Greenspan Says Preemptive Strike on Iran Is `Difficult Choice'

Sept. 21 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the threat posed by Iran may force the U.S. to consider a preemptive strike, and conceded that the Iraq war, which he advocated, has made the Middle East ``less stable.''

Iran has rejected calls to cease efforts to enrich uranium, which the U.S. and its European allies claim is a step toward developing nuclear weapons. President George W. Bush has said he would prefer a diplomatic solution to the standoff with Iran, though he has refused to rule out a military response.

``It's a very difficult choice,'' Greenspan, 81, said in an interview with Bloomberg Television's ``Political Capital With Al Hunt'' to be broadcast this weekend. ``This issue of when do you strike -- preemptive strike'' arose during the Cold War ``because if you didn't act, your country was destroyed.''

Expanding on his memoir, ``The Age of Turbulence,'' published this week, Greenspan suggested the 2003 invasion of Iraq was justified, even though the country didn't possess weapons of mass destruction, as he initially believed.

Former Iraqi President Saddam Hussein ``had access to huge amounts of cash,'' which could have allowed him to ``buy nuclear devices or weapons,'' Greenspan said. ``I could see him irresistibly moving -- in a sense irrationally -- to try to take over the oil fields of the Middle East by one device or another.''

Still, Greenspan said the Middle East is now ``less stable'' than it was before the invasion.

McCain Over Giuliani

On the 2008 U.S. presidential race, the former Fed chief, a Republican, was enthusiastic about Senator John McCain's candidacy.

``John McCain would be a name I would put in,'' Greenspan said. ``There is no doubt in my mind that he'd be a very effective president.'' Greenspan added that he was saddened that the Arizona senator's campaign hasn't recovered from some recent setbacks, including fund-raising shortfalls and staff defections.

His possible support for the Republican frontrunner, Rudy Giuliani, was more qualified. Greenspan only said he would ``probably'' support the former New York mayor if he wins the party's nomination.

In other interviews this week, Greenspan said the Democratic frontrunner, Senator Hillary Clinton of New York, is ``unquestionably qualified'' to be president, though he added that his tendency would be to vote for a Republican.

Praise for Clinton

In the book, Greenspan commends Clinton's husband, former President Bill Clinton, for prudent tax and fiscal policies that brought the budget from deficit to surplus.

In the Bloomberg interview, the former Fed chief reprised his criticism of the Republican Party for its lack of fiscal probity, saying fellow party members dashed his hopes of what a unified Republican government could achieve.

``I was obviously overjoyed when Republicans took over both the House and the Senate in the early '90s and I looked forward to the implementation of many of the policies which I felt were very important for this country,'' Greenspan said. Instead, he said, ``they swapped policy for power and achieved neither.''

While he criticized his party, Greenspan praised several Republican lawmakers, including Senator Chuck Hagel of Nebraska, whom he described as ``really quite knowledgeable and very thoughtful'' and ``very engaging.'' Greenspan also called Senator John Sununu of New Hampshire ``very smart.''

Though his own party has been irresponsible on budget and economic issues, the Democrats who took control of Congress in the 2006 elections are no better, Greenspan said. ``Now that they're in power, they're behaving like Republicans.''

Greenspan said that former New York Democratic Senator Daniel Patrick Moynihan, who died in 2003, was ``unbelievable in a sense of a broad scope of vision, intellect, and judgment.'' He also said former Senate Majority Leader Howard Baker of Tennessee was ``one of the most effective people in government I have ever encountered.''

Greenspan said he wished that Barry Goldwater, a former Republican senator from Arizona who lost the 1964 presidential election to Lyndon Johnson, had become president.

``I consider myself coming out of the roots of Goldwater Republicanism,'' Greenspan said.

To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net