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     Jul 22, 2006
'War on terror' cost hits $430bn
By Emad Mekay

WASHINGTON - The United States' "global war on terror" has cost the country at least US$430 billion over the past five years in military and diplomatic efforts, according to the Government Accountability Office (GAO), the watchdog arm of the US Congress.

The GAO warns that future costs may be difficult to estimate because of irregularities in how the Pentagon does its accounting and because of unforeseen events in Iraq and Afghanistan.

The report comes only weeks before the fifth anniversary of the September 11, 2001, terrorist attacks in the United States, which kick-started the US "war on terror".

The figures are particularly important because they show how

much the war is still costing the United States in Iraq and Afghanistan years after both operations began, and at a time when the US is facing rising health-care costs and budget deficits.

For example, the money spent so far could have helped fund employer health insurance for some 107.5 million US citizens, more than double the estimated number of people without health coverage.

The figures are also notable because before the March 2003 US invasion of Iraq, top officials in the administration of President George W Bush said they expected the invasion not to burden the US budget and predicted that Iraqi oil sales would pay for reconstruction and some expenses associated with military operations.

However, today, oil production remains far below the prewar level of about 2.5 million barrels per day.

The report explains that since 2001, the Department of Defense (DOD) alone received $386 billion for its military operations, while other agencies, including the State Department and the Agency for International Development, have received about $44 billion to fund reconstruction and stabilization programs.

Of that money, Iraq received the lion's share at $34.5 billion. Afghanistan received $9 billion, while an additional $400 million was slated to be used in both countries.

For 2007, the Pentagon has requested another $50 billion for military operations, and other US government agencies have requested $771 million for reconstruction and stabilization activities.

Most of the money went to activities in the "war on terror" that include combating resistance groups, civil affairs, capacity-building, reconstruction operations and training military forces of other nations.

The congressional watchdog signaled its concern over how the Pentagon reports the costs associated with the "war on terror", which adds to the difficulty of estimating future costs.

For example, it says that through April, the Pentagon reported only $273 billion in incremental costs, which differ from the GAO findings on money allocated to operations.

"DOD's reported GWOT [global war on terror] costs and appropriated amounts differ generally because DOD's cost-reporting does not capture some items such as intelligence and army modular force transformation," the report says.

The agency says previous problems with the Pentagon's accounting led the GAO to conclude that future costs are likely to be much higher than anticipated.

It said the GAO's prior work found numerous problems with DOD's processes for recording and reporting the war costs, including the use of estimates instead of actual cost data, and the lack of adequate supporting documentation.

"As a result, neither DOD nor the Congress reliably know how much the war is costing and how appropriated funds are being used or have historical data useful in considering future funding needs," the report says.

GAO says the "war on terror" will likely involve the "continued investment of significant resources", requiring decision-makers to consider difficult tradeoffs as the country faces increasing fiscal challenges in the years ahead.

"Our nation is not only threatened by external security threats, but also from within by growing fiscal imbalances due primarily to known demographic trends and rising health-care costs," US comptroller general David M Walker told Congress this week.

Walker's report says many variables, such as the extent and duration of military operations, force redeployment plans and the amount of damaged or destroyed equipment needing to be repaired or replaced, make predicting the real cost of the war a difficult mission.

It is not known how much money other US agencies will need to help form governments and build loyal security forces in Afghanistan and Iraq, or meet the health-care needs of thousands of veterans, including providing future disability payments and medical services.

However, the GAO says US commitments in Iraq "are likely to be in the hundreds of billions of dollars".

Walker told Congress that Iraqi needs are greater than originally anticipated and estimated that in the next several years, the country will require some $3 billion to reach and then sustain oil-production capacity of 5 million barrels per day.

To fund electricity needs, the occupied nation will need $20 billion through 2010.

"Iraqi budget constraints and limited government managerial capacity limit its ability to contribute to future rebuilding efforts," Walker said.

Accurate accounting is also complicated because reconstruction efforts have not taken the risk of corruption into account when assessing the costs of achieving US objectives in Iraq.

The report quotes government figures as saying that about 10% of refined fuels are diverted to the black market, and about 30% of imported fuels are smuggled out of Iraq and sold for a profit.

Meanwhile, lack of security has stymied efforts to rebuild electrical, sewer and water systems. A report in February by the special US inspector general overseeing reconstruction says so much money was being spent on security that most sewer, irrigation and drainage projects had been canceled.

Some funds have also been diverted to other types of projects, primarily security-related, and the reconstruction efforts have been plagued by substantial corruption and overcharging by contractors.

The cost of security has eaten up as much as 25% of each project, according to the inspector general.

Additional expenses facing the United States include its new embassy in Baghdad, which is projected to cost a whopping $592 million, but the full cost of establishing a diplomatic presence across Iraq is still unknown.

In Afghanistan, the army and police program could cost up to $7.2 billion to complete and about $600 million annually to sustain, the GAO says.

(Inter Press Service)

Iraq, the mother of all budget busters (Jan 14, '06)

Precision killing in Iraq (Jan 13, '06)

The Iraq reconstruction strategy (Jan 20 '06)

Dismal days ahead in Iraq (Jan 12, '06)

Bush's 'priceless' war (Feb 25, '05)


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