Alan Greenspan: I Never Said Iraq War Was About Oil

It's fitting that now that he's left his post as chairman of the Federal Reserve, Alan Greenspan's words are being as closely scrutinized as they were back in his days at the Fed.

Not carefully enough, though, it seems.

Over the weekend, a media firestorm errupted after the Washington Post printed a news article claiming that in his memoirs, Greenspan said the ouster of the Saddam Hussein government was just about oil.

Unfortunately for the liberal press and blogosphere, Greenspan did not say what was attributed to him. After the news broke, Greenspan called up the Post to say he'd been quoted out of context:

Greenspan said that at the time of the invasion, he believed, like Bush, that Iraq had weapons of mass destruction "because Saddam was acting so guiltily trying to protect something." While he was "reasonably sure he did not have an atomic weapon," he added, "my view was that if we do nothing, eventually he would gain control of a weapon."

His main support for Hussein's ouster, though, was economically motivated. "If Saddam Hussein had been head of Iraq and there was no oil under those sands," Greenspan said, "our response to him would not have been as strong as it was in the first gulf war. And the second gulf war is an extension of the first. My view is that Saddam, looking over his 30-year history, very clearly was giving evidence of moving towards controlling the Straits of Hormuz, where there are 17, 18, 19 million barrels a day" passing through.

Greenspan said disruption of even 3 to 4 million barrels a day could translate into oil prices as high as $120 a barrel -- far above even the recent highs of $80 set last week -- and the loss of anything more would mean "chaos" to the global economy.

Given that, "I'm saying taking Saddam out was essential," he said. But he added that he was not implying that the war was an oil grab.

"No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will."

Will the media be as eager to propagate Greenspan's actual remarks as they were to do so for the ones attributed to him? I'm not holding my breath.