The week when Bush lost the world

03 October 2003
This is a bad time for the US administration's campaign to win the world over to its Iraq project. The UN has announced it is withdrawing most of its international staff from Baghdad, contradicting Washington's view that security in the city was improving.

The Coalition Provisional Authority (CPA) is running out of money, principally because oil exports are lower than forecast. The authority, now experiencing a rapid turnover of senior staff, is a lame duck that will cease to exist in less than a year. Increasingly, it is a liability in the US' attempts to win contributions of troops and money for the occupation of Iraq.

In Dubai, Treasury Secretary John Snow's defence of the massive US budget deficit, in part a reflection of heavy spending in Iraq, was coolly received at the IMF/World Bank meetings. In Washington, CPA administrator Paul Bremer was subjected to critical grillings by senators and congressmen about the White House's request for $87,000 million in additional spending for Iraq and Afghanistan in the fiscal year starting this week.

The donors' conference in Madrid on 24 October may prove to be an anti-climax too. Doubts about the legality of the CPA's role, the legitimacy of the governing council (GC) and American intentions have so far deterred firm financial commitments from the sources expected to be the most generous: notably the cash-rich Gulf states.

Questions are being asked about the validity of the economic policy statement delivered by Iraqi's interim finance minister in Dubai on 21 September. Interim Iraqi ministers themselves admit the statement has no immediate practical applicability and acknowledge it is unclear and confusing. It has even been attacked by members of the GC, the closest Iraq has to a representative decision-making body. Pointedly, IMF managing director Horst Koehler told the world press in Dubai on 24 September that he had not been given a copy. This is strange since the IMF has played a key role with the World Bank in drafting economic studies about Iraq for the Madrid conference.

And in the UN, President Bush's address to the general assembly was greeted with little enthusiasm by a body that a year ago had warmly applauded his declaration that the US would after all turn to the UN to force Saddam Hussein to comply with Security Council resolutions.

Even the US' closest ally, UK Prime Minister Tony Blair, has failed to rally to Bush's support. Blair, who was not at the general assembly, has been seriously damaged by his decision to support the White House's attack on Iraq without UN support. He has lost two cabinet ministers through resignation. Blair's reputation has suffered: opinion in the UK has turned against the Labour Party and the Hutton inquiry into the death of UK scientist David Kelly has been excruciating.

The final days of September may have been the week that Bush finally lost the world. The US is on its own in Iraq. Only a decisive change in approach, which would implicitly acknowledge that America made a mistake - in timing at least - when it launched the Iraq war, will quickly bridge the gap with the rest of the UN Security Council and produce a new Iraq resolution.

The haunted look on the face of the world's most powerful man as he delivered his UN address suggests another concern. That is the fear that Bush may be about to lose the American people as well, and with it - in November 2004 - his presidency.

I was chatting to IMF managing director Horst Koehler following the finale of the IMF/World Bank meetings in Dubai, and I mentioned that I thought it had been one of the best-organised events I had ever attended. 'I have been to 15 meetings,' said Koehler. 'And this has been the best.' It seems significant that the former head of the European Bank for Reconstruction & Development, who has been with the fund for almost four of a five-year term, should single this particular event out for praise.

The poor performance of the UN during the Iraq crisis has turned the spotlight back on institutions like the IMF and the World Bank. There have been few major crises in Koehler's time at the IMF, in contrast to the 13-year reign of Michel Camdessus, the patrician Frenchman he replaced. And he may not have the same experience in the rough-and-tumble of international politics as the beleaguered UN Secretary-General Kofi Annan. But the ability of economists like Koehler to shape the future of countries is beginning to eclipse the role of the world's supranational body.

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