“Better War than Peace”

▽Constantly delayed resolution on Iraq = The time when the phrase `Iraq War` arose to be the main subject to the New York Times as well as to the worldwide press is from December 2001 when the war with Afghanistan ended with the United State`s sole victory. After the UN Security Council passed the Iraqi Resolution in November of last year, there has been follow up reports that `the war clouds have thickened`.

Even until then, it had been predicted that the Iraqi situation would be resolved somehow when the investigation result report on the Weapons of Mass Destruction (WMD) by the UN Monitoring, Verification and Inspection Committee (UNMOVIC) gets submitted on January 27th. However, as the executive directing countries of the UN Security Council, France, Russia, China, etc., restrained the attack on Iraq, centered on the United States and Great Britain, the solution has been again postponed to be resolved after the secondary investigation result in the beginning of March.

George W. Bush, the President of the United States, declared that “there would be no more chances given to Iraq” through his statutory speech. However if Saddam Hussein, the President of Iraq, decides to do a political decline such as rapidly intruding their hidden weapons of mass destruction to the public or fleeing from Iraq before the United States attack, the Iraqi political conditions may again fall into a stalemate status.

▽Trembling International Market due to the `War Premium` = Due to the `chronic` war crisis, premium has been added to the international political `cost variables`. The international freight rate of an oil tanker operating from the Middle East to the Far East Asia has been increased from 50 of last May to 123 of last December. It even went over 150 on the 30th of last month.

As the United States stands in the middle of the international crisis of Iraq and North Korea`s nuclear problems, the U.S. currency has been weakening while the Euro currency has been reflectively, reaching the strong trend. All of the worldwide businesses are experiencing difficulties in preparing the business plan and maintaining the exchange rates as the value of the main currency, the U.S. Dollar, is shaking.

Because the American market is timid about the possibility of the double deep, it has been observed that the American Stock Market would not be able to rise up from the bottom until the Iraq crisis gets resolved. Also with the alignment reaction, the worldwide stock markets are in the swamp as well. The companies, such as Infiniti Property, Verizon Communication, and etc, which have planned to be newly listed in the market, have postponed the listing due to the market stagnation. Thus there is a total lack of the companies listed in the New York Stock Market as of now, the 4th. On the other side, as the instability of the international market heightens, the value of gold has been increasing here and there. In Tokyo, the transacted gold retail market value on the 3rd was 1,539 yen per gram (including the consumption tax), which is the highest ever after August 1992 that is 10 years and 6 months later.

▽Five dollar premium on oil price = Following the raise in the medium quality oil value of the Western Texas Incorporated (WTI) by over 30 dollars per barrel, the Dubai oil, mainly used by the Asian regions, has increased up to 29.61 dollars per barrel on the 31st of January. This is very close to the value of 32 dollars right before the Gulf War in 1991. At the New York Mercantile Exchange, the trade cost of the crude petroleum futures of the March delivery portion is 33.51 dollars per barrel on the 31st. However, the delivery portion of December has been traded at the lower cost of 27 dollars per barrel. The manufactured average premium is 5 dollars based on the futures trade cost after the expiration in July. We-Dae Kim, a senior researcher at the Korea Center for International Finance, has stated, “This is a result of anticipation mentality of the market that the war would be over by the end of July. However, if the quick victory of the United States is uncertain, more premium will be added.”

▽ `Better War than Peace (?)` = The economists of the primary investment banks, such as the Goldman Sachs and Deutsche Bank, presumed the movements of the numerous variables including the faith of the consumers on oil cost, and etc. in accordance with the four scenarios of the Iraqi situations. As a result, they concluded that `the United States` quick victory will have more positive effects on the U.S. economy than not having a war`. Besides, the Newsweek on its recent edition (dated 10th) introduced many arguments from various sectors of economy who are supporting the war including the report submitted by the `Institute of Directors (IOD)`, consisting of business managers of London and stating `the short termed war will drop the oil cost to 20 dollars and will increase the stock rate by 5%`.

However, there has been analysis that the recent uncertainty is not only due to the Iraq War. It has been also pointed out that the deflation pressures from China as well as the presence of North Korea and Iran, which have been classified as `the axis of evil` by President Bush, also add the uncertainty to the current situation.

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