How little Iraq matters

The American occupation of Iraq is going badly, 22 Americans have been killed in two helicopter ambushes, and no end is in sight to guerrilla warfare and its human toll.

Many Indians believe that will sink the political chances of re-election of President Bush in the US and Prime Minister Tony Blair in Britain . In fact events in the last week have shown how surprisingly strong Bush and Blair are.

Blair has been castigated for exaggerating the threat of weapons of mass destruction in Iraq , and has even been accused of driving weapons expert David Kelly to suicide.

Yet far from benefiting from this, the Tories have just sacked their leader Iain Duncan Smith because he has no earthly chance of beating Blair in the next election.

Indeed, the Tories fear that under Duncan Smith they would lose several marginal seats to the Liberal Democrats (in a recent by-election the Liberal Democrats thrashed both Labour and the Tories). So, the Tories have replaced Smith with Michael Howard, a largely forgotten veteran of the Thatcher Cabinet.

They do not believe Howard can beat Blair, but think he will lose less badly than Smith. Even this is far from certain.

According to a MORI poll, the Tory vote has fallen from 35 per cent to 32 per cent after Duncan Smiths exit, the vote of the Liberal Democrats has risen from 21 percent to 25 per cent and the Labour Party remains well ahead with 38 per cent. So much for the supposedly fatal wounding of Blair by Iraq .

What about Bush? He has been hurt by the continuing fiasco in Iraq , and rising death toll. But in the US , as elsewhere, all politics is ultimately local, and foreign affairs matter rather little.

If you look at local politics in the US , Bush has just had a splendid week. Republican candidates ousted Democratic incumbents in elections to the governorship of Mississippi and Kentucky .

This follows the victory of Republican film actor Arnold Schwarznegger in California . Republicans now control 29 states (out of 50) accounting for 60 per cent of the population.

This is no guarantee that Bush will win re-election. But it does suggest that Iraqi travails, have not created any anti-Bush wave so far.

Indeed, the spin doctors of the White House seem to have been so successful with false propaganda that 70 per cent of Americans believe that Saddam Hussein was behind the attack on the World Trade Centre.

In 1992, George Bush Sr. was beaten by Bill Clinton, who campaigned on the now-famous theme it\’s the economy, stupid. Although Bush Sr had won the Gulf war, the country had suffered a recession in 1991.

The economy was recovering fast in 1992, the year of the election, but employment was not: no new jobs are created in the early stages of a recovery. Democrats capitalised on unemployment by distributing car stickers with the slogan, Saddam Hussein has kept his job. Have you?

This drives home how little foreign affairs matter in US elections. Iraq will not be central to the next US election, regardless of whether things improve or deteriorate for the US occupation.. Once again, it\’s the economy, stupid.

The situation right now is that the US economy has lost 2.7 million jobs since Bush came to power, the biggest job loss presided over by any President since the Great Depression. The recession ended in 2001, but employment has not picked up. If another year goes by with no new jobs, Bush\’s re-election will be in doubt.

Yet the Republicans are optimistic on this front. The US economy is recovering with a bang after the second Gulf War, and grew at a phenomenal rate of 7.8 per cent in the latest quarter.

To put this figure in perspective, it is as much as four years of GNP for Belgium , or 1.5 years for Poland . Bush can claim credit for this: his tax cuts have helped stoke the economic recovery.

This is also helping take the sting out of the criticism, which is indubitably correct, that his tax cuts will benefit the rich the most.

The 7.8 per cent growth estimate for July-September may well be revised downwards, and nobody expects such a breakneck rate to continue. Most economists predict that the US economy will average 4 per cent growth in the next four quarters leading up to the next Presidential election. Non-farm jobs grew by 125,000 in September and 126,000 in October.

Still, that reduced unemployment only marginally, from 6.1 per cent to 6.0 per cent. Whether job creation will be sufficiently buoyant to ensure a Bush victory, it is too early to say. But the outlook is not bad at all.

Personally, I would love to see Bush beaten. But I try not to let my personal preferences influence my judgment. It gives me no pleasure to say so, but right now the chances are that Bush will win a second term, even if the mess in Iraq continues.

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