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Cost estimates for war keep
rising
By Kathleen Knox
PRAGUE - As war in Iraq looms, economists have
been busy trying to put a price tag on a military
campaign - and any occupation and reconstruction that
follows.
Lawrence Lindsey, a former White House
economics adviser, fired the first shot in the war of
estimates last autumn. He said that it would cost the
United States at least US$100 billion.
Not so,
said other officials. US Defense Secretary Donald
Rumsfeld said in a January interview that it would be
less than half that figure.
But recent reports
suggest that official estimates for a war and a short
occupation are again creeping toward the $100 billion
mark. Add in a lengthy post-war occupation and
reconstruction, and the bill could reach the dizzying
figure of $1.6 trillion, according to one academic
economist.
Cost estimates are rising, too, for
the United Kingdom, which is likely to join any US-led
attack. Chancellor Gordon Brown has now earmarked 1.75
million pounds ($2.8 billion). But independent
economists say that the bill could be twice that much.
Brown himself said that Britain will spend "what
it takes" to disarm Iraqi President Saddam Hussein.
"Last year, I set aside 1 billion pounds to be drawn
upon by the Ministry of Defense for security and
military preparation if and when action became
necessary. Last month, I set aside an additional 750
million pounds. Our armed forces do an outstanding job
for Britain, and today I make clear our gratitude for
the work that they do and my resolve to ensure that our
armed forces are properly supported for whatever lies
ahead," Brown said.
Analysts say that the
conservative estimates are based on a best-case
scenario: a short, successful war that removes Hussein
from power and maintains regional stability.
But
the war could get bogged down, or messy, if Saddam uses
chemical or biological weapons. Oil prices could spike
for a long time. It could set off regional instability.
And how long or intensive would the postwar occupation
and reconstruction be?
For the US, it could all
push the final bill up to the scary $1.6 trillion figure
given by Yale economist William Nordhaus in December
last year.
Little wonder US government officials
are reluctant to provide numbers. Rumsfeld last week
said it's impossible to made an accurate prediction. And
his deputy Paul Wolfowitz was so evasive to the House
Budget Committee last week that one congressman, James
Moran, accused him of "deliberately keeping us in the
dark".
Keith Hartley is the director of the Center
for Defense Economics at York University in the UK. He
said that politicians have every incentive to
underestimate the costs. "They want to make it appear
cheap, and, of course, even if they have a more accurate
idea of the costs of the war, if they publicize that
figure, that sends out a clear signal to a potential
enemy about the scale of the involvement and the
assumption behind the military campaign. So,
understandably for military reasons, you'd want to be
cautious about the cost figures, and for political
reasons, you want to deliberately underestimate the
costs so as not to appear too expensive," Hartley said.
This is a particularly sensitive area in the UK,
where the public is already mostly anti-war and many
people are grumbling that the money is needed at home.
One contributor to a recent online debate asked, "In a
country that has crumbling hospitals and underfunded
schools, do you really think a war with Iraq is the best
use of our tax money?"
Inevitably, comparisons
are made with the bill for the Gulf War of 1991, which
was around $60 billion. The difference there is that
other allies shared the bill. Ron Smith, a
defense-economics expert at Birkbeck College London,
said that cut the costs for Britain down to a minimum.
"It was offset by contributions from Kuwait and Saudi
Arabia, so the net cost of the first Gulf War to the
British economy was very small. It's very unlikely that
other countries would contribute to the cost of the war
this time," Smith said.
Hartley said that
predicting the cost a potential war leads him to
consider - half-seriously - an alternative economic
scenario. If it's worth spending upward of $100 billion
on a war, why not spend it on avoiding a war?
His suggestion: Pay Saddam $20 billion to leave,
give $50 billion to the Iraqi people to rebuild their
economy, and the US could still save compared to the
costs of a war.
That's unlikely to find a
sympathetic audience, not least because it would reward
bad behavior and encourage other "future Saddams".
Still, if those estimates keep rising, it may start to
look like a tempting bargain.
Copyright (c)
2002, RFE/RL Inc. Reprinted with the permission of Radio Free Europe/Radio
Liberty, 1201 Connecticut Ave NW, Washington DC
20036
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