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STEAMROLLERING WORLD OPINION the US has begun bombardment of Iraq on the expiry of the sham ultimatum. While the war is ostensibly because Iraq would not disarm, as agreed after Gulf War I, and hence poses a threat to the US and its allies, the US President, Mr George Bush, has marshalled other arguments too for his aggression: That Saddam Hussein is a brutal dictator and the Iraqi people need to be liberated, and that there is evidence linking Saddam Hussein to Al Qaeda and other terrorist groups. Even if one concedes that Iraq must disarm and that the Iraqi people may be better off without Mr Saddam Hussein, should the US have taken on this task without UN mandate? Surely many other countries are not democratic or have leaders who oppress their citizens, but no such forceful regime change has been attempted. And unlike last time, Mr Saddam Hussein has not invaded any country now. Yet, the US has gone ahead to attack Iraq, willing even to strain the NATO alliance, especially the relations with France and Germany, and virtually render the UN redundant.

Now that the inevitable has happened, what of the world economy? Every thing depends on the impact on crude prices, especially if in the worst case scenario Iraq destroys its oil facilities or damages those in neighbouring Saudi Arabia and Kuwait. A spike in oil prices to, say, $40 a barrel, could severely strain the world economy. A reasonably rapid military victory could mean a quick fallback in oil prices and even a boost to the global economy, but this may not happen, considering Mr Bush's goal of a regime change in Baghdad. A long-drawn affair would knock at least two percentage points off the expected 3 per cent world growth projected, says the IMF head, Dr Horst Koehler.

Oil is the key in other ways too. For, one dominant school of thought is that Mr Bush's main reason to attack is Iraq's oil. Given current rates of economic growth and energy usage, especially in Asia, oil is the world's most strategically valuable commodity. At 112 billion barrels, Iraq has the second largest reserve after Saudi Arabia. Control of Iraqi oil will increase the US' economic clout and political power. The extraction of oil and trade is also closely linked to the continued dominance of the dollar as the international reserve currency. Iraqi oil is denominated in euros, and other oil producing countries such as Iran may also want to move away from the greenback. If this happens, and some European producers like Norway join the Eurozone, the cosy oil-dollar nexus would be threatened; and with it, the supremacy of the dollar as the international store of value. Indeed, Mr Bush is gambling big.

Anyway, will Mr Bush's prescription of regime change really make a difference for Iraq or take him ahead in his war against terror? For, the removal of a strong hand often gives rise to the same kind of forces, as happened in Iran after the overthrow of the Shah regime. Also, the attack on Iraq could raise the winds of fundamentalist terrorism that is already swirling around the globe; the US may bear the brunt of this offensive. For the rest of the world, including India, which have little or no clout to influence the unfolding events, the only hope is a quick end to the war and that their limited preparation — for instance, some oil stockpiling by India — will see them through.

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