The Costs of Coalition Building
By Sam Vaknin
Author of "Malignant Self Love - Narcissism Revisited"

Foreign aid, foreign trade and foreign direct investment (FDI) have
become weapons of mass persuasion, deployed in the building of both
the pro-war, pro-American coalition of the willing and the French-
led counter "coalition of the squealing".

By now it is clear that the United States will have to bear the bulk
of the direct costs of the actual fighting, optimistically pegged at
c. $200 billion. The previous skirmish in Iraq in 1991 consumed $80
billion in 2002 terms - nine tenths of which were shelled out by
grateful allies, such as Saudi Arabia and Japan.

Even so, the USA had to forgive $7 billion of Egyptian debt.
According to the General Accounting Office, another $3 billion were
parceled at the time among Turkey, Israel and other collaborators,
partly in the form of donations of surplus materiel and partly in
subsidized military sales.

This time around, old and newfound friends - such as Jordan, an
erstwhile staunch supporter of Saddam Hussein - are likely to carve
up c. $10 billion between them, says the Atlanta Journal-
Constitution. Jordan alone has demanded $1 billion.

According to the Knight Ridder Newspapers, in February 2003, an
Israeli delegation has requested an extra $4-5 billion in military
aid over the next 2-3 years plus $8 billion in loan guarantees.
Israel, the largest American foreign and military aid recipient, is
already collecting c. $3 billion annually. It is followed by Egypt
with $1.3 billion a year - another rumored beneficiary of $1 billion
in American largesse.

Turkey stands to receive c. $6 billion for making itself available
(however reluctantly, belatedly, and fitfully) as staging grounds
for the forces attacking Iraq. Another $20 billion in loan
guarantees and $1 billion in Saudi and Kuwaiti oil have been mooted.

In the thick of the tough bargaining, with Turkey demurring and
refusing to grant the USA access to its territory, the International
Monetary Fund - thought by many to be the long arm of US foreign
policy - suddenly halted the disbursement of money under a two years
old standby arrangement with the impoverished country.

It implausibly claimed to have just unearthed breaches of the
agreement by the Turkish authorities. This systemic non-compliance
was being meticulously chronicled - and scrupulously ignored by the
IMF - for well over a year now by both indigenous and foreign media
alike.

Days after a common statement in support of the American stance, the
IMF clinched a standby arrangement with Macedonia, the first in two
turbulent years. On the same day, Bulgaria received glowing - and
counterfactual - reviews from yet another IMF mission, clearing the
way for the release of a tranche of $36 million out of a loan of
$330 million. Bulgaria has also received $130 million in direct US
aid between 2001-3, mainly through the Support for East European
Democracy (SEED) program.

But the IMF is only one tool in the administration's shed. President
Bush has increased America's foreign aid by an unprecedented 50
percent between 2003-6 to $15 billion. A similar amount was made
available between 2003-8 to tackle AIDS, mainly in Africa.

Half this increase was ploughed into a Millennium Challenge Account.
It will benefit countries committed to democracy, free trade, good
governance, purging corruption and nurturing the private sector. By
2005, the Account contained close to $5 billion and is being
replenished annually to maintain this level.

This expensive charm offensive was intended to lure and neutralize
the natural constituencies of the pacifistic camp: non government
organizations, activists, development experts, developing countries
and international organizations.

As the war drew nearer, the E10 - the elected members of the
Security Council - also cashed in their chips.

The United States has softened its position on trade tariffs in its
negotiations of a free trade agreement with Chile. Immigration
regulations were relaxed to allow in more Mexican seasonal workers.
Chile received $2 million in military aid and Mexico $44 million in
development finance.

US companies cooperated with Angola on the development of offshore
oilfields in the politically contentious exclave of Cabinda. Guinea
and Cameroon absorbed dollops of development aid. Currently, Angola
receives c. $19 million in development assistance.

Cameroon already benefits from military training and surplus US arms
under the Excess Defense Articles (EDA) program as well as enjoying
trade benefits in the framework of the Africa Growth and Opportunity
Act. Guinea gets c. $26 million in economic aid annually plus $3
million in military grants and trade concessions.

The United States has also pledged to cause Iraq to pay its
outstanding debts, mainly to countries in Central and East Europe,
notably to Russia and Bulgaria. Iraq owes the Russian Federation
alone close to $9 billion. Some of the Russian contracts with the
Iraqi oil industry, thought to be worth dozens of billions of
dollars, may even be honored by the victors, promised the Bush
administration. It reneged on both promises. Debt relief reduced
Iraq's debt by 90% and all Saddam Hussein era contracts were
vitiated.

Thus, the outlays on warfare are likely be dwarfed by the price tag
of the avaricious constituents of president Bush's ramshackle
coalition. New York Times columnist Paul Krugman aptly christened
this mass bribery, "The Martial Plan". Quoting "some observers", he
wrote:

"The administration has turned the regular foreign aid budget into a
tool of war diplomacy. Small countries that currently have seats on
the U.N. Security Council have suddenly received favorable treatment
for aid requests, in an obvious attempt to influence their votes.
Cynics say that the 'coalition of the willing' President Bush spoke
of turns out to be a 'coalition of the bought off' instead'."

But this is nothing new. When Yemen cast its vote against a November
1990 United Nations Security Council resolution authorizing the use
of force to evict Iraq from Kuwait - the United states scratched
$700 million in aid to the renegade country over the following
decade.

