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Saddam Hussein and the Dollar War

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For once, the media have got it right. The capture of Saddam Hussein is a major event in the war. Its importance does not rest on whether he was in operational command of the guerrillas; he wasn't. Nor does it hinge on whether his capture will destroy the morale of the guerrillas; it won't. The importance of Hussein's capture is that it happened at all: It signals a major improvement in U.S. war-fighting capabilities in general and in American intelligence in particular.

The greatest intelligence failure of the Iraq war did not concern weapons of mass destruction. It concerned the failure of U.S. intelligence to understand the Iraqi war plan, which in hindsight was obvious. The Baathists knew the United States would rapidly defeat Iraq's conventional forces. Therefore, they prepared a follow-on plan that would begin after Baghdad was occupied. This plan was a guerrilla war, manned by troops drawn from trusted elite forces, with an installed infrastructure of arms caches, safe houses and secure — nonelectronic — command and control systems suitable for such a war.

The guerrilla war began within weeks of the fall of Baghdad in April. U.S. intelligence about the war was so poor that until late in June, Defense Secretary Donald Rumsfeld and the rest of the administration were denying that the attacks on U.S. troops were being staged by an organized force. They viewed them simply as random attacks by unconnected dead-enders and criminals. It was not until summer that the administration conceded that it was facing a concerted guerrilla war.

Throughout the summer, the United States had trouble defining the nature of the guerrilla force, let alone developing a coherent picture of its order of battle or command structure. Therefore, the United States, by definition, could neither engage nor defeat the guerrillas. Washington remained in an entirely defensive posture during this period; the guerrillas had the initiative. There never was a danger that the guerrillas would actually defeat the United States. Still, the continual drumbeat of attacks and the U.S. forces' inability to launch effective counterattacks created substantial political problems, as it was intended to.

The problem for the United States was that the Iraqis understood the strengths and weaknesses of U.S. intelligence. The United States is extremely strong in technical means of intelligence, including image and signal intelligence. The guerrillas avoided electromagnetic communications and were difficult to distinguish with aerial reconnaissance. They were essentially invisible to the preferred U.S. intelligence methods.

Late in the summer, the United States began to increase its human intelligence capability in Iraq substantially, particularly the number of CIA officers on the ground. It began a systematic program of penetrating the guerrillas. It was not an easy task: Recruiting agents able to infiltrate the guerrilla ranks was hard to do; getting them into the ranks was even harder. The guerrillas understood that recruitment was a risk and relied upon existing forces or recruited from well-known and reliable reservoirs. The ranks of foreign jihadists who entered the country also were difficult to penetrate. To add to the complexity, they operated separately from the main force.

The guerrillas did have one major vulnerability: money. The Baathist regime long ago lost its ideological — and idealistic — foundations. It was an institution of self-interest in which the leadership systematically enriched itself. It was a culture of money and power, and that culture permeated the entire structure of the Iraqi military, including the guerrilla forces that continued to operate after the conventional force was defeated. Indeed, the guerrillas substituted money for recruitment. In many cases, they would pay people outside their ranks to carry out attacks on U.S. troops as a supplement to attacks by the main guerrilla force.

The culture of money made the guerrillas vulnerable in two ways. First, they relied on support from an infrastructure fueled by money. Whatever their ideology, they purchased cooperation with money and intimidation. Second, much of the money the guerrillas had was currency taken from Iraqi banks prior to the fall of Baghdad. A great deal of it was in U.S. dollars, which continued to have value, but most of it was in the currency of the old regime. One of the earliest actions of the U.S. occupation forces was to replace that currency. Over time, therefore, the resources available to the guerrillas contracted.

The United States brought its financial resources into play, purchasing information. As U.S. money surged into the system and guerrilla money began to recede, the flow of information to the United States increased dramatically. Obviously, much of the information was useless or false, and it took U.S. intelligence several months to tune the system sufficiently that operatives could evaluate and act upon the intelligence. Over time, the very corruption of the Baathist system was turned against it. Indeed, it happened in a surprisingly short period, made possible by a Baathist organization in which political loyalty and business interests tied together so blatantly that reversals of loyalty did not necessarily appear as betrayals.

