Tuesday, January 9, 2007

At first glance, the Soviet Union, Enron and the World Trade Center in New York City seem to have little in common with the ongoing struggle to turn Iraq into a peaceful and stable nation. But, sadly, they do. Each imploded. As President Bush informs us tonight on his revised Iraq strategy, lessons from those other implosions should not be dismissed as Iraq hangs in the balance.

Albert Einstein reminded us that in problem solving, the solution should be made as simple as possible but no simpler. In basic terms, the Soviet Union imploded because the irrationalities, inefficiencies and contradictions of that system could not tolerate exposure to the light of day. Back then, Soviet leader Mikhail Gorbachev thought he could salvage the USSR through a combination of glasnost (openness) and perestroika (restructuring). Instead, the Soviet Union ultimately collapsed, ending forty-five years of Cold War without a shot being fired in anger. In essence, the unworkable ideology of Soviet Communism and the reformist vision of Mr. Gorbachev combined to evaporate the state.

Enron suffered from delusions of grandeur. Then-Chairman Kenneth Lay was not satisfied with Enron’s mere status as the world’s largest energy trading corporation. His ambition was to make Enron the largest corporation in the world. The means was by dominating the trading business, expanding beyond energy to bandwidth and conceivably any other commodity that could turn a profit.

Traders were incentivized with immense financial rewards and told to make as much short-term money as possible to drive stock prices upwards. Hundreds of so-called Special Purpose Entities (SPE) were created to that end, most off-balance sheet. The Securities and Exchange Commission approved Enron’s use of “mark to marketing” accounting, meaning that projected revenues could be listed as profits. To reassure outside investors, each SPE was underwritten by Enron stock. When little or no cash flow was realized, Enron had to cover the losses. The energy giant went further and further into debt until its credit rating crashed, taking the company with it. Here, an unworkable ambition, combined with greed in the form of profligate rewards and riches, imploded what had been regarded as one of America’s best-led companies.

The Twin Towers imploded on September 11, 2001, not because of the initial impact of wide-bodied jets hitting both buildings. Architects and engineers had designed the towers to withstand the destructive effects of a 747 jumbo jet crash. But no one anticipated that thousands of gallons of unburned jet fuel might explode into uncontrollable fires. The heat became so intense that the steel girders supporting the structures melted and the buildings collapsed. Implosion was the result of an unanticipated and fatal external factor.

How do these implosions relate to Iraq? Tonight, the president unveils the new strategy. Leaks suggest that a combination of increased U.S. military forces and a broader political and economic agenda to stimulate national unity and job creation will be part of this strategy. However, none of these fully addresses the issues and dangers that are underscored by the implosions of the Soviet Union, Enron and the towers.

A crucial reason for invading Iraq was the president’s vision that democratization was the best and only cure for the ills infecting the greater Middle East causing decades of terror, violence and instability. Rather like Mr. Gorbachev and Mr. Lay, President Bush based policy on a hugely ambitious vision and goal. That goal however will not be achievable in the region for a long time to come, if ever.

Second, as Enron guaranteed the success of its SPE with its stock, the Bush administration has guaranteed the Iraqi solution with American military power. The U.S. military has been the underwriter first for deposing Saddam Hussein and defeating the Iraqi army, then in trying to pacify and rebuild that nation and now in overcoming the insurgency, civil war and sectarian violence that are killing more than 20,000 Iraqis a year. Tragically, most of the other arms of our government and theirs are missing in action in Iraq or yet to be deployed, overburdening an already overstretched military.

Finally, as the designers of the Twin Towers failed to anticipate potential disaster, the United States has been woefully deficient in anticipating backlashes and blowback to its policies. Decommissioning the Iraqi army was one such failure. The Iraqi government’s incompetence and bungling of Saddam’s trial and execution is another devastating example of the failure to anticipate consequences that speaks volumes about its inability to govern.

Of course, Mr. Bush may surprise us with a radically different approach. While we can hope so, we ought not be blind to past lessons that suggest what may lie ahead. This new strategy is a “hail Mary pass” at best. Pray that we have some awfully capable receivers downfield, Iraqi and American, who can catch that pass.

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