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India - Reuters
As war starts, financial cost to U.S. still secret
35 minutes ago

By Alister Bull

BRUSSELS (Reuters) - Wars cost money as well as lives and estimates for the attack on Iraq (news - web sites) are high and rising.


U.S. President George W. Bush (news - web sites) unleashed dawn strikes at Baghdad on Thursday as the American-led campaign to topple Iraqi leader Saddam Hussein (news - web sites) got under way.

Bush has been conspicuously silent on what the action will cost U.S. taxpayers. But conservative calculations, assuming a swift campaign that matches the speed of the 1991 Gulf War (news - web sites), reach up to $100 billion.

This would be equivalent to one percent of U.S. gross domestic product. But if the war gets bogged down, for example 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 U.S. taxpayers.

That's just for America. British forces are also fighting and this support will carry a price tag.

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

Likewise, British Treasury officials on Thursday again declined to put a number on the country's costs beyond 1.75 billion pounds already allocated from existing contingency funds.

This leaves U.S. studies from the Congressional Budget Office (news - web sites) (CBO), 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.


This envisaged 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.

Actual deployment to the Gulf falls towards the lower end of this range. There are 280,000 military personnel in the region, of whom 45,000 are British, 2,000 Australian and the rest U.S.

In addition, there are an estimated 500 warplanes and upwards of 70 U.S. naval vessels arrayed in the Gulf.

Cost-wise it would still cheaper than in 1991, which ran to $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 burden for U.S. taxpayers could still be heavier.

U.S. 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.

U.S. military planners pitched the war cost at $95 billion. White House aides, speaking off the record, dismissed this as a Pentagon (news - web sites) 'wish list' and saw a $60 billion bill.

Michael O'Hanlon, a defence expert at the Brookings Institute, said $50-$100 billion was "the right plausible range -- just for the U.S. 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 U.S. peacekeepers in Kosovo. But the number of troops would be far higher and the occupation could drag on for years.


As a guide, U.S. occupation of Japan after World War Two lasted seven years and its troops have been in South Korea (news - web sites) for 50 years and show no sign of leaving.

Bush has said that the United States 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, U.S. 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.


Nor do the numbers include grants for key allies. A multi-billion aid package for Turkey may be in doubt after it declined to allow U.S. troops to mass on its soil.

But Israel still stands to receive $4 billion from Washington. And don't forget Jordan, promised over $1 billion, or Egypt which wants access to U.S. export markets.

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

For Britain, which has already earmarked 1.75 billion pounds for its involvement from contingency reserve, the bill could be easily twice as high.

Keith Hartley, professor at the Centre for Defence Economics at York University in northern England, estimates British costs could reach 3.0 billion pounds.

Similarly, 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 pounds.

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