I am not sure about this. Do other people find this a bit far-fetched?
Certainly stocks associated with the military-industrial complex are likely
to prosper but I would think that the touting of the NMD system has as much
or more to do with this as the specific instance of bombing Iraq.
Cheers, Ken Hanly
How war and globalization support American business... as billions
flow to oil and defense companies:
Bombing of Baghdad staves off financial uncertainty
By Michel Chossudovsky
Professor of Economics, University of Ottawa, author of The
Globalization of Poverty, second edition, Common Courage Press,
2001.
This article can also be consulted at Emperors-clothes.com at
http://emperors-clothes.com/articles/choss/bombs.htm
On Friday February 16th, spurred on by the dot-com implosion
and the climactic downfall of Nortel Networks Corporation, the
World's leader in fiber optics, the value of high tech stocks
plummeted on Wall Street in turbulent trading. The NASDAQ stock
index declined by more than five percent to a record low.
But it could have been much worse. Did the bombing of
Baghdad pull Wall Street out of danger? In fact it did more than
that. It put billions of dollars into the deep pockets of Defense
contractors and oil companies?
WARNINGS FROM WALL STREET
In the days leading up to the February 16 near-meltdown, stock
market analysts had warned of a worst case scenario. High tech
stocks were heavily overvalued.
But that day at 1.00pm, a few hours before trading closed on the
New York Stock Exchange, American and British warplanes
bombed Baghdad in what the Pentagon described as "a routine
mission of self-defense."
Routine self defense? The US media applauded. And on Wall
Street, brokers did more than applaud; they gasped with relief. For
in a cruel irony, the bombing raids had saved the day. As one
British financial analyst noted with contempt:
"..the American market didn't collapse. It didn't plummet. Indeed,
the fall was less than one per cent. This was a routine day - unless
you happened to live in Baghdad."1
Meanwhile, with telecom and computer stocks in the doldrums,
financial and defense analysts had been working hard to rebuild
"confidence in the stock market":
"Makers of the nation's warfare technologies along with Wall
Street analysts and industry consultants spent a week bragging
about new opportunities and the likelihood of changes to Pentagon
policy that would foster growth after 15 years of strained budgets.
What's more, defense and aerospace stocks ended on a high note,
climbing amid a broad market slump as 24 U.S. and British
warplanes struck Iraqi military targets using various long-range,
precision-guided weapons."2
In the last hours of trading on the 16th, defense stocks spiraled;
oil and energy stocks boomed following news that Iraq's oil industry
might be impaired. The value of Exxon, Chevron and Texaco
stocks shot up. Harken Energy Corporation -- in which George W.
Bush served as company director and corporate consultant before
entering politics -- gained 5.4% by the end of trading. Harken
Energy happens to be a key player in Colombian oil (with a multi-
billion dollar US military aid package under "Plan Colombia" on
hand to protect its investments). Harken Energy CEO Mikel
Faulkner is a former business associate of George W.
FINANCIAL MELTDOWN
The February 16th meltdown was already being predicted at the
close of trading on the 15th. Business analysts on the evening
news said that a major "correction" in the value of high tech stocks
was "inevitable". The financial press had previously hinted that the
US defense industry could also take a beating if the new Bush
Administration were to curtail military procurement.
A few days earlier, Lockheed Martin (LMT) -- America's largest
defense contractor -- had announced major cuts in its satellite
division due to "flat demand" in the commercial satellite market. A
company spokesman had reassured Wall Street that Lockheed
"was moving in the right direction" by shifting financial resources
out of its troubled commercial (that is, civilian) undertakings into the
lucrative production of advanced weapon systems.
For weeks, defense contractors had been actively lobbying the
new Administration. On Tuesday February 12th, President Bush
promised to hike defense spending based on "a comprehensive
review of the military." According to The New York Times (12
February 2001), George W. Bush said:
"He planned to break with Pentagon orthodoxy and create 'a
new architecture for the defense of America and our allies,'
investing in new technologies and weapons systems rather than
making 'marginal improvements' for systems in which America's
arms industry has invested billions of dollars."
