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The road to Laden

One book that should be mandatory reading for every war correspondent is the Strategic Bombing Survey. I call it a book, but it is actually a study conducted after World War II.

Air power supposedly played the decisive role in that conflict. The Americans put together a team to quantify how significant the air forces had actually been. The team included Harvard economist John Kenneth Galbraith and a future American undersecretary of defence, George Ball.

To the horror of the air power fan club, the group concluded that bombing hadn't really done much. German war production was remarkably stable until Allied forces actually stood on German soil. The Strategic Bombing Survey is a damning indictment of the power of propaganda, the determination of military machines to delude themselves, and the alacrity with which the media swallow claims of 'precision'.

Don't think this was an isolated instance. By 1967, it was clear the war in Vietnam was not going well. Once again, the analysts were called in. Woundingly, they came to the conclusion that it was costing the United States US $9.60 for every $1.00 of damage to North Vietnam!

And then there was the Gulf War. Many remember those beautiful pictures of 'guided' missiles homing in on a tiny target. But analysis conducted half a decade later proved conclusively that it just wasn't so. If we want to see that kind of precision, we must tune in to Star Trek rather than the news.

You must, therefore, pardon my scepticism when I watch missiles thudding into Kabul and Kandahar. What exactly has the United States achieved by sending its missiles flying into Afghanistan?

Cruise missiles are expensive, anything between $750,000 and $1,000,000 each depending on which source you choose to believe. About 50 of these monsters were used on the first day of the attack.

What was the result? We are told various Afghan airports are out of commission. But how many planes does the Afghan Air Force, assuming that such a beast exists, operate? Let's see: something between $35 million and $50 million to destroy a couple of airports that weren't much in use... It makes the whiz kids of Vietnam seem positively stingy in comparison!

I apologise to readers who object to thinking of a war purely in dollars and cents. But I bow here to a man who knew something about the art and craft of war, Napoleon. The French conqueror opined that money is "the sinews of war". (Knowing that you can't eat gold, he also said that an army "marches on its stomach".) Cut off the sinews and no force, even one as dedicated as that commanded by Osama bin Laden, will move very far.

So here, at the risk of speaking military heresy, is a prediction: in the long run, the United States secretary of the treasury will have more to do to win the war than will his counterpart in the Pentagon. The effort to trace Laden's funds and then freeze them is far more important than any concentration of aircraft carriers in the Arabian Sea and the Indian Ocean. Assuming I am correct -- and infallibility is not one of my virtues! -- this lesson must be learnt by my colleagues in the media.

Ironically, one of the men who has grasped this lesson is Laden himself. I seem to remember reading somewhere that the man has earned an MBA. I have no idea if this is correct, but he has repeatedly demonstrated a superb grasp of practical economics. While exiled in Sudan, he apparently ran everything from bakeries to banks -- and made money from all of them too.

However, it isn't the bread from the Laden patisserie which is leaving a sour taste in the chancelleries of America and Europe. No, they are wondering if Osama bin Laden didn't come up with a one-two punch on 11 September -- strike at American targets with one hand, rake in the loot with the other.

How? Well, essentially by playing the bear on a giant scale. The mechanisms are complicated, but I'll try to describe them simply. Basically, one sells stocks which one doesn't actually possess with the promise of delivery at an agreed future date. The assumption is that somewhere in between, it will be possible to pick up these shares at a price lower than the price at which one sold them.

This is, usually, a gamble. (I remember it backfired spectacularly many years ago when a bear cartel tried to take on Reliance.) But prior knowledge of the attacks on the United States gave the bears an immense advantage.

Two industries were sure to be hit immediately by the attacks -- aviation and insurance. (Actually, the aviation sector wasn't particularly healthy even before the attacks; witness the Swiss carrier plunging into the red.) When the markets finally opened, there was a bloodbath, with shares plunging across the board. (Defence industry stocks, predictably, were an exception.)

Waking up a little late in the day, the watchdog agencies noted that there had been an unusual amount of activity in the markets before the attacks, with plenty of bear speculation in the aviation and insurance sectors. (I wonder if there was any rise in buying armament industry shares.) There is plenty of speculation that this was Osama bin Laden using his market savvy to rake in several millions by the side.

Every sensible human being backs a war on terrorism. But I'm a little disappointed by the military attacks. (It might have been better to wait for more information, but I suppose President Bush had to do something within a month of the September attacks.) Follow the money trail -- it will be a far better guide to the terrorists than any 'guided' missile.

T V R Shenoy