[Mb-civic] Iraq War Could Cost US Over $2 Trillion

[ean at sbcglobal.net]

Published on Saturday, January 7, 2006 by the Guardian/UK

Iraq War Could Cost US Over $2 Trillion, says Nobel 
Prize-Winning Economist

· Economists say official estimates are far too low;· New 
calculation takes in dead and injured soldiers
http://www.commondreams.org/headlines06/0107-03.htm
by Jamie Wilson in Washington
 

The real cost to the US of the Iraq war is likely to be between $1 trillion 
and $2 trillion (£1.1 trillion), up to 10 times more than previously 
thought, according to a report written by a Nobel prize-winning 
economist and a Harvard budget expert.

The study, which expanded on traditional estimates by including such 
costs as lifetime disability and healthcare for troops injured in the 
conflict as well as the impact on the American economy, concluded 
that the US government is continuing to underestimate the cost of the 
war.

The report came during one of the most deadly periods in Iraq since 
the invasion, with the US military yesterday revising upwards to 11 the 
number of its troops killed during a wave of insurgent attacks on 
Thursday. More than 130 civilians were also killed when suicide 
bombers struck Shia pilgrims in Karbala and a police recruiting station 
in Ramadi.

The paper on the real cost of the war, written by Joseph Stiglitz, a 
Columbia University professor who won the Nobel prize for economics 
in 2001, and Linda Bilmes, a Harvard budget expert, is likely to add to 
the pressure on the White House on the war. It also followed the 
revelation this week that the White House had scaled back ambitions 
to rebuild Iraq and did not intend to seek funds for reconstruction.

Mr Stiglitz told the Guardian that despite the staggering costs laid out 
in their paper the economists had erred on the side of caution. "Our 
estimates are very conservative, and it could be that the final costs will 
be much higher. And it should be noted they do not include the costs of 
the conflict to either Iraq or the UK." In 2003, as US and British troops 
were massing on the Iraq border, Larry Lindsey, George Bush's 
economic adviser, suggested the costs might reach $200bn. The 
White House said the figure was far too high, and the deputy defence 
secretary, Paul Wolfowitz, said Iraq could finance its own 
reconstruction.

Three years later, with more than 140,000 US soldiers on the ground in 
Iraq, even the $200bn figure was very low, according to the two 
economists.

Congress has appropriated $251bn for military operations, and the 
Congressional budget office has now estimated that under one 
plausible scenario the Iraq war will cost over $230bn more in the next 
10 years. According to Mr Stiglitz and Ms Bilmes, whose paper is due 
to be presented to the Allied Social Sciences Association in Boston 
tomorrow, there are substantial future costs not included in the 
Congressional calculations.

For instance, the latest Pentagon figures show that more than 16,000 
military personnel have been wounded in Iraq. Due to improvements in 
body armour, there has been an unusually high number of soldiers 
who have survived major wounds such as brain damage, spinal 
injuries and amputations. The economists predict the cost of lifetime 
care for the thousands of troops who have suffered brain injuries alone 
could run to $35bn. Taking in increased defence spending as a result 
of the war, veterans' disability payments and demobilisation costs, the 
economists predict the budgetary costs of the war alone could 
approach $1 trillion.

The paper also came amid the first indications from the Pentagon that 
it intended to scale down its costly presence in Iraq this year.

Last night, Ayman al-Zawahiri, al-Qaida's number two, said in a video 
that hints of the American withdrawal amounted to a "victory for Islam".

The unforeseen costs of the war have been blamed on poor planning 
and vision by the architects of the invasion. In a frank admission 
yesterday, Paul Bremer, the first US administrator of postwar Iraq, said 
the Americans did not anticipate the uprising that has persisted since 
flaring in 2004. "We really didn't see the insurgency coming," he told 
NBC television.

But the economists' costings went much further than the economic 
value of lives lost. They factored in items such as the higher oil prices 
which could partly be attributed to the war. They also calculated the 
effect if a proportion of the money spent on the Iraq war was allocated 
to other causes. These factors could add tens of billions of dollars.

Mr Stiglitz, a former World Bank chief economist, said the paper, which 
will be available on josephstiglitz.com, did not attempt to explain 
whether Americans were deliberately misled or whether the 
underestimate was due to incompetence.

But in terms of the total cost of the war "there may have been 
alternative ways of spending a fraction of that amount that would have 
enhanced America's security more, and done a better job in winning 
the hearts and minds of those in the Middle East and promoting 
democracy".

© Guardian Newspapers Limited 2006


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