Iraq war could cost US$2 trillion

WASHINGTON – The Iraq war will likely cost the United States anywhere between one and two trillion dollars, despite earlier assurances by the White House that these expenses would be manageable, according to a new study co-authored by a Nobel Prize-winning economist.

The research made public yesterday by Joseph Stiglitz of Columbia University, a 2001 Nobel Prize laureate and former chief economist at the World Bank, and economy professor Linda Bilmes of Harvard University, argues current official assessments of the war cost fail to consider key expenses likely to dog the US budget for years to come. They include rising medical expenses to treat more than 16 000 wounded soldiers, accelerated depreciation of military hardware on the battlefield and the ripple effect on higher oil prices on the US economy, which in part can be blamed on the military venture.”Even taking a conservative approach, we have been surprised at how large they are,” Stiglitz and Bilmes wrote of the costs of the war.”We can state, with some degree of confidence, that they exceed a trillion dollars.”Lawrence Lindsey, a former chief White House economist, suggested in the run-up to the war that its costs could probably reach US$200 billion.However, the number was immediately dismissed by other administration officials as a gross overestimation.Throughout the study, the authors provide “conservative” and “moderate” estimates of expenses incurred by American society since the start of the war in March 2003.According to a “conservative” assessment, the war will cost Americans at least US$1,026 trillion.Under a “moderate” assessment, the expenses will top US$1,854 trillion.The United States has already spent US$251 billion in cash on combat operations in Iraq since the invasion was launched, and continues to fund operations there at about US$6 billion a month, according to congressional officials.However, argue the economists, these figures fail to take into consideration disability payments to veterans over the course of their lifetime, the cost of replacing military equipment and munitions.In addition, the cost of recruiting new soldiers has gone up dramatically, with the Pentagon paying recruitment bonuses of up to US$40 000 for new enlistees and special bonuses and other benefits of up to US$150 000 for current troops that re-enlist.”Another cost to the government is the interest on the money that it has borrowed to finance the war,” the authors point out.They estimate that direct budgetary costs of the Iraq war to the US taxpayer will be in the range of US$750 billion to US$1,1 trillion assuming that the administration of President George W Bush begins to withdraw troops in 2006 and maintains a diminishing presence in Iraq for the next five years.But there are also economic costs likely to stretch out for years, the study warns.For example, to date, more than 3 200 US soldiers have suffered head or brain injuries that require lifetime care at a cost range of 600 000 to US$5 million per person.The economists calculate that over a 20 year-period this group alone will cost the United States US$14 billion in healthcare expenses and lost productivity.The study points to the hidden costs of plucking reservists from their jobs and sending them overseas, rising costs of homeland security spurred by fears of new terrorist attacks, and multiple other factors.And they insist that higher oil prices, that went from US$25 a barrel before the conflict to around US$50 a barrel today and are affecting every facet of American life, can be partly blamed on the war.A “conservative” calculation provided by the study says 20 per cent of the increase was due to the Iraq war.The “moderate” puts it at 25 per cent.- Nampa-AFPThey include rising medical expenses to treat more than 16 000 wounded soldiers, accelerated depreciation of military hardware on the battlefield and the ripple effect on higher oil prices on the US economy, which in part can be blamed on the military venture.”Even taking a conservative approach, we have been surprised at how large they are,” Stiglitz and Bilmes wrote of the costs of the war.”We can state, with some degree of confidence, that they exceed a trillion dollars.”Lawrence Lindsey, a former chief White House economist, suggested in the run-up to the war that its costs could probably reach US$200 billion.However, the number was immediately dismissed by other administration officials as a gross overestimation.Throughout the study, the authors provide “conservative” and “moderate” estimates of expenses incurred by American society since the start of the war in March 2003.According to a “conservative” assessment, the war will cost Americans at least US$1,026 trillion.Under a “moderate” assessment, the expenses will top US$1,854 trillion.The United States has already spent US$251 billion in cash on combat operations in Iraq since the invasion was launched, and continues to fund operations there at about US$6 billion a month, according to congressional officials.However, argue the economists, these figures fail to take into consideration disability payments to veterans over the course of their lifetime, the cost of replacing military equipment and munitions.In addition, the cost of recruiting new soldiers has gone up dramatically, with the Pentagon paying recruitment bonuses of up to US$40 000 for new enlistees and special bonuses and other benefits of up to US$150 000 for current troops that re-enlist.”Another cost to the government is the interest on the money that it has borrowed to finance the war,” the authors point out.They estimate that direct budgetary costs of the Iraq war to the US taxpayer will be in the range of US$750 billion to US$1,1 trillion assuming that the administration of President George W Bush begins to withdraw troops in 2006 and maintains a diminishing presence in Iraq for the next five years.But there are also economic costs likely to stretch out for years, the study warns.For example, to date, more than 3 200 US soldiers have suffered head or brain injuries that require lifetime care at a cost range of 600 000 to US$5 million per person.The economists calculate that over a 20 year-period this group alone will cost the United States US$14 billion in healthcare expenses and lost productivity.The study points to the hidden costs of plucking reservists from their jobs and sending them overseas, rising costs of homeland security spurred by fears of new terrorist attacks, and multiple other factors.And they insist that higher oil prices, that went from US$25 a barrel before the conflict to around US$50 a barrel today and are affecting every facet of American life, can be partly blamed on the war.A “conservative” calculation provided by the study says 20 per cent of the increase was due to the Iraq war.The “moderate” puts it at 25 per cent.- Nampa-AFP