On the 14th, he confirmed "a $2.6 billion increase in the
Pentagon's budget as a 'down payment' on new-weapons research
and development."3
And two days later Baghdad was bombed by the US Air Force.
The raids were a signal to Wall Street that Bush's promise "to
revitalize the nation's defense" should be taken seriously. Had the
Bush administration decided otherwise, Lockheed Martin's listing on
the New York Stock exchange might well have experienced the
same fate as that of Nortel. In fact, while (civilian) high tech stocks
(quoted on the NASDAQ) had plummeted, Lockheed Martin stocks
ended the day up a comfortable 1.6%.
Meanwhile, the F-22 Raptor high tech fighter jet was already
scheduled --pending the Administration's final approval -- to be
assembled (at an estimated cost of $60 billion) at Lockheed Martin
Marietta's plant in Georgia:
"Defense Secretary Donald Rumsfeld was an F-22 advocate
before joining the Bush administration, and Lockheed officials said
Thursday [February 15th , one day before the raids on Baghdad]
they are confident Rumsfeld will support the technologically
advanced plane." 4
The message to financial markets was crystal clear: the bear
market was hitting "civilian" high tech stocks including Nortel, Dell
Computers and Hewlett Packard; but defense industry listings --
including Boeing, General Dynamics, Lockheed Martin, Northrop-
Grumman and Raytheon (the "Big Five" defense contractors) --
remained "safe" and "promising." (i.e. "a good place to put your
money"). Wall Street analysts had concluded -- without batting an
eyelid - that "with the Bush administration's focus on defense, there
is optimism the industry is on target to outperform the market again
this year."5
The new buzz phrase on Wall Street is that -- despite the slow-
down of the US economy -- defense stocks constitute "a safe-
haven shelter from the dot-com implosion". More generally, the
assumptions underlying Bush's new defense budget are considered
"good for business": no wonder pension funds and institutional
investors are busy changing the structure of their portfolios!
NEW WORLD 'ORDER'
War and globalization go hand in hand. Militarisation is an
integral part of the neoliberal agenda. The build-up of the defense
budget contributes to beefing up the "Big Five" US defense
contractors, while denying financial resources to civilian programs
including health, education and social welfare not to mention the
rebuilding of America's deteriorating urban infrastructure. Whereas
defense production has spiraled, recession has hit the sectors of
the US economy which produce "civilian" consumer goods and
services. The U.S. domestic economy increasingly hinges on the
military industrial complex and the sale of luxury goods (travel,
leisure, luxury cars, etc.) And this satisfies the financial
establishment irrespective of the needs of ordinary people.
The bombing raids on Baghdad were certainly intended to
intimidate countries committed to ending the sanctions on Iraq. But
more generally, "missile diplomacy" is applied to enforce American
political and economic domination under the guise of what is
euphemistically called "the free market."
"The hidden hand of the market will never work without a hidden
fist McDonald's cannot flourish without McDonnell Douglas, the
designer of the F-15."6
And America's war machine is used to support the conquest of
new economic frontiers. In the Middle East, the Balkans and
Central Asia, the US military is positioning itself directly and through
NATO not only to support the interests of the Anglo-American oil
conglomerates, which are working hand in glove with defense
contractors in lucrative joint ventures, but to further colonize the
former Soviet Union and Asian countries. Meanwhile, spiraling
defense spending pours wealth into the military industrial complex
at the expense of civilian needs.
NOTES
1 Sunday Mail, London, 18 February 2001.
2 Reuters, 16 February 2001. About 80 warplanes were involved, of
which 24 were strike aircraft. See Financial Times, 17 February
2001.
3 "Bush Vows To Modernize Military After Pentagon Review Is
Completed", The Bulletin's Frontrunner, 14 February 2001.
4 Dave Hirschman, "F-22's Fate to be Decided Next Month; Not on
hold: Bush's Defense Review won't delay Judgment on Raptor",
The Atlanta Journal and Constitution, 16 February 2001.
5 The Nightly Business Report, NPR, 19 February 2001.
6 Thomas L. Friedman, "A Manifesto for the Fast World," 'New York
Times Magazine', Mar. 28, 1999.)
