The rally in equities these past few days, plus the sharp selloff in gold to $335, confirms my belief that the tide has shifted toward a diplomatic solution in Iraq and that there will be no war. President Bush had of course said he would be prepared to use military force against Iraq even without a Security Council resolution, to disarm Iraq, but he never expected that Baghdad would be so cooperative in giving the weapons inspectors everything they demand.
The administration is also reeling from the several embarrassments on the intelligence front this week. There were the faked documents on Iraqi attempts to purchase uranium from Niger. Then came the drones, said to represent a delivery system for chem/bio WMD, which turn out to be balsa wood toys with a range of 55km at the outside. A further embarrassment is the New Yorker article this week by Seymour Hersh, which links Richard Perle -- the mastermind of the warhawks -- to companies which benefit from war and lose if there is peace. Perle is suing Hersh and the New Yorker for libel, but the White House must be worrying that the wheels are falling off the national security strategy it bought into.
It is a perfect time for the President to declare victory in Iraq and move on to the Israeli-Palestinian problem, which he seems already to be doing with his commitment to a "road map" toward a settlement. The warriors have not given up as they have so much at stake. Bill Hoagland of the Washington Post, a prominent warhawk, told CNN`s Lou Dobbs Thursday night that Bush has to go to war to implement his plan to take over Iraq. Why? Because if he does not and the UN announces Iraq is in full compliance with #1441, it must then lift the economic sanctions, which will give Saddam access again to Iraq`s enormous oil wealth, which it could then use to threaten its neighbors, meaning Israel. Of course, this is what it has been all about from the beginning. But if there is a settlement with Palestine in parallel, that fear also dissipates.
Clearly the pressure on France, Russia, China and Germany which had been designed to produce at least a majority vote in the Security Council has not worked, and the advantage has now shifted to those players against the administration and its British ally. There will be further moves left to the hawks as they insist President Bush must go it alone, but my best guess is that his closest political advisors, including his father, see only costs and no benefits at this stage of the game. With a few more concessions from Baghdad, which it is ready to supply if asked, Mr. Bush really can declare victory through diplomacy, backed by the credible threat of force.