Bush's Dollar Diplomacy

Short on allies for a war against Saddam, the White House is trying to win friends with its wallet. How solid would this coalition be?

Money, it is often said, is the mother's milk of politics. It's also turning out to be the nectar of superpower diplomacy. As George W. Bush approaches the diplomatic climax of his arduous drive to win backing for war with Iraq, U.S. diplomats increasingly find themselves tempted to brandish Uncle Sam's checkbook -- and with it, the suggestion that sticking with America now might mean rewards later.

Much of this bid to win friends is playing out in the U.N. Security Council, which is grappling with a U.S.-backed resolution that could trigger military action against Saddam Hussein. But in broader terms, pressure on the White House to dangle inducements transcends the U.N. debate and goes to the heart of Washington's current dilemma -- America's poverty of friendship.

For two years, Administration diplomacy has been marked by a brash Texas swagger that Bush partisans consider a refreshing exercise in plain-speaking -- and which some traditional allies consider arrogance. But the differences go beyond style. In walking away from global treaties and disdaining the views of traditional allies, Bush foreign policy has also been marked by an in-your-face unilateralism that has set much of the world on edge.


  Now, with the Administration struggling to round up allies and hosting the leaders of such nations as Latvia and Bulgaria to demonstrate the depth of its coalition, the price of that disdain is coming into focus. "We've made it harder than it had to be by taking a high-handed approach," says Samuel R. Berger, National Security Adviser during the Clinton Administration.

Indeed, the bill for the Administration's approach is just starting to come due -- and the bottom line is breathtaking. On Feb. 25, Bush aides revealed that the cost of a military campaign could top $95 billion. That's a far cry from what happened during the first Gulf War, when coalition partners paid some $70 billion of the $75 billion war tab. "Rebuilding Iraq will require a sustained commitment from many nations, including our own," Bush said in a speech to the American Enterprise Institute on Feb. 26. But the fact is, the U.S. will likely find itself shouldering peacekeeping duties and much of Iraq's reconstruction on its own -- meaning beleaguered American taxpayers may bear the brunt of the costs.

True, a broad coalition was never in the cards. Unlike Operation Desert Storm, which was a response to Iraq's invasion of Kuwait, this showdown looms as an exercise in preemptive action. Still, while Bush talks of a "coalition of the willing" backing a U.S. invasion of Iraq, in reality America finds itself with precious few allies as the hour of decision approaches. And buying allegiances one country at a time is a far cry from building a cohesive group committed to a common cause.


  Another consequence of the Bush Administration's Iraq policy is that it could unintentionally undermine the President's broader goal of implanting the seeds of reform in the region. If the intervention comes to be seen by Iraq's neighbors as illegitimate, the result could be more radicalism, not less. The Administration's lofty goals in the Mideast could be much harder to achieve if "Americans are seen less as a partner than as a foreign power," says Jon B. Alterman, who recently left the Bush State Dept.

In a sense, the current bargaining round was heralded by the September 11 terror strike on America. In the subsequent war on the Taliban regime in Afghanistan, the White House decided it had to shore up friendships and showered largesse on new allies ranging from Tajikistan to impoverished African nations. None fared better than Pakistan, a desperately poor country that was pivotal in the anti-terror war. President Pervez Musharraf's regime suddenly found itself freed of sanctions imposed for its nuclear testing and the beneficiary of a $12.5 billion debt restructuring from the U.S. and other nations. That helped lift Pakistan from a debtor nation to one that now runs a modest current-account surplus.

Now, the Bush team faces a far more formidable chore in mustering global support for disarming Iraq by force. With skepticism rampant, France and a big bloc of nations fear the consequences of the U.S. making preemptive attacks an acceptable policy tool. Just as important, they fear that the risks of a destabilized Mideast far outweigh the danger Saddam poses. And in the region, where Saddam has been weakened and contained since the 1991 war, resistance to a U.S. invasion has led some countries to limit the American military's rights to nearby bases.

