War on Iraq Could Boost World Economy-U.S. Official Wed Oct 2,12:39 PM ET
By Pawel Kozlowski
WARSAW (Reuters) - A senior U.S. Commerce Department ( news - web sites) official said on Wednesday that a possible war on Iraq could boost the global economy by eliminating a terrorist threat and releasing fresh oil supplies onto world markets.
The comments in Poland by Under Secretary Grant Aldonas came amid diplomatic wrangling over sending weapons inspectors to Iraq, which President Bush ( news - web sites) says is threatening the world with weapons of mass destruction.
Aldonas told a news conference that war was not inevitable and the impact on the world economy would depend on how long the conflict lasted, if it happened.
"The combined effect may actually be positive economically because it would eliminate one of the real sources of terror and one of the real clouds hanging over the world's economy," he said.
"At the same time it will open up the spigot on Iraqi oil, which would certainly have a profound effect in terms of the performance of the world economy for those countries that are manufacturers and oil consumers.
"That obviously isn't the point of any action taken against (Iraqi leader) Saddam Hussein ( news - web sites) and Iraq but certainly it would be one of the results economically," he added.
Iraq is allowed currently to export controlled volumes of oil under U.N. supervision imposed in the aftermath of the 1991 Gulf war ( news - web sites). But it has shut down supplies sporadically to rattle oil markets as part of a campaign to get U.N. sanctions lifted.
Aldonas' comments came after World Trade Organization ( news - web sites) Director General Supachai Panitchpakdi said on Tuesday an Iraq war could have a limited, but negative, impact on the world economy. The WTO chief said military action might cause exchange rate volatility and boost transport and insurance costs, but would be unlikely to undermine world trade.
"The worst it could do is subject (global commerce) to some cost inflation and some slowdown but not really to undermine the whole process," he added.
Washington is pressing for a tough U.N. Security Council resolution which would ensure full access for weapons inspectors, backed up by the threat of military action if Baghdad fails to comply.
Aldonas was in Poland on a trip to boost economic ties and discuss the impact of a dispute between the European Union ( news - web sites) and the United States over U.S. steel import tariffs. Poland is a NATO ( news - web sites) member and candidate to join the EU.