Viewpoint / Mark Martinez: Follow the money -- Masters of terror scheme

Sunday March 2, 2003

Approximately 500 B.C., Sun Tzu wrote that the art of war "is a matter of life and death, a road either to safety or to ruin."

In his book, "The Art of War," Sun Tzu discusses allies and the need to secure intelligence because "if you know the enemy, you need not fear the result of a hundred battles."

Throughout history masters and generals have ignored Sun Tzu's counsel to their peril. As our security alliances begin to crack in the initial phases of our war on terror, one can legitimately ask whether Osama bin Laden has read this book, as well.

Consider the post-9/11 findings. One mainstream conclusion is that bin Laden's primary goal was to break our spirit by undermining our economy, the foundation of our power. As we know, because the twin towers were merely representative symbols of America's financial power and greatness, our economy didn't collapse. Afterward we found comfort and strength in how we bounced back. Resiliency was our answer to terrorism. Americans had it in abundance.

Now let's assume bin Laden isn't some deranged lunatic and wasn't really after the immediate collapse of America. What if he believes destabilizing America only requires pushing the U.S. into a sustained wartime economic binge? To be sure, with allies to share the burden, a global operation against terrorism wouldn't necessarily break the bank. We proved this in the fight against communism.

However, most have forgotten that by the mid-1960s, our European partners began to grumble about the "exorbitant privilege" the U.S. enjoyed to print and send dollars abroad, which our allies dutifully held. This prompted France's Charles de Gaulle to complain that no other nation had the capacity to export its inflation abroad, which encouraged the French and others to send dollars back to the U.S. (exchanged for gold) in the 1960s. This led to an uneasy agreement by 1971: the U.S. could continue to print deficit dollars, which our partners would keep, as long as we continued to pay for the defense of the West.

At this point, we must ask ourselves whether bin Laden understands something about international politics and finance the rest of us don't. That is, will the global community continue to hold our exported deficit dollars as we continue to berate them and run up massive budget deficits as we prosecute the war on terror?

Here we must keep in mind that the global war on terror will require battles on many fronts. Whether we pursue terrorists, attempt to establish order in post-conflict states, or simply pursue war, the U.S. must be able to count on allies to help shoulder the burden of intelligence gathering, state-building, and eventually winning the hearts and minds of people the world over.

It's the last of these that's important because true mastery of war is the capacity to break the resistance of the enemy without seeking military battles. On this Sun Tzu writes, the "skillful leader subdues the enemy's troops without any fighting; he captures their cities without laying siege to them; he overthrows their kingdom without lengthy operations in the field." Our lesson here is not Vietnam, but the staggered collapse of the Soviet Union.

To achieve victory in the war on terror the U.S. must be able to count on its allies in many areas. Financially the U.S. must be able to count on the global community to hold large amounts of deficit dollars instead of Euros, marks or yen rather than sending them back home.

However, as Princeton economist Paul Krugman has observed: "Sooner or later, foreigners will grow weary of holding ever larger quantities of U.S. assets; that is, they will no longer be willing to invest enough to finance both the continuing trade deficit and the growing interest payments on America's foreign debt. When that happens, the dollar will fall and the longer that day is postponed, the bigger the fall."

Today our overseas liabilities continues to grow due in part to the $6.4 trillion we owe here and abroad (compared to almost $1 trillion in 1979) while the amount of global trade conducted in dollars has fallen significantly.

With $300 billion budget deficits expected well into the future, we need to ask ourselves if we have the same diplomatic resources, political conditions and international good will necessary to convince our allies to hold and trade in dollars, as was the case 30 years ago. The administration's current approach isn't encouraging.

The fact that treaties and alliances are thrown aside and belittled by the Bush administration can only be icing on bin Laden's war cake. In this sense, if 9/11 was simply the first salvo of a larger financial war we don't yet understand, bin Laden might prove himself to be a master student of Sun Tzu's observation that "all warfare is based on deception."

More importantly, he will have demonstrated mastery of another Sun Tzu maxim: "The opportunity of defeating the enemy is provided by the enemy himself."

Mark A. Martinez is an associate professor of political science at Cal State Bakersfield.