Nor is the United States famous for keeping its antebellum promises.

Turkey complains that the USA has still to honor its aid commitments
made prior to the first Gulf War. Hence its insistence on written
guarantees, signed by the president himself. Similarly, vigorous
pledges to the contrary aside, the Bush administration has allocated
a pittance to the reconstruction of Afghanistan in its budgets - and
only after it is prompted to by an astounded Congress.

Macedonia hasn't been paid in full for NATO's presence on its soil
during the Kosovo conflict in 1999. Though it enjoyed $1 billion in
forgiven debt and some cash, Pakistan is still waiting for quotas on
its textiles to be eased, based on an agreement it reached with the
Bush administration prior to the campaign to oust the Taliban.

Congress is a convenient scapegoat. Asked whether Turkey could rely
on a further dose of American undertakings, Richard Boucher, a State
Department spokesman, responded truthfully: "I think everybody is
familiar with our congressional process."

Yet, the USA, despite all its shortcomings, is the only game in
town. The European Union cannot be thought of as an alternative
benefactor.

Even when it promotes the rare coherent foreign policy regarding the
Middle East, the European Union is no match to America's pecuniary
determination and well-honed pragmatism. In 2002, EU spending within
the Euro-Mediterranean Partnership amounted to a meager $700 million.

The EU signed association agreements with some countries in the
region and in North Africa. The "Barcelona Process", launched in
1995, is supposed to culminate by 2010 in a free trade zone
incorporating the European Union, Algeria, Morocco, Tunisia, Egypt,
Israel, Jordan, Lebanon, the Palestinian Authority, Syria and
Turkey. Libya has an observer status and Cyprus and Malta have
joined the EU in the meantime.

According to the International Trade Monitor, published by the
Theodore Goddard law firm, the Agadir Agreement, the first intra-
Mediterranean free trade compact, was concluded In March 2003
between Egypt, Jordan, Morocco and Tunisia. It is a clear
achievement of the EU.

The European Union signed a Cooperation Agreement with Yemen and, in
1989, with the Gulf Cooperation Council, comprising Saudi Arabia,
Kuwait, Bahrain, Qatar, United Arab Emirates and Oman. A more
comprehensive free trade agreement covering goods, services,
government procurement and intellectual property rights is in the
works. The GCC has recently established a customs union as well.

Despite the acrimony over Iran's not-so-civilian nuclear program,
the EU may soon ink a similar set of treaties with Iran with which
the EU has a balanced trade position - c. $7 billion of imports
versus a little less in exports.

The EU's annual imports from Iraq - at c. $4 billion - are more than
50 percent higher than they were prior to Iraq's invasion of Kuwait
in 1990. It purchases more than one quarter of Iraq's exports. The
EU exports to Iraq close to $2 billion worth of goods, far less than
it did in the 1980s, but still a considerable value and one fifth of
the country's imports. EU aid to Iraq since 1991 exceeds $300
million.

But Europe's emphasis on trade and regional integration as foreign
policy instruments in the Mediterranean is largely impracticable.
America's cash is far more effective. Charlene Barshefsky, the
former United States trade representative from 1997 to 2001,
explained why in an opinion piece in the New York Times:

"The Middle East ... has more trade barriers than any other part of
the world. Muslim countries in the region trade less with one
another than do African countries, and much less than do Asian,
Latin American or European countries. This reflects both high trade
barriers ... and the deep isolation Iran, Iraq and Libya have
brought on themselves through violence and support for terrorist
groups ... 8 of (the region's) 11 largest economies remain outside
the WTO."

Moreover, in typical EU fashion, the Europeans benefit from their
relationships in the region disproportionately.

Bilateral EU-GCC trade, for instance, amounts to a respectable $50
billion annually - but European investment in the region declined
precipitously from $3 billion in 1999 to half that in 2000. The GCC,
on its part, has been consistently investing $4-5 billion annually
in the EU economies.

It also runs an annual trade deficit of c. $9 billion with the EU.
Destitute Yemen alone imports $600 million from the EU and exports a
meager $100 million to it. The imbalance is partly attributable to
European non-tariff trade barriers such as sanitary regulations and
to EU-wide export subsidies.

Nor does European development aid compensate for the EU's egregious
trade protectionism. Since 1978, the EU has ploughed only $210
million into Yemen's economy, for instance. A third of this amount
was in the form of food support. The EU is providing only one fifth
of the total donor assistance to the country.

In the meantime, the USA is busy signing trade agreements with all
and sundry, subverting what little leverage the EU could have
possessed. In the footsteps of a free trade agreement with Israel,
America has concluded one with Jordan in 2000. The kingdom's exports
to the United States responded by soaring from $16 million in 1998
to c. $400 million in 2002. Washington negotiated a similar deal
with Morocco. It is usurping the EU's role on its own turf. Who can
blame French president Jacques Chirac for blowing his lid?


Sam Vaknin ( http://samvak.tripod.com ) is the author of Malignant
Self Love - Narcissism Revisited and After the Rain - How the West
Lost the East. He served as a columnist for Global Politician,
Central Europe Review, PopMatters, Bellaonline, and eBookWeb, a
United Press International (UPI) Senior Business Correspondent, and
the editor of mental health and Central East Europe categories in
The Open Directory and Suite101.

Until recently, he served as the Economic Advisor to the Government
of Macedonia.

Visit Sam's Web site at http://samvak.tripod.com