October 25, 2000

The War That Nobody Talks About
Debt Relief on the Fast Track
U.S. Steel Protectionism May Face WTO Challenge

The War That Nobody Talks About

In a front page story today, The Washington Post questions the continuing U.S. policy of aggression toward Iraq, saying it is characteristic of U.S. military missions in the post-Cold War era: It is small-scale, open-ended and largely ignored by the American people. Even though U.S. warplanes are routinely dropping bombs on a foreign country, it has not been an issue in the presidential campaign and has hardly been mentioned by the candidates.

The threat Saddam Hussein poses to U.S. security is overblown and our current policy of trying to overthrow Saddam is futile, writes David Isenberg in "Imperial Overreach: Washington’s Dubious Strategy to Overthrow Saddam Hussein." He recommends that general economic sanctions be replaced with a limited export control process that would restrict Iraq’s ability to rearm.

Some observers support an agreement to remove sanctions in exchange for renewed weapons inspections while others have suggested committing to a "rollback" of Saddam's regime by more actively supporting the Iraqi opposition. Former U.N. Weapons Inspector Scott Ritter, Cato Adjunct Scholar David Isenberg, and Daniel Byman of RAND discussed the question, "What should the United States do about Saddam Hussein?" at a policy forum held at Cato this year. The event can be watched in streaming video on the Cato Web site.

Debt Relief on the Fast Track

Congressional leaders agreed yesterday to a plan to write off loans to 30 of the world's poorest countries, according to The Washington Post. The plan is part of a major foreign aid package that will include the full $435 million sought by President Clinton for Third World debt relief as well as language allowing the International Monetary Fund to release $800 million from the sale of its gold reserves for additional debt forgiveness.

Clinton spearheaded an international effort to bail out debt-laden Third World countries, on the theory that it would relieve them of interest payments that might otherwise go for education and other initiatives to help their economies. But until now he has been unable to persuade skeptical U.S. lawmakers to go along; a key factor in changing the situation was pressure from an eclectic coalition that includes Pope John Paul II, Nobel Prize-winning economists and singer Bono of the rock group U2.

In "Shell Games Won't Help Africa," Director of the Project on Global Economic Liberty Ian Vasquez explains that the "need" for debt forgiveness is a testament to the fact that loans have not worked. He writes that loans have "subsidized regimes whose policies have destroyed their national economies." In "Debt and Dependency Are the IMF's Legacy," Senior Fellow Doug Bandow writes that international lending "failed to promote self-sustaining economic growth anywhere in the world. Instead, it has left debt and dependency in its wake."

U.S. Steel Protectionism May Face WTO Challenge

According to Japan's Kyodo news service, Japanese Ambassador to the United States Shunji Yanai said Monday that Tokyo intends to file a complaint with the World Trade Organization (WTO) if President Clinton signs into law a bill to subsidize American steelmakers from antidumping revenues.

"We will bring the case to the WTO if it becomes law," Yanai told reporters, adding Japan may do so jointly with the European Union (EU) and South Korea, which are considering similar actions.

The legislation, which was attached as an amendment to a comprehensive agricultural spending bill, sailed through the Senate last Wednesday by an 86-to-eight vote, far exceeding the two-thirds majority needed to sustain a Clinton veto. The provision would enable the U.S. administration to compensate domestic steelmakers hurt by foreign competition by passing on duties imposed on foreign manufacturers accused of "dumping" products on the U.S. market.

Brink Lindsey, Daniel T. Griswold and Aaron Lukas of Cato's Center for Trade Policy Studies write in "The Steel 'Crisis' and the Costs of Protectionism" that although there is no real crisis, consumers and steel-using producers will be the ones who pay a heavy price for steel protection.

In "Stealing from Steel Consumers," Senior Fellow Doug Bandow explains that protectionism "would lock resources in obsolescent and inefficient industries, stifling technological progress and economic development."

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