Would a Full-Blown Iraqi Civil War Really Be that Bad for the United States? By Ivan Eland Price of Liberty

July 16, 2007

As Congress begins to consider the Iraq War funding bill, defections by important Republican Senators have caused a White House debate on whether to try to get ahead of the onrushing train to leave Iraq. In the Bush administration’s surreal parallel universe, this “post surge redeployment”—normal people would call this a withdrawal after a failed attempt at escalation—would consist of halving the number of U.S. combat forces policing dangerous areas in Iraq and letting the remainder conduct the less dangerous missions of guarding Iraq’s borders, training Iraqi security forces, and keeping al Qaeda off balance in the country. While this reduced footprint would be intended to slow Iraq’s downward spiral and allow the United States to keep coveted military bases in Iraq to protect Persian Gulf oil, it is not a viable long-term U.S. strategy.

Iraq is rapidly becoming unglued, and the war weary American public—as well as the presidential candidates of both parties pandering to them—is likely to demand a complete and rapid withdrawal of all forces from Iraq. This policy is the correct one and its ill effects have been vastly overstated.

Even the worst case scenario after a total U.S. withdrawal—a full blown Iraqi civil war that drags in neighboring states—would be bad for Iraqis, but it would have only minimal effects on U.S. security. Frankly, no one would care what happened in Iraq if it weren’t for its large oil deposits. Yet Iraq’s oil production has never recovered from decades of wars and grinding economic sanctions. Even if one of the U.S. motivations for invading Iraq was to replace military bases being lost in Saudi Arabia, the United States has successfully “defended” oil before in the region without having permanent bases for land and air forces—in 1991, after Saddam Hussein invaded Kuwait. In that instance, the United States brought in forces from the United States. In the end, the U.S. government obtained permanent bases only after the threats to the oil from the Soviet Union and Saddam Hussein had collapsed or greatly diminished. Besides, bases in Iraq set up to project U.S. power in the Gulf region are of greatly reduced value if they are constantly under assault from unfriendly Sunni and Shi’ite militias fighting in a civil war.

Many economists would even question whether the U.S. government needed to “defend” oil using military forces. Oil is a valuable commodity and large amounts of money can be made selling it. Gulf nations do not have much else to sell to generate revenue—between 65 to 95 percent of their exports come from oil. Even an Islamist regime, such as Iran, has not shut off oil exports, because it needs money to promote its radical agenda. Thus, using expensive U.S. military forces to defend oil flows that are not in jeopardy seems foolhardy.

Although oil is not likely to be cut off, however, it could go up in price if instability, such as a full-blown civil war in the Gulf, results. Yet recent history shows that industrial economies are more resilient to increases in oil prices than is commonly believed. According to Donald L. Losman, an economist at the National Defense University in Washington, D.C., from the fourth quarter of 1998 until the third quarter of 2000, Germany experienced a crude oil price rise of 211 percent but continued to experience economic growth with declining unemployment and inflation. In 2006 and 2007, the United States experienced significant increases in the price of oil but similarly maintained economic growth with low inflation. Thus, even much higher oil prices caused by any instability in Saudi Arabia, for example, could be weathered.

Of course, the main cause of instability there would likely be Islamist outrage from the U.S. invasion and occupation in Iraq and U.S. support for the corrupt Saudi regime. The United States could end that support but still buy Saudi oil. Thus, if the Saudi monarchy were overthrown, the new regime probably would not have as much hatred for the United States as did the Islamist Iranian regime when it took power. Moreover, any new Sunni Islamist regime in Saudi Arabia, like the Shi’ite one in Iran, would have the same incentives to sell oil into the world market. Similarly, if the Iranians gained control over southern Iraqi oil in any Iraqi civil war, they would likely keep selling it.

If Persian Gulf oil will flow despite any full-blown Iraqi civil war, what about Israel’s security? Although instability in the area is not good for Israel, having its primary enemies—the Sunni Arab states and Shi’ite Iran—fight over Iraq might not be all that bad for the Jewish state. Besides, Israel’s security is ultimately guaranteed by its wealth and its 200 to 400 nuclear weapons.

