Iraq war could cost US over $2 trillion, says Nobel prize-winning economist
http://www.guardian.co.uk/Iraq/Story/0,2763,1681119,00.html
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".
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