Between Iraq and an Arms Race

While most of the world is clear in its condemnation of Iraq's invasion of Kuwait, the U.S. defense industry sees the crisis in a somewhat different light.

"If Iraq does not withdraw and things get messy, it will be good for the industry," remarked a New York investment analyst in late August. "You will hear less rhetoric from Washington about the peace dividend."

The confrontation in the Persian Gulf highlights the fact that -- for those whose pocketbooks and careers are dependent on the military economy -- the demise of the Cold War does not mean that peace need get the upper hand. Before August, with the budget deficit, the S&L crisis, and a long-neglected social sector hungering for any available funds, defense contractors, weapons labs, and think tanks were trembling in fear of a leaner future.

Iraq's attack -- and Bush's damn-the-diplomacy, full-speed-ahead response -- threatens to derail the peace train before it leaves the station. The Gulf crisis, according to a Reagan-era defense department official, "lends more credibility to the Pentagon's argument that the world isn't at peace now, just changed."

Indeed, the Pentagon and its civilian counterparts haven't acted as if the Cold War thaw has changed anything:

- The Pentagon is seeking a 22 percent increase in Star Wars funding next year, while the program's new director urged that the space-based weapons system remain focused on "protecting the country from an all-out Soviet assault."

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