By Paul Krugman

The New York Times

Friday 14 September 2007

To understand what's really happening in Iraq, follow the oil money, which already knows that the surge has failed.

Back in January, announcing his plan to send more troops to Iraq, President Bush declared that "America will hold the Iraqi government to the benchmarks it has announced."

Near the top of his list was the promise that "to give every Iraqi citizen a stake in the country's economy, Iraq will pass legislation to share oil revenues among all Iraqis."

There was a reason he placed such importance on oil: oil is pretty much the only thing Iraq has going for it. Two-thirds of Iraq's G.D.P. and almost all its government revenue come from the oil sector. Without an agreed system for sharing oil revenues, there is no Iraq, just a collection of armed gangs fighting for control of resources.

Well, the legislation Mr. Bush promised never materialized, and on Wednesday attempts to arrive at a compromise oil law collapsed.

What's particularly revealing is the cause of the breakdown. Last month the provincial government in Kurdistan, defying the central government, passed its own oil law; last week a Kurdish Web site announced that the provincial government had signed a production-sharing deal with the Hunt Oil Company of Dallas, and that seems to have been the last straw.

Now here's the thing: Ray L. Hunt, the chief executive and president of Hunt Oil, is a close political ally of Mr. Bush. More than that, Mr. Hunt is a member of the President's Foreign Intelligence Advisory Board, a key oversight body.

Some commentators have expressed surprise at the fact that a businessman with very close ties to the White House is undermining U.S. policy. But that isn't all that surprising, given this administration's history. Remember, Halliburton was still signing business deals with Iran years after Mr. Bush declared Iran a member of the "axis of evil."

No, what's interesting about this deal is the fact that Mr. Hunt, thanks to his policy position, is presumably as well-informed about the actual state of affairs in Iraq as anyone in the business world can be. By putting his money into a deal with the Kurds, despite Baghdad's disapproval, he's essentially betting that the Iraqi government - which hasn't met a single one of the major benchmarks Mr. Bush laid out in January - won't get its act together. Indeed, he's effectively betting against the survival of Iraq as a nation in any meaningful sense of the term.

The smart money, then, knows that the surge has failed, that the war is lost, and that Iraq is going the way of Yugoslavia. And I suspect that most people in the Bush administration - maybe even Mr. Bush himself - know this, too.

After all, if the administration had any real hope of retrieving the situation in Iraq, officials would be making an all-out effort to get the government of Prime Minister Nuri Kamal al-Maliki to start delivering on some of those benchmarks, perhaps using the threat that Congress would cut off funds otherwise. Instead, the Bushies are making excuses, minimizing Iraqi failures, moving goal posts and, in general, giving the Maliki government no incentive to do anything differently.

And for that matter, if the administration had any real intention of turning public opinion around, as opposed to merely shoring up the base enough to keep Republican members of Congress on board, it would have sent Gen. David Petraeus, the top military commander in Iraq, to as many news media outlets as possible - not granted an exclusive appearance to Fox News on Monday night.

All in all, Mr. Bush's actions have not been those of a leader seriously trying to win a war. They have, however, been what you'd expect from a man whose plan is to keep up appearances for the next 16 months, never mind the cost in lives and money, then shift the blame for failure onto his successor.

In fact, that's my interpretation of something that startled many people: Mr. Bush's decision last month, after spending years denying that the Iraq war had anything in common with Vietnam, to suddenly embrace the parallel.

Here's how I see it: At this point, Mr. Bush is looking forward to replaying the political aftermath of Vietnam, in which the right wing eventually achieved a rewriting of history that would have made George Orwell proud, convincing millions of Americans that our soldiers had victory in their grasp but were stabbed in the back by the peaceniks back home.

What all this means is that the next president, even as he or she tries to extricate us from Iraq - and prevent the country's breakup from turning into a regional war - will have to deal with constant sniping from the people who lied us into an unnecessary war, then lost the war they started, but will never, ever, take responsibility for their failures.

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