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The financial cost of a war with Iraq

March 04, 2003 19:21 IST

Wars cost money as well as lives and estimates for an attack on Iraq are high and rising.

Conservative calculations, which assume a swift campaign that emulates the speed of the 1991 Gulf War, pitch in at around $100 billion, equivalent to one percent of United States gross domestic product.

If the war gets bogged down, however, in street-to-street fighting to take Baghdad, costs would rise.

Throw in the nightmare of chemical or biological warfare, rebuilding the country and sticking around for the next 10 years to encourage Middle East stability, and some see an astronomical bill of $1.6 trillion for US taxpayers.

That's just for America. With British forces likely to take part in any US-led attack on Iraq, there would also be a heavy cost for Britain.

These numbers are not coming from the White House. US President George W Bush, who wants to cut taxes, has remained silent on a subject that could hurt this key goal.

This leaves US studies from the Congressional Budget Office, which works for the Republican-led Congress and from Democratic staff on the House Budget Committee.

Neither is non-partisan. But they come up with similar numbers, putting the cost of a war, excluding occupation and reconstruction, at $44 billion-$60 billion if it lasts only 30-60 days.

War Heavy

This envisages 250,000 to 370,000 troops and up to 1,500 aircraft, 800 helicopters, 800 tanks and 60 ships in the case of the CBO's 'Heavy Ground' scenario.

This is less than the 1991 Gulf War, which cost $60 billion--$79.9 billion in today's money--and deployed 540,000 military personnel. On the other hand, the Iraqi army and tank-force is now half the size it was in January, 1991.

But the cost to US taxpayers could still be heavier. US allies Kuwait and Saudi Arabia, as well as Germany and Japan, carried most of the cost back then. This time America will have to foot most of the bill itself.

Desert Storm to evict Iraq from Kuwait in 1991 began with a massive air attack on January 17, involved just 100 hours of ground fighting and was over by January 28.

Demobilisation began almost immediately the signatures were dry and by end-September that year only 25,000 troops remained.

On the other hand, the alliance did not attempt to capture Baghdad or achieve a 'regime change' toppling Saddam Hussein, goals that may galvanise defence and take much longer to reach.

US military planners themselves pitch the war cost at $95 billion. White House aides, speaking off the record, dismiss this as a Pentagon 'wish list' and see it at around $60 billion.

Michael O'Hanlon, a defence expert at the Brookings Institute, said $50-$100 billion was "the right plausible range--just for the US and just for the war itself."

Once you add the cost of maintaining an occupation force of up to 200,000 troops after hostilities end, there will be a further bill of between $12 and $48 billion a year, according to the Congressional Budget Office.

The daily cost per soldier would be less than for US peacekeepers in Kosovo. But the number of troops would be far higher and the occupation could drag on for years.

Hit And Run

As a guide, US occupation of Japan after World War Two lasted seven years and its troops have been in South Korea for 50 years and show no sign of leaving.

Bush has said that the US will stay as long as necessary and not a day longer- a vague and open-ended commitment.

"It is difficult to see how a successful occupation of Iraq could be less than five years and it might easily last two decades," wrote Yale economist William Nordhaus in the December edition of the New York review of Books.

He saw an occupation costing between $75 and $500 billion. But this includes no estimate for rebuilding the country or decontamination in the event of chemical or biological warfare.

Under the Marshall Plan, US spending worth $450 billion in today's money was needed to rebuild a defeated Germany.

"Costs for an occupation (of Iraq) could be significantly higher if that operation included the construction of bases, bridges and roads," the CBO report warned.

Nordhaus adds all this up to mean $121 billion bill if the war is short and luck favours America, versus $1.6 trillion if the fortunes of war roll the other way.

Loyalty Bought

Nor do the numbers include grants for key allies Turkey or Israel, which stand to receive $6 billion and $4 billion respectively from Washington. And don't forget Jordan, promised over $1 billion, or Egypt, which wants access to US export markets.

All of this is to be financed on top of a US deficit, which Bush already projects at a record $304 billion this year and $307 billon in fiscal 2003/2004.

The US is not the only country sending troops into battle. Britain has pledged 40,000 soldiers and already earmarked £1.75 billion, comfortably covered by the government's contingency reserve, to pay for the war.

But British finance minister Gordon Brown was expected on Tuesday to make clear in a speech the government was ready to spend more than £1.75 billion if necessary.

Treasury sources said Brown would pledge that the government would find all the necessary money for funding a possible war with Iraq and the battle against terrorism.

Keith Hartley, professor at the Centre for Defence Economics at York University in northern England, says the bill for Britain could reach £3 billion ($4.74 billion).

And a recent study carried out for the Royal United Services Institute suggested a war similar to 1991 Gulf War would cost Britain around £3.5 billion.