The US superpower’s quick victory over a fourth-rate military power allowed Bush and the neo-conservative hawks who run the US government, such as Cheney, Rumsfeld, and Wolfowitz, to emerge temporarily strengthened. The US victory in Iraq solved very few problems, however, ushering in a period of greater instability and volatility on a world scale.

The US did not liberate Iraq; the US army occupied Iraq like a colonial power. The oil fields and oil ministry were immediately taken over and protected as plans were made to privatize Iraqi oil. Billions of dollars in “Iraq reconstruction contracts” went to giant US corporations – all of them big contributors to the Republican Party. Ultimately, the cost of the Iraqi “liberation” is supposed to be paid by the “liberation” of Iraqi oil for the benefit of US big business.

Despite the swift victory, things were not as simple as Rumsfeld and Bush had imagined. The attempt to install an American puppet regime is in serious trouble, as the US and British forces do not have a real base of support in Iraq. The most powerful force that has emerged in Iraq is right-wing political Islam, especially among the Shi’a majority. Any support that existed for the US at the beginning of the occupation is now evaporating fast and turning into anger, reflected in the demonstrations, sniper attacks, and suicide bombings.

The anxiety and insecurity of US troops in Iraq can even be seen on TV. They were led to believe that they would be greeted as liberators, but instead they are in almost daily confrontations with an angry and resentful population. An armed guerrilla resistance could quickly develop in this situation, which could go on for years.

After the government committed to the war, the majority of US opinion supported the war and Bush. But it is important to ask how public opinion may change if thousands of American soldiers get stuck in Iraq, attacked and harassed by a hostile population like Lebanon in the 1980s.

Middle East in Crisis
The US imperialist strategists believe the US military victory in Iraq will bring stability and democracy to the Middle East. In reality, US policies in the Middle East are threats of invasions and blackmail against other regimes, while supporting the right-wing Israeli government of Sharon. Supposedly, this policy will lead to a “domino effect” of democratic Arab regimes under the tutelage of the US.

Furthermore, Bush’s attempt to present the “Road Map” towards peace with the creation of a Palestinian state is in reality a mirage and a fraud.

The Palestinian Authority was pressured by the US to “elect” Abu Mazen, as a more pliable Prime Minister who has promised to “stop all violence” as a precondition for talks with Israel. But Abu Mazen, or Arafat for that matter, cannot stop the violence of the various organizations fighting the Israeli state as long as the Israeli Defense Force massacres civilians, bulldozes houses, and occupies territories.

The Israelis are supposed to stop settlements and even remove a few settlers, but the military occupation will continue until the Palestinian Authority “stops the violence.” In reality, the Israeli ruling class will never allow the creation of a viable Palestinian state on its borders. If such a state were allowed, it would only be a puppet state dependent on Israel and run by its agents as a means of policing the Palestinians. This plan will not lead to a peaceful solution for the Middle East, but will lead to new upheavals and increased bloodletting among Palestinians. Meanwhile, the Israeli working class is facing the worst economic depression since the creation of Israel.

Poverty, wars, mass unemployment, terrorism, and repression is what the future holds for the peoples of the Middle East on the basis of capitalism. Prospects for US plans to work there are rather poor.

Growing Inter-Imperialist Tensions
The war against Iraq marked a turning point in world relations. Even among capitalist political commentators, it is now widely recognized that the Bush administration’s decision to defy the UN and go to war has led to cracks that threaten to shatter the entire structure of international relations and institutions established since World War Two.

Splits and divisions have opened up not only in the UN, but also in the European Union, NATO, the G-8, and most importantly between France and Germany on the one side and the US and Britain on the other.

France, Germany, Belgium, and Luxembourg, alarmed by the arrogant power of US imperialism, are pressing ahead with the European Defense Force. This, of course, led them into conflict with Britain, Spain, and Italy, who do not want the new force not to be a rival of NATO.

France and Germany have tried to use Russia as a counter-weight to the US. Russia was very upset by the cutting off of its lucrative contracts with Iraq for the exploitation of oil-fields, and with the US invasion into traditional Russian spheres of influence in Central Asia and the Caucasus.

Alliances and blocks between different groups of imperialist powers will continue to emerge along with new conflicts over the next period, leading to more insecurity, instability, and militarism as the rival camps arm themselves to the teeth and try to unload their crisis on their rivals.

Dark Clouds Over the Economy
Far from boosting the economy, the end of the war has seen increased volatility and a general decline in economic growth forecasts.

