[R-G] Estimates of Iraq war costs rise

[Usman Majeed]

http://news.bbc.co.uk/1/hi/business/2805769.stm

Estimates of Iraq war costs rise
     
By Steve Schifferes
BBC News Online in Washington


Even before a shot has been fired, the costs of the possible war against
Iraq have been escalating.

Pentagon planners are now expected to ask Congress for a supplemental
appropriation of $95bn to pay for the war if hostilities break out, up from
previous estimates of around $60bn.

The request would raise the US budget deficit for 2003 to a record $400bn
(£250bn), above the previous high of $290bn in 1992.

Democrats were quick to denounce President George W Bush for calling for tax
cuts and additional spending, instead of raising taxes to pay for the war.

"The government is going to have to borrow the money to finance this war,"
said Senator Robert Byrd, "overwhelming a federal budget which is already
sliding into deep deficit and warping the US economy".

Pressure on Congress

The Bush administration has rejected calls for changes to its economic
strategy, saying that its dividend tax cuts are essential to job creation,
and arguing that the deficits are still manageable.

 
US forces may have to stay longer


The Pentagon wants the money approved before Congress goes on a long recess
on 10 April. 

But the president has resisted pressure to send an early budget request
covering the initial costs of deployment.

"When the administration has something that is ready... we will share it,"
said presidential spokesman Ari Fleischer.

The increased costs of the war reflect uncertainty about the duration of the
conflict, as well as additional costs for reconstruction and aid to key
allies such as Turkey.

Earlier, experts in the Congressional Budget Office had estimated the cost
of a short, two-month war at around $40bn-60bn, with the deployment of
around 250,000 troops.

But each additional day of high-intensity conflict would cost an additional
$500m. 

There are many uncertainties in any calculation.

If Iraqi president Saddam Hussein uses chemical or biological weapons, for
example, there could be huge costs of a clean-up.

Large reconstruction costs

And if Saddam Hussein destroys his oil wells, that would add greatly to the
cost of reconstruction - and reduce the possible revenue available from the
sale of Iraqi oil abroad.

POSSIBLE COST OF WAR

1991 Gulf War: 

US: $61bn 
90% financed by Gulf states



2003 war estimates:

Initial war: $50bn-100b
Occupation: $15bn-45bn per year
Reconstruction: $20bn-80bn


The biggest uncertainties, however, concern the cost of a the reconstruction
after the war. 

President Bush's ambitious goal of rebuilding democracy in Iraq implies that
a large occupation force would be needed, staying at least several years.

He has said that US forces would stay "as long at it takes" in Iraq.

And Washington plans to appoint a prominent US official to help run the
country to ensure that "one brutal dictator is not replaced by another".

According to Michael O'Hanlon of the Brookings Institution, the "costs of
winning the peace... may actually turn out to be a greater concern than the
one-time cost of winning the war".

Refugees 

There may be millions of refugees.

If 10% of Iraq's population fled to other countries, it could cost $1bn-2bn
per year in humanitarian aid to help them, far more than the US and Britain
are currently contributing to the UN High Commission for Refugees.

A bigger expense could be the reconstruction of post-war Iraq, including
physical rebuilding and the training of personnel to run the country.

An ambitious "Marshall Plan" for the build-up of post-war Iraq could cost
the US and its allies up to $75bn (£45.8bn) for a six-year period, according
to estimates by Yale University economics professor William Nordhaus.

A 75,000-200,000 strong peacekeeping force in Iraq could cost $15bn-45bn a
year alone, according to the Congressional Budget Office and the Centre for
Strategic and International Studies.

A five-year presence by 100,000 troops in Iraq could add $125bn to the bill.

Another uncertainty, however, is to what extent US allies will pay for part
of that bill - or directly aid the reconstruction efforts.