This process was speeded up dramatically during the November Ramadan offensive. This offensive, we now know, was a surge operation rather than a sustained increase in operational tempo. Two things happened during the Ramadan offensive: First, the guerrillas increased their consumption of resources dramatically, burning through men and money very quickly; second, the rapid tempo of operations required the guerrillas to expose their assets far more than in the past. Whereas previously a combat team would attack, disperse and remain dispersed for an extended period, the tempo of Ramadan required that the same team carry out multiple attacks. This meant that they could not disperse and therefore could be more readily identified. This led to a greater number of prisoners and further opportunities to purchase information.

The United States moved from being almost blind during the summer to having substantially penetrated the guerrillas by the end of November. By that time, Washington had a clearer idea of the guerrilla order of battle and command structure. It had created a network of informants that was prepared to provide intelligence to the Americans in exchange for money, amnesty and future considerations.

Hussein, therefore, was betrayed by the culture he created. He was found with no radio — no surprise, since the guerrillas tried not to use them. Rather, he was found with his two most important weapons: a pistol and $750,000 in cash. His pistol could not possibly outfight the troops sent to capture him. He did not have enough money to buy safety. The Americans had him outgunned and outspent.

The importance of Hussein's capture is not only its symbolism — although that certainly should not be underestimated. Its importance is that it happened, that U.S. intelligence was able to turn a debacle into a success by identifying the core weakness of the enemy force and using it for the rapid penetration and exploitation of the guerrilla infrastructure.

The guerrillas understand precisely what happened to Hussein: Someone betrayed him for money. They also understand that even though attacks on U.S. troops can be purchased for dollars, the Americans have far more dollars than they do. That is why, in the week prior to Hussein's capture, the guerrillas twice attacked banks: They desperately needed to replenish their cash reserves. In one case, they even went so far as to engage in a pitched battle with U.S. armor, a battle they couldn't possibly win.

The threat to the guerrillas is snowballing betrayal. The guerrillas must be increasingly paranoid. At the prices the Americans are paying, the probability of betrayal is rising. As this probability rises, paranoia not only eats away at the guerrillas' effectiveness, it also raises the temptation to betray. Better to betray than to be betrayed.

The guerrillas can arrest this process only by ruthlessly punishing betrayers. If the people who betrayed Hussein can't be identified — or can't be publicly killed — then the guerrillas' impotence will become manifest and a self-fulfilling prophecy. Indeed, as other insurgencies have controlled betrayal by public retribution, the guerrillas, unable to compete financially, would have to respond with a wave of public executions. However, with each public execution, they would expose themselves to capture and revenge.

The capture of Hussein, regardless of whether he commanded anyone or knows anything, is critically important. It is inconceivable that the guerrillas would want him captured, since it inevitably hurts their credibility. Like him or not, he was theirs to protect. Their inability to protect Hussein creates a massive crisis of confidence among the Baathist guerrillas.

This does not mean the guerrilla movement in Iraq is dying. It means that the leadership of the movement is going to shift away from the Baathists who launched the guerrilla war to the mostly foreign jihadists, who joined the war for very different motives. These guerrillas are not motivated by money and are unlikely to betray each other for cash. They fight because they believe — and that makes it more difficult to penetrate their ranks.

At the same time, most of them are foreigners. They do not know the country as well as the Baathists, they don't have family and tribal connections there, and they don't have their own infrastructure. They were separate from the Baathists, but relied upon them for their support structure. If the Baathists are taken down, the jihadists will fight on. However, just as they are less vulnerable to money, they are less invisible than the Baathists.

The capture of Hussein does not, in other words, end the war. However, the process that led to his capture is broader and more subversive than simply the capture of the former president. It is eating away at the infrastructure of the Baathist guerrillas. It is possible for them to reverse this, but as their financial resources decline, they will have to respond with brutal suppression to betrayers. That might not do the trick.

Still, the war is far from over. Washington now faces a more substantial challenge — one that has proven difficult to overcome in the broader war. It must penetrate the jihadists in Iraq. Given the experience with al Qaeda, this might well prove difficult.

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