US Victory in Iraq Cannot Solve its Economic Problems

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Last updated at: (Beijing Time) Thursday, April 17, 2003

US Victory in Iraq Cannot Solve its Economic Problems

US President George W. Bush made remarks in the past two days focusing on economic issues at home instead of the war in Iraq, the first time he had done so since the war started nearly a month ago.

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US President George W. Bush made remarks in the past two days focusing on economic issues at home instead of the war in Iraq, the first time he had done so since the war started nearly a month ago.

In a speech at the White House on Tuesday, Bush asked the US Congress to support his huge tax-cut package in a bid to spur a USeconomic recovery which has been limping since the end of 2001.

Touring a Boeing Co. factory in St. Louis, Missouri, on Wednesday, Bush pledged to promote economic growth and create jobsand stressed the need to implement his tax-cutting plan to achievethe economic goals. He said he is concerned with the unemployment situation in the country.

Analysts said the US president has obviously shifted his attention to domestic affairs, particularly the economic issues, at a time when the war has almost come to an end with victory for the United States.

Former President George Bush, father of the incumbent president,won the war with Iraq 12 years ago but failed in the fight for reelection in the following year as the economy remained sluggish.

To learn the bitter lesson of his father, the son shifted swiftly the focus of his strategy to economic problems as soon as major fighting ended in Iraq and when his reelection campaign is nearing.

However, to many people in the United States and the rest of the world, whether the end of the war in Iraq can boost the US economy is a big question mark.

The war against Iraq has produced many uncertainties and led toa slower economic growth, a plunging stock markets and more job losses.

A victory over Iraq will not eliminate the serious economic problems at home because the economic difficulties in the United States are deeply rooted and has not resulted only from the war, according to analysts.

There are more bad economic news recently even when the US war in Iraq went smoothly since late last month.

Industrial production in the United States declined by 0.5 percent in March, the worst in three months, the Federal Reserve reported on Tuesday.

The drop marked the second straight month that output at US factories, mines and utilities went down. Analysts said it was another sign of the troubles plaguing US manufacturers.

The consumer confidence declined for the fourth month in March and dropped to its lowest in the past decade.

US companies laid off more than 400,000 workers in the past twomonths, a level not seen for several months.

The stock market had been up for several days as the war in Iraq was finishing but declined sharply on Wednesday.

That means that the war is not the only factor behind the market, said analysts.

Investors want to see steady economic growth and profit increase from companies, not only the result of the war, they said.

The victory in Iraq will produce two more problems for the US economy: a huge budget deficit and the financial burden of Iraq's reconstruction.

The US president predicted in his budget proposal for fiscal 2004, submitted to the US Congress in February, that the deficit of this fiscal year will reach as high as 304 billion dollars and rise to 307 billion dollars in 2004. That does not include the cost of the war against Iraq.

President Bush signed on Wednesday a bill for additional spending totaling 80 billion dollars to cover the cost of war in Iraq. So the deficit of this fiscal year would increase to about 400 billion dollars and the soaring federal deficit will surely slow the pace of economic growth in the long run.

How much money will be needed in the reconstruction work following the war? No one knows for sure. Many people predicted that it will cost US tax-payers 100 billion dollars if the UnitedStates wants to monopolize the post-war reconstruction.

To keep the force at a size of 100,000 troops for peacekeeping in Iraq alone, it will cost billions of dollars a year.

President Bush toppled Saddam Hussein's government in 21 days. However, getting his domestic agenda done especially the economic problems will not be so easy, the Washington Post said in a recentarticle. (Xinhua News)

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