One of the first casualties of war may be those happy-talk forecasts of a robust recovery once the bombing starts in Iraq, but a far more momentous economic question accompanies Bush’s invasion plans: Can free-market globalization survive in a world governed by one nation’s overwhelming military power? The global economy has largely disappeared from political discussions in recent months as national leaders preoccupied themselves with warmaking. But the boosters of corporate-led globalization should understand that their vision of a New World Order is fundamentally imcompatible with George W. Bush’s.

Who is to rule the world’s future–global markets or national governments? The regime of globalization promotes an unfettered marketplace as the dynamic instrument organizing international relations. The other regime relies on the old-fashioned military power of the nation-state–the United States alone in this case–to impose its will on others in the name of global order. One system promises the free flow of capital, goods and technologies across national boundaries, largely exempted from control by sovereign nations. The other system sets out to intervene in the private marketplace–by force of arms if it chooses–to countermand any market transactions it regards as threatening. In history, of course, capitalism has often advanced arm-in-arm with military interventions. But that system was known as colonialism–the fusion of commercial ambitions and military conquest. It contradicts the principles claimed for free-running globalization, or at least unmasks its high-minded pretensions.

The outlines of this profound collision of purposes are now visible though not yet widely recognized, especially in Washington. Paul McCulley, a managing director of PIMCO, the world’s largest bond investment fund, based in Newport Beach, California, observes the structural shift already under way in global governance, driven by the weakened condition of the global economy but also by the imperial ambitions of Washington. “American imperialism is, by definition, a retreat away from global capitalism, a retreat from the invisible hand of markets in favor of a more dominant role for the visible fist of governments,” McCulley wrote.

This is a “regime change” the warrior crowd may not have anticipated, but the consequences are implicit in their insistence that the United States will capture and take control of Iraq’s oil, the second-largest petroleum reserves in the world. American statesmen grumble about the mercenary interests of the French, Russians and Chinese, whose companies currently have contracts for Iraqi oil production, but what of America’s mercenary interests? The Wall Street Journal reports that the Pentagon has already tapped Halliburton (the Vice President’s old company) to manage after-action cleanup of the Iraqi oilfields. Industry analysts figure Halliburton and other US firms could share $1.5 billion in contracts. Meanwhile, the US Agency for International Development is seeking ambitious proposals from America’s five largest construction companies (including Halliburton) to rebuild Iraq’s roads and bridges, the electrical grid, housing, schools and hospitals after America’s smart bombs finish their work (no foreigners need apply for the contract). American taxpayers will presumably pick up the tab, unless Washington instructs the US colonial general to seize Iraq’s oil income as our own.

The threat to globalization is not the wasted American dollars but Washington’s readiness to mix US commercial interests with its self-appointed role as global protector. At a time when the US economy must borrow from abroad to sustain its own domestic consumption, this move is sure to deepen distrust among trading partners and foreign creditors–suspicions that will permeate every forum of the trading system. Americans who imagine that their government will manage Iraqi oil to insure cheap gasoline may be disillusioned too. As overseer of Iraq, the United States would doubtless act like other OPEC members, managing production to insure stable oil prices at around $26 a barrel. Anything less threatens oil-producing countries–and oil companies. The Bush White House, if it has any sense, will quickly pass off this role to some sort of international agency. Otherwise, it is going to be caught between the interests of US consumers and its buddies in the oil industry.

The far more substantial conflict with globalization involves nuclear proliferation and Bush’s commitment to fight the spread of so-called weapons of mass destruction on any front, with armed force if countries don’t cooperate. It is good to see conservatives finally embrace the cause of nonproliferation, but they are about a generation late and used to be on the other side–defending multinational corporations against laws prohibiting export of defense-sensitive materials and machinery. Where did Saddam Hussein acquire his dangerous toxins? He bought them from European and American companies. Where did India and Pakistan get starter kits to develop nuclear weapons? Same place. For that matter, how did Israel get its nukes? In other words, to truly halt the spread of dangerous technologies, Washington will need much more than conquering armies. It will have to create an effective and intrusive set of export controls–worldwide–that can monitor a vast range of industrial goods and prohibit many items from entering into the “free trade” system.

A central quality of the globalizing economy is how fluidly it disperses advanced technologies from rich countries to poor countries–literally sharing the industrial tools of the wealthiest economies with many underdeveloped societies. In the broad sweep of human development, that aspect of globalization is virtuous (though it does dilute the advantages of the leading economies). Yet technology transfer cannot easily proceed if subjected to stringent regulatory controls by governments searching for forbidden weapons components. The controversies over Iraqi weapons illustrate why such rules are fiendishly difficult to devise and enforce. Was Saddam buying aluminum tubes and industrial magnets for a nuclear-bomb project or for standard uses in domestic centrifuges? The United States charged bomb-making motives; the UN inspectors endorsed Saddam’s claim of innocence. Multiply these ambiguities and conflicting interpretations across thousands of industrial chemicals, hardware or software. Bush’s desire to control the terms of trade–only nice countries can buy the dangerous stuff–sounds like Sisyphus on the Potomac.

While Washington focused obsessively on war with Iraq, it seemed to forget for the moment that the global economy remains wounded and groaning. When the war is over, these troubling facts will return with brutal clarity. The worry is not only the weakened US economy, which props up global trade by playing the supportive role as “buyer of last resort” for other nations’ exports. The global system itself has still not recovered from the great financial crisis of 1997-98; bank lending to emerging economies remains $177 billion below five years ago. Nor has the United States shaken off the deep wounds from its own bursting stock-market bubble. The economic arrows are pointing down again at present–even as the United States absorbs record trade deficits. If this White House understood what is at stake, Bush would be launching major public-works spending here in the homeland instead of bombing, then rebuilding, Iraq. If globalization’s ardent advocates grasped the deeper economic implications of Bush’s war, they too would be demanding to bring the troops home.