AMERICA’s elder statesman of finance, Alan Greenspan, has shaken the White House by declaring that the prime motive for the war in Iraq was oil.
In his long-awaited memoir, to be published tomorrow, Greenspan, a Republican whose 18-year tenure as head of the US Federal Reserve was widely admired, will also deliver a stinging critique of President George W Bush’s economic policies.
However, it is his view on the motive for the 2003 Iraq invasion that is likely to provoke the most controversy. “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil,” he says.
Greenspan, 81, is understood to believe that Saddam Hussein posed a threat to the security of oil supplies in the Middle East
Britain and America have always insisted the war had nothing to do with oil. Bush said the aim was to disarm Iraq of weapons of mass destruction and end Saddam’s support for terrorism.
Fed veteran Alan Greenspan lambasts George W Bush on economy
By Graham Paterson
09/16/07 “The Times” — – THE highly respected former chairman of the Federal Reserve, Alan Greenspan, launches a harshly critical attack on President George W Bush’s economic competence in his memoir published tomorrow.
While his declaration that America’s prime motive for the Iraq war was oil will set off one political storm, his onslaught against Republican fiscal mismanagement will cause another, just as the economy becomes a big issue in the primary election campaign.
Greenspan’s 531-page book will do little to restore faith in the Bush administration’s claims of economic proficiency at a time when the markets are deeply unsettled. He has harsh words for Bush, the vice-president, Dick Cheney, and the Republicans over their big spending and lack of financial discipline. They are contrasted with former president Bill Clinton, whom Greenspan clearly admires.
He writes that Bush’s failure to curb spending was “a major mistake” and that Republican congressmen were “feeding at the trough”. “The Republicans in Congress lost their way,” he says. “They swapped principle for power. They ended up with neither. They deserved to lose [the 2006 congressional election].”
He sums up his deep disappointment with Bush. “My biggest frustration remained the president’s unwillingness to wield his veto against out-of-control spending,” Greenspan writes. “Not exercising the veto power became a hallmark of the Bush presidency . . . To my mind, Bush’s collaborate-don’t-confront approach was a major mistake.”
In contrast Greenspan, an adviser to Gordon Brown who describes his own politics as “lifelong libertarian Republican”, called Clinton’s 1993 economic plan “an act of political courage”.
When Bush and Cheney won the 2000 election, Greenspan writes, “I thought we had a golden opportunity to advance the ideals of effective, fiscally conservative government and free markets . . . I was soon to see my old friends veer off in unexpected directions.”
He rejects the Republican mantra that “deficits don’t matter” and says that in the Bush-Cheney White House “little value was placed on rigorous economic policy debate or the weighing of long-term consequences”.
Greenspan, 81, who retired last year after serving six presidents either as chairman of the Fed or as an economic adviser, makes no secret of his admiration for Clinton but believes he was undermined by the scandal of his relationship with the intern Monica Lewinsky.
“President Clinton’s old-fashioned attitude towards debt might have had a more lasting effect on the nation’s priorities. Instead, his influence was diluted by the uproar about Monica Lewinsky.”
When the news first broke, Greenspan discloses, “I was incredulous. ‘There is no way these stories could be correct,’ I told my friends. ‘No way’.”
Later, when the affair was confirmed, Greenspan says, “I wondered how the president could take such a risk. It seemed so alien to the Bill Clinton I knew, and made me feel disappointed and sad.”
He has sharp views on other presidents he has known, judging that there is something abnormal about anyone willing to undergo what it takes to get the job. Gerald Ford, he writes, “was as close to normal as you get in a president, but he was never elected”.
The Watergate tapes, he says, show Richard Nixon as “an extremely smart man who is sadly paranoid, misanthropic and cynical”. He recalls telling a friend who had accused Nixon of anti-semitism that “he wasn’t exclusively anti-semitic. He was anti-semitic, anti-Italian, anti-Greek, anti-Slovak. I don’t know anybody he was pro”.
Ronald Reagan’s ability to joke and tell folksy anecdotes in support of a particular policy represented an “odd form of intelligence”.
The Age of Turbulence: Adventures in a New World is likely to be pored over in Wall Street and the City for clues to Greenspan’s still hugely influential views on the economy.
He forecasts that inflation will be harder to contain in future and predicts that far higher interest rates will be needed to maintain price stability. At some point, he argues, the movement of people from farms to factories in countries such as China will slow, leading inevitably to higher wages and prices.
Economists have been critical of Greenspan’s 2003 decision to cut interest rates which, they argue, helped create the housing bubble, the collapse of which provoked this summer’s banking crisis.
Greenspan defends the policy. “We wanted to shut down the possibility of corrosive deflation,” he writes. “We were willing to chance that by cutting rates we might foster a bubble, an inflationary boom of some sort, which we would subsequently have to address . . . It was a decision done right.”
In the book, which has an initial print run of 1m copies, Greenspan includes details of his private life, including his relationship with the television journalist Andrea Mitchell, 60.
After their first date in 1985 he invited her back to his flat to read an economics paper he had written. They have been together ever since. “I’m not threatened by a powerful woman; in fact, I’m now married to one,” Greenspan says.
He started writing the memoir, for which he received a reported advance of £4m, on the day he retired from the Fed in January, 2006. Most of it was composed in the bath, a practice he began after he received a back injury in the 1960s.
© Copyright 2007 Times Newspapers Ltd.
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