the Palestinian issue was resolved peacefully, I really think all the hoorah about Iraq would immediately end, as the Israelis would no longer worry about a threat from Iraq and would seek to open commercial relations with it. Before the 1967 war, Cedric, there were 200,000 Jews living in Iraq, which had been the most secular of all the Arab states. Baghdad was the most cosmopolitian capital in all the Arab world. My Iraqi friends tell me there are still Jewish families living in Baghdad and that there are at least two functioning synagogues. You would never find that kind of religious freedom in Saudi Arabia or some of the other Islamic states. And it is always a surprise when people find that Tariq Aziz, the deputy prime minister of Iraq and its most recognized spokesman, is a Catholic.

Even if the Palestinian problem were resolved peacefully, once and for all, there would still be hawks in our political circles who would like to set up a puppet state in Iraq, with a government ready to allow our military to use it to police the region. Paul Wolfowitz, the second in command at the Pentagon, is of this mind. And of course there is Iraq's great oil wealth, 115 billion barrels of proven reserves, second in the world only to Saudi Arabia's. The hawks would not get very far with their arguments, though, if there was peace in Israel.

Cedric Muhammad: Who really determines the Bush administration policy on Iraq? Is it done by committee or does President Bush alternate between two opposing views like that of say, Colin Powell on one side and Paul Wolfowitz on the other?

Jude Wanniski: When I listen to the President discuss this topic, I hear several different strands of competing thought come out of his mouth, as I did in his press conference on the 7th of November. Most of the ideas on Iraq and the Middle East have come from the hawks he has assembled around him, but I can also sense he has been listening to the doves. He hasn't really reconciled the contradictions in his own mind, which is why he sounds scrambled at times. Wolfowitz is just one fellow on the Bush team and not the most influential, in the sense that Richard Perle is the more important political player. Wolfowitz is the more influential theoretician, a man who has a grand vision of the United States as the Ruler of the World, the Ultimate Imperium. It is not a laughable vision, which is why it can hold so much sway among the right wingers in the Republican Party. I think it is a dangerous vision if it continues to look down its nose on the Islamic world. It was because of that concern that I publicly warned in 1998 that the terrorists would be back to bring down the Twin Towers.

Cedric Muhammad: You deal with the Iraqi officials in this country. What has been the nature of those contacts and what have you learned?

Jude Wanniski: I first met with an official Iraqi in 1997 when I called the UN Mission and asked for a meeting with then ambassador Nizar Hamdoon. I'd come to the conclusion that I could not believe anything I read in our newspapers about Iraq, because it had become so demonized. And I was very concerned that the Clinton administration was using it as a punching bag to divert attention away from the President's impeachment problems. Remember "wagging the dog"? So after a few discussions with Hamdoon, I offered to be devil's advocate for the Saddam regime. We've had a very good relationship....He is back in Baghdad, more or less retired with a heart ailment similar to Vice President Cheney's. But the net result of those early contacts is that I am now trusted to a high degree by the Iraqi government as an "honest broker." I still e-mail to Hamdoon in Baghdad and I talk to the UN Mission with regularity. The new UN ambassador from Iraq, Mohammad Aldouri, is a good fellow, rather sweet and gentle, a lawyer who spent most of his career professing human rights causes inside Iraq and as his government's representative to the Human Rights Convention in Switzerland.

I have Al Douri's cell phone number and e-mail address and communicate with him as much as anyone. And I do not keep this a secret. I've told all my contacts in the White House and on Capitol Hill that I have this relationship with Iraq and that I do not mind if the FBI is listening in. In fact I told the Ambassador that I am so anxious to get my message out, that I wish the FBI would listen in and broadcast the essence of our conversations. What I have learned is that I can trust the Iraqis to tell me the truth, as they see the truth, because every time I check them out with authoritative sources, I find out they have told me the truth. They insist Saddam never "gassed his own people in 1988," for example, and the most authoritative sources at the CIA, DIA and Army War College back them up. Yet President Bush still accepts the genocide assertions that basically come out of Human Rights Watch and were played up earlier this year in a New Yorker article that President Bush and Vice President Cheney swallowed. Saddam may be a brutal dictator, but he never committed genocide. If I thought he were capable of genocide, a la Hitler, I would not be able to play's devil's advocate. That's why I have spent countless hours on that one issue.

Cedric Muhammad: How do you grade the mainstream media's coverage of Iraq? What is the root of the slant, bias and inaccurate nature of some of the coverage? Could you provide some striking examples?

