Iraq:
The presentation to the UN Security Council by Secretary of State Colin Powell rocketed Iraq to a higher level-unquestionably closer to war.
1) Powell's evidence of a material breach by Iraq did not (as he predicted it would not) produce evidence of a smoking gun. His use of voice intercepts and aerial photography produced only circumstantial evidence of chemical and/or biological weapons, and even less backing of claims that Iraq is developing nuclear weapons. Weakest of all was his effort to link Saddam Hussein with al Qaeda.
2) Nevertheless, Powell scored major points domestically-with the public (according to early polls) and even more with the Washington establishment, especially the media elite. Nobody-not even President George W. Bush-could have done so well with the limited intelligence provided Powell. His towering prestige and masterful manner prevailed.
3) He did not do so well internationally, however. Powell won no apparent converts to the U.S. position that Iraq poses a threat to the peace of the world and must be "disarmed"-by force, since Saddam will not act voluntarily. There is still no sign that France (as Powell has privately predicted) will break away from Germany. China and Russia remain opposed, though they may merely abstain from rather than veto the second Security Council resolution desired by the U.S.
4) The Bush Administration, as orchestrated by Defense Secretary Donald Rumsfeld, has amassed a substantial NATO majority against "Old Europe" (France and Germany). That could prove the death knell of the Western alliance, but it frees the U.S. hand re Iraq.
5) It has been made clear for some time that it will take the removal of Saddam to stay Bush's hand in Iraq. To satisfy the American president, it will not be enough for the Iraqi dictator to make late concessions to the UN inspectors (such as new authorization of V-2 flights). That is why military action is now a near certainty.
6) Much of the Arab world-in particular, Saudi Arabia-is terrified by the impending U.S. intervention in Iraq. There have been all kinds of reports about Saudi agents plotting throughout the region (conspiring to get rid of Saddam or, conversely, undermining Kuwait's necessary support for the U.S. military operation). The fear in Riyadh is that anti-American rage could overthrow the royal regime and possibly lead to a U.S. intervention.
7) Powell's supporters still hope and his detractors still fear that the Secretary of State in the end will stay Bush's hand and avert war. The more rational expectation, however, is that Powell believes he has to bow to the administration consensus on Iraq in order to maintain his influence on Korea, the Palestinian question, and many other areas.
Trade:
Changing his tack on trade from 2002, President Bush's budget moves away from protectionist policies.
1) In his budget, Bush called on Congress to repeal the laws that the World Trade Organization (WTO) has found in violation of international trade rules. That includes special tax treatment for exports and incentives for U.S. firms to file anti-dumping complaints.
2) Congress has responded negatively, with more than two thirds of the Senate saying they would not repeal the "Byrd Amendment"-the law named after Sen. Robert Byrd (D.-W.Va.) that funnels U.S. awards from trade disputes to companies that show they were hurt by the foreign activity under dispute.
3) America's trading partners objected that this law acts an undue incentive for U.S. companies to file trade complaints. The WTO concurred, and Bush has called for the law's repeal to bring the U.S. into compliance and funnel the rewards to the U.S. Treasury, bringing down the deficit.
4) Sixty-nine Senators, however, have sent a letter to President Bush saying they do not want to repeal the law. They are encouraging the White House to settle the WTO dispute through negotiations, and perhaps Congress will be willing to repeal the law in exchange for concessions from trading partners.
5) The other disputed law is a tax exemption granted to some import revenue. The WTO authorized the European Union to impose 100% tariffs on up to $4 billion in U.S. imports, but Europe has not yet acted on that. Bush's budget indicates that, rather than White House negotiations with Europe, Congress should just fix the law.
6) One surprising item on Bush's budget was a zero dollar request for the program budget of the Export-Import Bank. The agency, almost unique in its ability to roll over funds from previous years, has underspent its budget for issuing and guaranteeing loans and holds that this year $350 million will be adequate. This represents a drastic reduction in activity from previous years.
