moneyPaul Krugman’s op ed today nails a key link between President Bush’s call to maintain a substantial permanent occupation force in Iraq and the expectations for Iraq’s future on which the occupation is premised. The occupation assumes not only that the surge has failed but that the Iraq national government has failed, and we must hold together a failed state indefinitely.

The key indicator, Krugman argues, is in the separate oil development contract Bush friend, Ray L. Hunt of Hunt oil signed with the independent Kurdish Province. The Hunt/Kurdish oil deal came just as Iraqi discussions of the Administration’s repeatedly hyped oil law “agreement” collapsed.

Some commentators have expressed surprise at the fact that a businessman with very close ties to the White House is undermining U.S. policy. But that isn’t all that surprising, given this administration’s history. Remember, Halliburton was still signing business deals with Iran years after Mr. Bush declared Iran a member of the “axis of evil.”

No, what’s interesting about this deal is the fact that Mr. Hunt, thanks to his policy position, is presumably as well-informed about the actual state of affairs in Iraq as anyone in the business world can be. By putting his money into a deal with the Kurds, despite Baghdad’s disapproval, he’s essentially betting that the Iraqi government — which hasn’t met a single one of the major benchmarks Mr. Bush laid out in January — won’t get its act together. Indeed, he’s effectively betting against the survival of Iraq as a nation in any meaningful sense of the term.

The smart money, then, knows that the surge has failed, that the war is lost, and that Iraq is going the way of Yugoslavia. And I suspect that most people in the Bush administration — maybe even Mr. Bush himself — know this, too.

So while the President told the nation last night that our troops will remain in Iraq until they achieve success, his oil buddies are already signaling that Iraq is a failed state that will require our presence indefinitely. And the only thing Bush has left to do is to make sure the Democrats get blamed for his failure:

At this point, Mr. Bush is looking forward to replaying the political aftermath of Vietnam, in which the right wing eventually achieved a rewriting of history that would have made George Orwell proud, convincing millions of Americans that our soldiers had victory in their grasp but were stabbed in the back by the peaceniks back home.

What all this means is that the next president, even as he or she tries to extricate us from Iraq — and prevent the country’s breakup from turning into a regional war — will have to deal with constant sniping from the people who lied us into an unnecessary war, then lost the war they started, but will never, ever, take responsibility for their failures.

We are only 18 months away — and another 1000 or so US troop deaths — from Mission Accomplished.