Zeev's Turnips Patch-No Politics (ZEEV)

[Lane Hall-Witt]

Michael Soucie--

I expect we'll see a significant escalation of war talk again once the elections are decided. (That may not happen until December if control of the Senate depends on the Louisiana race and Louisiana requires a December runoff.) The war became a difficult issue for both sides, politically, because polling shows U.S. support for action against Saddam, but only under certain conditions (U.N. endorsement, international coalition). I think the whole question just got tabled for October so it wouldn't get caught up in the dynamics of the election.

It's important to note, by the way, that the international context for a war worsened significantly over the weekend, with Saudi Arabia denying the U.S. staging and flyover privileges for an attack on Iraq and with an Islamic party winning this weekend's elections in Turkey. The elections in Turkey are especially worrisome for many reasons: (1) Turkey has been a critical and important U.S. ally; (2) Turkey has molded itself as a secular constitutional democracy in recent years, but may now be trending toward Islamist populism; (3) Turkey has been on fairly good terms with Israel at a government level, but has been seeing greater anti-Israeli populism that appears now to be translating into votes; (4) Turkey, of course, is one of the "problem children" of the IMF and the World Bank, and it's not clear what the new government will do in the face of multilateral demands.

Obviously, none of this is of concern to the market today. <G>