Greenspan, Iraq, Oil. How’s that again?

The WSJ and NYT underplay Greenspan role as "behind-the-scenes advocate" for invading Iraq. Woodward and Post get it right.

In the second-to-last paragraph of a story on page A3 Monday, The Wall Street Journal says Alan Greenspan was “himself a behind-the-scenes advocate of overthrowing former Iraqi leader Saddam Hussein.”

He says he felt “getting Saddam out of there was very important,” not because of weapons of mass destruction, but because he was convinced the Iraqi dictator wanted to control the Strait of Hormuz, through which a sizable portion of the world’s oil passes. That would enable him to threaten the U.S. and its allies.

The Fed chairman advocated going to war to protect the Strait of Hormuz?

Message to Audit Readers: No, you are not crazy. This is new information. The story, under the headline “Greenspan’s Dismay Extends Both Ways, wildly underplays the point.

He said he conveyed that view to both Mr. Cheney and then-Defense Secretary Donald Rumsfeld, another friend from the Ford administration, but doubts that played a part in the Bush administration’s decision to invade Iraq.

On the other hand, it probably didn’t slow things down much, either.

The Journal’s story is based on one of a number of interviews Greenspan gave to major media outlets to promote his new book, The Age of Turbulence. The questions stem from the book’s startling phrase, first reported by The Washington Post on Saturday, that “the Iraq War is largely about oil.”

I’m sure hellacious deadlines played a role in this fact getting buried; the book news broke over the weekend, and Greenspan’s interviews followed right afterward. There was a lot of news in the book; It’s going to be a while to sort things out.

The New York Times didn’t do much better in a story headlined ” A ‘Disappointed’ Greenspan Lashes Out at Bush’s Economic Policies”:

Mr. Greenspan also spelled out his own views about the war in Iraq: he supported the invasion, he says, not because Saddam Hussein might have had weapons of mass destruction, but because Saddam had shown a clear desire to capture the Middle East’s oil fields.

“I supported taking out Saddam, because he was moving inexorably toward taking the world’s oil resources,” he said. “Iraq was a far greater threat than Iran to the world scene.”

In his interview with Greenspan, though, the Post’s Bob Woodward picks up on Greenspan’s statement about the Iraq War being “largely about oil” and asks him about it.

In the interview, he clarified that sentence in his 531-page book, saying that while securing global oil supplies was “not the administration’s motive,” he had presented the White House with the case for why removing Hussein was important for the global economy.

“I was not saying that that’s the administration’s motive,” Greenspan said in an interview Saturday, “I’m just saying that if somebody asked me, ‘Are we fortunate in taking out Saddam?’ I would say it was essential.”

He said that in his discussions with President Bush and Vice President Cheney, “I have never heard them basically say, ‘We’ve got to protect the oil supplies of the world,’ but that would have been my motive.” Greenspan said that he made his economic argument to White House officials and that one lower-level official, whom he declined to identify, told him, “Well, unfortunately, we can’t talk about oil.” Asked if he had made his point to Cheney specifically, Greenspan said yes, then added, “I talked to everybody about that.”

Greenspan said he had backed Hussein’s ouster, either through war or covert action. “I wasn’t arguing for war per se,” he said. But “to take [Hussein] out, in my judgment, it was something important for the West to do and essential, but I never saw Plan B” — an alternative to war.

Whatever one’s thoughts about a Fed chairman’s quiet advocacy of a war—what did William Rehnquist have to say about a diplomatic opening to North Korea?— the revelation of Greenspan’s role deserved the attention the Post gave it.

Reading the Journal’s version, a reader might conclude that Greenspan’s role in the pre-war debate was known. It wasn’t, though the press did uncover some hints.

A lengthy November 2004 Journal profile, headlined “The Navigator,”(1) for instance, mentions Iraq only in passing:

In 2003, when the Iraq war and threat of deflation hung over the economy, the Fed cut rates again. By June 2003, the Fed’s key rate was at one percent, the lowest in 45 years.

A Washington Post story in May 2004 moved a bit closer to the truth, noting (2) that Greenspan visited the second Bush White House more frequently than he did Clinton’s, primarily to discuss foreign policy and the economy:

But Fed spokeswoman Michelle Smith said Tuesday that Greenspan met with administration foreign policy officials to discuss international economic policy. Particularly since the U.S. invasion of Iraq last year, Middle East instability and its potential effects on the world oil supply have been key concerns. Another frequent topic is the interplay of economic and foreign policy issues in many areas.

At most, though, Greenspan was portrayed as allaying fears that a war would derail the economy—pretty much what you’d expect the Fed chairman to concern himself with. Here’s an April 2003 New York Times story on Greenspan agreeing to serve a fifth term as Fed chairman:

He also labored mightily to make himself indispensable. In the days leading up to the war with Iraq, he met repeatedly with top White House officials and gave his tacit blessing to the venture both in public and in private.

A widely acknowledged expert on the oil industry, Mr. Greenspan let it be known that he was not overly worried that the war would cause permanent disruptions to the oil market. Nor did he raise warnings about the financial cost of the war at a time when the federal budget had already run up big new deficits.

But giving “tacit blessing” and being a “behind-the-scenes advocate” is entirely different.

Mostly, though, business-press readers over the years heard that Greenspan was ready to act if the war required it, as the Journal wrote as the war appeared imminent:

Fed Girds for Interest-Rate Cuts as War Scenarios Unfold

This is not so much a criticism of the Journal as a public service to Audit Readers: No, you didn’t miss something. That the then-Fed chairman advocated behind the scenes for the Iraq War is indeed new information. It’s news.

1. Greenspan’s Legacy —- The Navigator — Fed Chief’s Style: Devour the Data, Beware of Dogma —- As Retirement Looms in 2006, Greenspan’s Strong Record Will Be Hard to Replicate —- Did He Help Create a Bubble?
18 November 2004
The Wall Street Journal

2. A More Frequent Visitor; Greenspan’s White House Trips Increased Sharply in Recent Years
Nell Henderson
Washington Post Staff Writer
27 May 2004
The Washington Post

3. Greenspan Agrees To Another Term Leading the Fed
The New York Times
April 24, 2003

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.