Saddam the Builder.

Iraqi engineer Nouzad Ariel is something of an expert on sputtering economic engines. A quarter century ago, as the chief maintenance officer for an Iraqi glass company, he spent several months in Japan near the height of its postwar boom. The glass company went bust, along with the rest of the Iraqi economy, because of the U.S. embargo imposed after the gulf war. Today, Ariel makes brass fittings for rubber hoses in a narrow concrete stall on Baghdad's Sheik Omar Street, using a lathe imported 30 years ago from Romania and a pressing machine jerry-built by welding a generator and hydraulic pump onto a metal frame. "We don't have hose manufacturing in our country anymore," says Ariel. "So we use old supplies from pre-sanction days. We're just like the Japanese when they bought scrap metal to rebuild their economy."

It is a poignant, if imperfect analogy. After its total victory in World War II, Washington helped rebuild Europe and Japan as bulwarks against communism, laying the foundation for prosperous trading blocs. After partial victory in the gulf war, the United States pursued the opposite strategy. It imposed an embargo on Iraq to contain what was left of Saddam Hussein's regime, effectively strangling one of the Arab world's largest consumers. The embargo fed the anti-Americanism now consuming the Middle East and became a recruiting tool for Islamic militants, including Osama bin Laden. Just as a robust Asia is hard to envision without a strong Japan, a prosperous Arab world is unlikely without a strong Iraq, on whose rich soil the world's first civilizations began. "There's a reason they call it the Fertile Crescent," says Said Aburish, a Palestinian writer and former consultant to the Iraqi regime. "And eliminating Iraq really did it in."

The Arab world is in decay, with its populations growing twice as fast as its economies. At this rate, the nations of north Africa, the Middle East and the Persian Gulf will be unable to absorb the legions of young men poised to enter the job market. Unemployment rates hover in the double digits. Governments weakened by corruption and mismanagement are failing to provide basic services, creating a void eagerly exploited by terrorists.

Iraq's place on George W. Bush's "axis of evil" obscures the fact that Saddam developed his nation's economy while other Arab leaders were plundering theirs. Viewed from the slums of south Beirut, Jordan's desert villages, the dilapidated hamlets of the Upper Nile, Iraq's economic debility is a more subversive threat to regional stability than its hidden weapons. At a time when the West is considering calls for a new Marshall Plan to rebuild Afghanistan as a bulwark against terror, the far more pivotal Iraqi economy goes ignored. And at a time when the United States is debating the merits of "removing" Saddam along with his weapons of mass destruction, it's worth noting a potentially priceless fringe benefit: getting rid of Saddam would free the economy he created, but then destroyed.

Saddam was largely responsible for Iraq's development even before he became president. As vice president in the 1970s, he led a modernization drive in the name of Baath socialism. While other Arab states traded their petrol dollars for palaces, Iraq built roads, schools and factories, and sent engineers and doctors to study in the United States and Europe. Saddam ordered sweeping land reform, a health-care system and minimum-wage laws. He opened male-dominated professions to women. Iraqi Airways boasted some ...