The US, which saw 4% average growth during the 1990’s has averaged less than 2% growth in 2001-2003. Bush is threatened with the dubious distinction of being the first president since Hoover in the 1930s to see a net loss of jobs for workers. Over 2 million workers have lost their jobs since Bush took office, and productive investment has dropped to half the rate of the 1990’s.

There will not be a real recovery in the US until there is a revival of investment, which in turn depends on a revival in profits. But prices and profits have been squeezed by overproduction and the overcapacity that exists in virtually every sector of the capitalist economy. As a result, prices for a large section of the economy have started to decline, threatening a deflationary spiral.

At a time of increased military expenditures and very little public trust (after Enron) in the corporate sector, there is an unprecedented level of private and corporate debt, a huge budget deficit, and an enormous current account deficit which now stands at 5% of the US gross domestic product. To put it plainly, the US is getting deeper in debt to the rest of the world and is financing its spending boom at the expense of foreign money.

This pressure is reflected in the danger of a deep decline in the value of the dollar and the danger of the escalation of “beggar thy neighbor” devaluations of currencies. The European economies are projecting stagnation, rising unemployment, and recession, while Japan remains mired in a decade-long economic slump.

The growth rate of the Asian “Tigers” has been reduced partly because of the outbreak of SARS, but also because of the weak outlook for the world economy.

In the current situation of a crisis of overproduction and overcapacity in the world economy, all the conflicts between the economic blocks (US-NAFTA zone, Europe, Japan) for the slightest advantage in markets or raw materials and spheres of control will continue to intensify.

Several serious capitalist commentators have compared the current protectionist dangers with the competitive currency devaluations that led to the depression of the 1930’s and can lead to a severe disruption of world trade.

The antagonisms between the US, Europe, and Japan have manifested in a series of sharp trade conflicts over steel, agricultural products, boycotts of products, etc.

Global Capitalism in Crisis
In every corner of the globe, there is a military spending and armaments race at the expense of social and economic needs. World capitalism is facing constant upheavals in one continent after another and one war after another. What other conclusion could the various regimes draw following the Iraq war? Develop any weapons of mass destruction as you can, as fast as possible!

The cost of the new arms races will be borne by the working class internationally in the form of lower living standards, higher taxes, and cuts in spending for the environment, healthcare, and education.

The mass demonstrations on the streets of Rome, London, Madrid, New York, and other cities across the globe before the war were an indication that the masses of the workers and young people are not prepared to put up with the demands of new cuts in social services, unemployment, and wars.

The discontent of the masses has been accumulating for some time, but it could not find a means of expressing itself (as the traditional workers’ parties and unions had moved far to the right) until the eruption of the anti-war movement. The mass demonstrations, while showing the limits of spontaneous mass action, are indications of the deepening radicalization that will sweep country after country in the coming years as the masses begin to move into action.

On the industrial front, during the past few months there have been mass general strikes in Spain, Greece, Italy, Portugal, India, Ecuador, the strike waves in France and Austria, the big steel strikes in Germany at IG Metal, and the sharpening of industrial conflicts in Britain.

In the US, capitalism is being weakened by the deepening gulf between a wealthy financial oligarchy and the vast majority of the population. Bush and the ruling clique around him are the political embodiment of the ruling elite who in the course of the 1990s made their fortunes through theft, fraud, and illegal activities at the expense of millions of workers who lost their jobs and savings through corporate downsizing.

While virtually eliminating taxation for millionaires, and those who inherit wealth, the Bush administration is allowing the collapse of the social infrastructure. A majority of the 50 states are on the verge of bankruptcy, with school districts and welfare in shambles, healthcare starved for funds, and social services cut drastically. Entire industries, like airlines, telecommunications and healthcare, face disaster with millions of jobs lost during the first two years of Bush’s presidency.

Bush is busy assuring people that the war is over now and that everything will be fine. In reality, his troubles have only just begun. The problems in Iraq and Afghanistan, the proliferation of weapons of mass destruction, economic crises (like Argentina), trade wars, terrorist attacks, job insecurity, and a new economic slump at the US’s doorstep will lead to new shocks and explosions of anger and discontent.

While the US is the economic and military superpower, the capitalist system is facing a huge social, political, and economic crisis and political radicalization of the working class and youth. The ideas of democratic socialism are the only way to end the nightmare of wars without end, environmental destruction, nuclear weapons, and poverty on a world scale.

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