Walbridge: Bush War on Terror Discounted in Bazaar
John Walbridge of Indiana University, who has long experience in the Middle East and Pakistan, writes:
” Your readers might be interested in my private index of the progress of the War on Terror: the exchange rate of the dollar against the euro and the Pakistani rupee:
On Sept. 11, 2000, while Clinton was in office the euro traded at about $.86. By Bush’s inauguration it had gone up to about $.96, but it had declined to $.91 by Sept. 11, 2001. On Sept. 11, 2002, the euro had risen to $.97, a year later in 2003 to $1.12, and by Sept. 11, 2004, it was trading at $1.23, over a third above where it was at the time of the attacks–in other words, a 26% devaluation of the dollar in the course of the War on Terror. This devaluation is the dog that didn’t bark in
the current presidential campaign.
A more telling index of the progress of the War on Terror is the exchange rate between the dollar and the Pakistani rupee. The rupee tends to be pretty closely tied to the US dollar, in good part because Pakistanis like to keep their savings in US hundred dollar bills. When I first encountered the Pakistani rupee in September 1997, it was trading at a little over 41 to the dollar. On Sept 11, 2000, it traded
at 55 to the dollar, which had fallen to 59.5 by Bush’s inauguration, and 64.2 by 9/11/2001. The rupee rose to 59.6 by Sept. 11, 2002 and 57.8 by Sept. 11, 2003. It has since dropped slightly to 59.5 to the dollar.
Therefore, during the course of the War on Terror, the Pakistani rupee has risen about 8% against the U.S. dollar, despite having lost 20% against the euro in the same period.
In other words, if the money changers of Pakistan are to be relied upon–and they are nobody’s fools in my experience–the prospects for economic stability in Pakistan are shaky, as witness the decline against the euro, but the prospects for the United States economy are worse.
Chair, Near Eastern Languages and Cultures
Director, Middle East and Islamic Studies Program
1011 East Third Street
Bloomington IN 47405-7005
jwalbrid _ a _ t indiana d o t edu ”