Turkey wants money up front this time

With allies scarce, small wonder that the Bushies may be tempted to float aid promises -- or be hit with a raft of "impact payment" requests from countries such as Egypt, Israel, Turkey, and Jordan, which claim that their economies will be damaged by the fallout of any conflict. "When somebody knows they're necessary for your game plan, they raise the price," says former top State Dept. official Chester A. Crocker.

The Bush Administration stoutly denies it's buying U.N. support or military access. "The President is not offering quid pro quos," insists White House Press Secretary Ari Fleischer. In fairness, the practice of cementing an entente with aid is hardly limited to the Bushies. The Clintonites, who currently assail Bush's need to reach for his wallet, threw billions at North Korea to keep its nuclear program shuttered. They also were forced to shrug when U.S. contributions to the International Monetary Fund were squandered by Russian kleptocrats. "Checkbook diplomacy," says former State Dept. official Helmut Sonnenfeldt, "is as old as checkbooks."

The most naked example of haggling came in the U.S.-Turkey base talks. With Turkish public opinion strongly antiwar and their economy on the ropes, the Turks sought upward of $35 billion in U.S. assistance for the right to station American troops on Turkish soil for use in a pincer move against Saddam. After bitter negotiations, Ankara came away with a package that includes up to $20 billion in cash and loans, some NATO military gear, and assurances that Iraq's Kurdish nationalists will be kept in check. Says Mehmet Simsek, a London-based analyst with Merrill Lynch & Co.: "The bottom line is, it will give Turkey some breathing room."

One reason the talks were so tough is Turkey's history with Desert Storm. After that war, the U.S. backed out of promises to compensate the country for the loss of trade with Iraq and aid to refugees. Now the Turks want money up front.


  Jordan may actually be the hardest hit of Iraq's neighbors this time, so Washington is also receptive to Amman's calls for help. "Nearly a quarter of our GDP could be knocked out as a result [of a new war]," frets Fahed Fanek, a Jordanian economist. The Administration is expected to ask Congress for $150 million in aid on top of the $300 million a year Jordan now receives. The U.S. already has started to deliver on a deal for F-16 fighters and Patriot II missiles, likely at a discount.

Other neighbors have their hands out, too. Israel wants $4 billion in additional military aid and $8 billion in loan guarantees. Egypt, which sees war losses of $1.6 billion to its tourist-dependent economy, wants faster delivery of as much as $415 million earmarked for Cairo.

Much of the dickering has been more subtle. Key swing votes on the Security Council -- Chile, Guinea, Cameroon, Angola, Mexico, and Pakistan -- have growing trade ties with the U.S. that could be jeopardized by a vote against the U.S. resolution. Both France and the U.S. are vying for those votes, the U.S. by noting that the American drive to ease agriculture subsidies among rich nations could open markets to Third World farmers.

What will be most telling is how Pakistan votes. After all, U.S.-backed debt restructuring allowed the country to adopt reforms that have helped revive the economy. And President Musharraf left Washington in late 2001 with a 15% increase in clothing and textile exports to the U.S., worth $500 million to Pakistani manufacturers. But Pakistani officials insist money won't sway their vote. "This is a matter of much greater importance than just a question of incentives," says Munir Akram, Pakistan's U.N. ambassador.


  It's still far from clear whether dollar diplomacy will give Uncle Sam a clear-cut victory in the U.N. But even without an affirmative vote, Bush seems intent on going ahead with plans to attack Saddam by late March. Then the questions become: What kind of alliance will Bush be heading, and how durable will such a coalition of convenience be?

If all goes swimmingly on the battlefield, some of today's qualms will surely fade -- replaced by radiant TV images of liberated Iraqis and new-wave technocrats who vow to build a new nation. But if the intervention turns into the oft-predicted miasma of Middle Eastern intrigue and dashed hopes, America could find itself standing far more alone than it is today.

Fast friends may be hard to come by in the self-centered world of diplomacy. Still, the kind you make because of truly shared interests seem preferable to the kind you rent.

By Stan Crock and Lee Walczak, with Paul Magnusson, in Washington, Rose Brady at the U.N., John Rossant in Paris, Neal Sandler in Jerusalem, Susan Postlewaite in Cairo, and bureau reports