Jude Wanniski: Good question. The central problem is that Saddam was so thoroughly demonized because of the invasion of Kuwait plus Israel's interest in putting Iraq into the sleeping arms of a puppet regime that mainstream politicians are scared to death of even raising a pinky, much less a hand in his defense. I've written a number of times that I feel sorry for President Bush, because the stuff I see him say on public television about Saddam and Iraq and THE THREAT is so much baloney. Do I think he believes all that baloney? Yes, he does. And his father still believes Saddam Hussein tried to assassinate him in Kuwait City in 1993, which is nonsense. This never happened, Cedric. But there is so much junk floating around in the media it isn't surprising that both Bushes may still believe in that story. The LAST person in the world who would have benefitted from the assassination of Bush Sr was Saddam Hussein. The attempt in early 1993 was supposedly made in Kuwait shortly after President Clinton took office and was openly discussing the possibility of settling matters with Baghdad peacefully. The hawks generated the story with the help of the Kuwaiti monarchy to discourage Clinton, and that succeeded. Read the investigative report of Seymour Hersh in the December 5, 1993 New Yorker, "Case Not Closed," and you will see how flimsy the evidence was.

Hersh and the periodical press has more leeway than the daily media. Everyday journalists cannot get involved in these matters. Once the nation's central powers have decided, a journalist who sees things differently will find his/her career disintegrating. The pressure to conform is intense, and understandable. It takes leadership, by which I mean political leadership. A member of the Senate or the House stepping out and saying "Wait one minute," Mr.President. "What you have just said about Saddam "gassing his own people" is not supported by the best evidence of the United States government." Once that happens, the press corps is free to run down the story, without individual reporters fearing they might get fired and have to support their families flipping hamburgers or working for a PR firm.

Cedric Muhammad: How are the Middle East Peace Process and the problem with Iraq intertwined?

Jude Wanniski: The Likud Party does not want a Palestinian state. It has, almost unanimously, voted against a Palestinian state. These are the representatives of the Old Zionists, who believe God promised them this Land, this Holy Land, and the Palestinians should get the heck out. The parallel in the United States would be the 19th century idea of "Manifest Destiny," that it was clearly God's will that we occupy all the land between the Atlantic and the Pacific. The indigenous population, the native Indians, would be taken care of on reservations. This is practically how the Likudniks view the Palestinians, who are now resisting more than they ever have. For the Likudniks to continue to occupy the Palestinian West Bank and Gaza, they seem to think it would be of great benefit if Uncle Sam occupied Iraq indefinitely. The Arab world is committed to a Palestinian state. So is Iraq.

Cedric Muhammad:What in your view will be the impact on the price of oil if Iraq were invaded? Short and long-term?

Jude Wanniski: If Iraq is invaded without the support of the United Nations and the Arab League, the price of oil will go sky high, the Dow Jones Industrial Average will go into the netherworld, and it will take at least 20 years to go and sort things out. If the global recession is deep enough, then of course the price of oil will decline into the netherworld, as there will be no buyers.

Cedric Muhammad: Do you think that the U.S. should look for alternative fuel sources in order to lessen its dependency on oil from the Middle East? What do you think of nuclear, hydro and solar power?

Jude Wanniski: There is a thousand times more oil in the ground than has been discovered, maybe 10,000 times. Asia and Africa have scarcely been explored. The US should encourage all the countries of the world to give their citizens the mineral rights to their sub-surface property as we are the only country that allows this. If we are not going to move in this direction, because the major US oil companies do not want more oil, we are faced with the Greenies who do not want nuclear power. I'm not opposed to nuclear power and think it should be used wherever it makes economic sense. Instead of burying "nuclear waste" in Nevada it should be reprocessed for use in nuclear power plants. Solar power is not close to being economically viable.

Cedric Muhammad: What confluence of events, personalities, institutions and policies, in your view, are necessary to resolving the U.S. Iraq problem?

Jude Wanniski: The UN inspectors have to be left alone to inspect, and then report to the UN. That will only solve a piece of the problem The other piece has to be a recognition in Israel that it is in the interests of the people of Israel to be on good terms with Baghdad. Saddam Hussein has repeatedly indicated he would accept any terms for a Palestinian state that the Palestinians accepted.

Cedric Muhammad: What do you think we can expect over the next 4 months?

Jude Wanniski: Lots of controversy regarding the weapons inspections and the sanctions on Iraq and more terrorism directed at Israel and its interests by Al Qaeda - unless the upcoming Israeli elections produce a more serious effort than we have seen thus far from Ariel Sharon. If Iraq turns out as well as I think it will, Secretary of State Colin Powell will be headed for the Nobel Peace Prize. Read Bob Woodward's new book, "Bush at War," and you will see how gifted this man is, and how he will soon have the backing he needs to get Israel back on the track it was on before Sharon was elected last year. President Bush must know how important Powell is to him and how essential it is that Powell's creative diplomacy continue to dominate the warriors at the Pentagon. I'm optimistic.

All BlackElectorate.com viewers can e-mail Jude Wanniski directly at: jwanniski@polyconomics.com

Tuesday, December 3, 2002

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