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Iraqi Invasion of Kuwait POWER POLITICS IN A WORLD OF FLOWS Introduct

ti reserves. Moreover, the rate at which the potential value of oil reserves can be realized by sales is limited; dumping too much oil on the market too fast simply depresses the price and may reduce rather than increase the overproducer's income.

In contrast, financial assets are fluid and difficult to embargo. Financial assets, unlike oil, need not be shipped in tankers. Buyers and sellers can be concealed by a host of well-established methods, and painstaking analytical accounting work is required to ferret out such transactions: they cannot be blocked by a destroyer in the Persian Gulf. Sales from a diversified portfolio such as Kuwait's can be made with much less risk of severely depressing the value of the assets. In all these respects, then, siezure of Kuwait's financial wealth promised a more immediate and flexible source of additional income for Iraq than did siezure of the oilfields.

Unfortunately for the Saddam regime, Kuwait's wealth turned out to be all too fluid -- so much so that almost all of it was transferred out of Kuwait in advance of even the fastest-moving Iraqi troops. Gold bars, the old form of financial wealth, may weigh several thousand times less per unit value than do barrels of oil, but they are still physical and subject to capture unless physically moved. It is unlikely that, in the small time available, the Kuwaitis would have been able to move gold or any physical form of wealth, even gilt-edged bonds, in time to keep them from falling into Iraqi hands. In the modern world, however, financial wealth has become in a literal sense metaphysical: its only existence is in the form of electronic codes. It could be -- and in the event was -- moved to safety with a few keystrokes.

Now, financial instruments in whatever form, whether gold bars or electronic deposits, are themselves ultimately not "wealth," but tokens of wealth, which ultimately takes the form of productive goods. But in ...

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Iraqi Invasion of Kuwait POWER POLITICS IN A WORLD OF FLOWS Introduct. (1969, December 31). In LotsofEssays.com. Retrieved 09:29, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1702264.html