What if Turkey invaded Iraqi Kurdistan to prevent that area from being used to inflame its own Kurdish population? Although this development would be bad for the Iraqi Kurds, it would have little effect on U.S. security. Kurdistan is a small area in a remote region of the world.

In sum, if the myth is properly debunked that instability in the Persian Gulf will disrupt Western economies, even an all-out civil war in Iraq doesn’t look that bad for U.S. security. In reality, the U.S. government’s primary goal seems to be to use military force to control the flow of oil to other nations, such as China and Europe. The Bush administration should give the U.S. taxpayer a break and abandon this expensive and imperial goal. In fact, it may be forced to do so as the clamor for a complete U.S. withdrawal from Iraq rises.

Charles V. Peña is Senior Fellow at the Independent Institute as well as a senior fellow with the Coalition for a Realistic Foreign Policy, senior fellow with the George Washington University Homeland Security Policy Institute, and an adviser on the Straus Military Reform Project.

William Ratliff is Adjunct Fellow at the Independent Institute, Research Fellow at Stanford University's Hoover Institution, and a frequent writer on Chinese and Cuban foreign policies.

Ivan Eland is Director of the Center on Peace & Liberty at The Independent Institute and Assistant Editor of The Independent Review. Dr. Eland is a graduate of Iowa State University and received an M.B.A. in applied economics and Ph.D. in national security policy from George Washington University. He has been Director of Defense Policy Studies at the Cato Institute, Principal Defense Analyst at the Congressional Budget Office, Evaluator-in-Charge (national security and intelligence) for the U.S. General Accounting Office, and Investigator for the House Foreign Affairs Committee. Full Biography and Recent Publications

Jonathan J. Bean is Research Fellow at the Independent Institute, Professor of History at Southern Illinois University, and editor of the forthcoming book, Race and Liberty: The Classical Liberal Tradition of Civil Rights.

Anthony Gregory is a Research Analyst at The Independent Institute. He earned his bachelor's degree in American history from the University of California at Berkeley and gave the undergraduate history commencement speech in 2003. In addition to his work with the Independent Institute, he regularly writes for numerous news and commentary web sites, including LewRockwell.com, Future of Freedom Foundation, and the Rational Review.
Full Biography and Recent Publications

Dominick T. Armentano is professor emeritus in economics at the University of Hartford (Connecticut) and a research fellow at The Independent Institute in Oakland, Calif. He is author of Antitrust & Monopoly (Independent Institute, 1998).

Alvaro Vargas Llosa is director of The Center on Global Prosperity at The Independent Institute. He is a native of Peru and received his B.S.C. in international history from the London School of Economics. He is widely published and has lectured on world economic and political issues including at the Mont Pelerin Society, Naumann Foundation (Germany), FAES Foundation (Spain), Brazilian Institute of Business Studies, Fundación Libertad (Argentina), CEDICE Foundation (Venezuela), Florida International University, and the Ecuadorian Chamber of Commerce. He is the author of the Independent Institute books The Che Guevara Myth and Liberty for Latin America. Full biography and recent publications.

Pierre Lemieux is an economist and co-director of the Economics and Liberty Research Group at the Université du Québec en Outaouais and a Research Fellow at The Independent Institute in Oakland, California.

Alexander Tabarrok is research director at The Independent Institute, associate professor of economics at George Mason University, editor of the Independent Institute books, Entrepreneurial Economics, The Voluntary City (with D. Beito and P. Gordon), and Changing the Guard: Private Prisons and the Control of Crime.

Robert Higgs is Senior Fellow in Political Economy at The Independent Institute, author of Against Leviathan and Crisis and Leviathan, and editor of the scholarly quarterly journal, The Independent Review. Click here for a bio on Dr. Higgs, the noted economist and historian.

William Marina is Research Fellow at the Independent Institute in Oakland, Calif., and Professor Emeritus of History at Florida Atlantic University.

David T. Beito is a Research Fellow at The Independent Institute, Associate Professor of History at the University of Alabama, and co-editor of the book, The Voluntary City: Choice, Community and Civil Society.

William Marina and David T. Beito belong to "Liberty and Power," a group blog at the History News Network.

For further articles and studies, see the Center on Peace & Liberty and OnPower.org.

Nicolas Heidorn is a public policy intern at The Independent Institute in Oakland, California.

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