"Dedicated to exposing the lies and impeachable offenses of George W. Bush"

Has 'War' become a leading brand for United States?
San Francisco Chronicle
Mark Engler
December 4, 2005

We hear a lot about the government largesse flowing toward Halliburton, Bechtel and a handful of other favored firms chosen to rebuild Iraq. Less often do we consider the possibility that the administration's bellicosity has been a major business blunder.

Breaking with the Clinton administration's advocacy for a cooperative, rules-based international economy -- a multilateral order known to critics as corporate globalization -- the Bush administration has fashioned a new model of imperial globalization, aggressive and unilateralist. This agenda, at best, benefits a narrow slice of the American business community and leaves the rest exposed to a world of popular resentment and economic uncertainty.

If Bush is an oil president, he's not a Disney president, nor a Coca-Cola one. If Vice President Dick Cheney is working diligently to help Halliburton rebound, the war he helped lead hasn't worked out nearly so well for Starbucks.

A year ago, Jim Lobe of Inter Press Service reported on a survey of 8,000 international consumers released by Global Market Institute Inc. of Seattle. The survey noted that "one-third of all consumers in Canada, China, France, Germany, Japan, Russia and the United Kingdom said that U.S. foreign policy, particularly the war on terror and the occupation of Iraq, constituted their strongest impression of the United States."

"Unfortunately, current American foreign policy is viewed by international consumers as a significant negative, when it used to be a positive," said Mitchell Eggers, Global Market's chief operating officer and chief pollster.

Brands the survey identified as particularly at risk included Marlboro, America Online, McDonald's, American Airlines, Exxon Mobil, Chevron, United Airlines, Budweiser, Chrysler, Mattel, Starbucks and General Motors.

In past months, a litany of stories in the financial press featured unnerving questions for business. Typical were the Financial Times in August ("World Turning Its Back on Brand America") and Forbes in September ("Is Brand America In Trouble?").

A U.S. Banker magazine article in August relaying the results of an Edelman Trust Barometer survey found that 41 percent of Canadian opinion leaders were less likely to purchase American products because of Bush administration policies, compared with 56 percent in the United Kingdom, 61 percent in France, 49 percent in Germany and 42 percent in Brazil.

It's not just snooty foreigners who are negative, either. American business leaders have been starting to link economic woes to imperial policy. The U.S. Banker article warned, the "majority of American CEOs, whose firms employ 8 million overseas, are now acknowledging that anti-American sentiment is a problem."

Regularly featured in stories about U.S. image problems is a group of corporate executives who have come together as Business for Diplomatic Action. While avoiding an explicit stance on the Iraq war, the group argues: "The costs associated with rising anti-American sentiment are exponential. From security and economic costs to an erosion in our ability to engender trust around the world and recruit the best and brightest, the U.S. stands to lose its competitive edge if steps are not made toward reversing the negativity associated with America."

Compared with the adverse impacts of Bush's imperial globalization, the administration's efforts at Karen Hughes-style brand rehabilitation are laughable, and Business for Diplomatic Action knows it. Taking diplomatic matters into their own hands, spokesmen for the group flatly state, "Right now, the U.S. government is not a credible messenger."

Is the problem just one of perception, or have the wages of war cut into business profits?

In June 2004, USA Today reporter James Cox wrote about how financially ailing companies are pointing to the war as the culprit: "Hundreds of companies blame the Iraq war for poor financial results in 2003, many warning that continued U.S. military involvement there could harm this year's performance. In recent regulatory filings at the Securities and Exchange Commission, airlines, home builders, broadcasters, mortgage providers, mutual funds and others directly blame the war for lower revenues and profits last year."

Among those complaining was Hewlett-Packard, which claimed that the occupation of Iraq has created uncertainty and hurt its stock price.

While fingering the war might just be a convenient excuse for some underperforming executives, the level of grumbling is noteworthy, as are the comments of outspoken fund managers profiled by Cox. "The war in Iraq created a quagmire for corporations," David Galvan, a portfolio manager for Wayne Hummer Income Fund, says in his letter to shareholders. Vintage Mutual Funds concludes that "the price of these commitments (in Iraq and Afghanistan) may be more than the American public had expected or is willing to tolerate."

In an SEC filing, Domenic Colasacco, manager of the Boston Balanced Fund, calls the U.S. occupation "sad and increasingly risky."

Of course, we know that companies reconstructing Iraq are posting profits. Sales of gas masks and armored Humvees are also up. But such war-supported companies are a small minority.

On the other hand, the diverse businesses in the tourism industry have taken a huge blow. JetBlue, Orbitz, Priceline.com, Morton's steakhouses and Host Marriott, to name just a few, have blamed disappointing returns on the war.

Travel industry leaders have warned that the United States is losing billions of dollars as international tourists are deterred from visiting because of a tarnished image overseas and bureaucratic visa policies.

"It's an economic imperative to address these problems," said Roger Dow, chief executive of the Travel Industry Association of America, tourism's main trade body. He stressed that tourism contributes to a positive perception of the United States. "If we don't address these issues in tourism, the long-term impact for American brands Coca-Cola, General Motors, McDonald's could be very damaging."

The potential costs of war also include the possibility that spreading guerrilla warfare and terrorism will include escalating sabotage against vast and largely indefensible stretches of oil pipeline in the Middle East.

Then there's domestic spending. Whether fiscal conservatives are right that deficits bloated by the Iraq war and tax cuts are necessarily bad for business, or whether Military Keynesianism has actually been helping to soften a periodic economic downturn, the idea of war without sacrifice seems suspect in the long term. Take direct war costs running in the hundreds of billions, add in medical bills for disabled veterans, then throw in the costs of National Guard reservists being pulled from small businesses, and pretty soon you're talking real money.

A year after the election, approval ratings for the victorious president continue to sink to all-time lows, and "staying the course" remains official Washington policy for Iraq.

In this context, it's not surprising that Republican realists like Brent Scowcroft (who warned in a Wall Street Journal essay before the war that "it undoubtedly would be very expensive, with serious consequences for the U.S. and global economy") are making noise again. And it would make perfect sense if an increasing number of those Bush CEOs were by now pining for a return to Clinton- style multilateral globalization of a sort still championed by many Democrats.

Neither of these camps will seem particularly appealing to progressives, but they pose a genuine threat to the imperial globalists who seem incapable of extracting themselves from Iraq. Indeed, intra-party rivalry among the Republicans, which is likely to increase as we enter an election year, could play a vital role in turning White House hawks into dead ducks.

All the better if this transformation is sped by dissatisfaction from corporate leaders re-evaluating the costs of Bush foreign policy and deciding that empire just doesn't pay.

Mark Engler, a writer based in New York City, is an analyst with Foreign Policy In Focus. A longer version of this article appeared on www. tomdispatch.com. Contact us at insight@sfchronicle.com.