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Iraq: How Much Would War Cost? The Estimates Keep Rising

How much would a war in Iraq cost? That's a question being asked with increasing urgency as a war looks imminent. The cost in human lives cannot be calculated. But number crunchers are trying to tote up the money the United States and Britain will need to spend. Their guesses at the likely price tag are high -- and rising.

Prague, 7 March 2003 (RFE/RL) -- As war in Iraq looms, economists have been busy trying to put a price tag on a military campaign -- and any occupation and reconstruction that follows.

Lawrence Lindsey, a former White House economics adviser, fired the first shot in the war of estimates last autumn. He said it would cost the United States at least $100 billion.

Not so, said other officials. U.S. Defense Secretary Donald Rumsfeld said in a January interview it would be less than half that figure.

But recent reports from the "Los Angeles Times" and elsewhere suggest that official estimates for a war and a short occupation are again creeping toward the $100 billion mark. Add in a lengthy postwar occupation and reconstruction, and the bill could reach the dizzying figure of $1.6 trillion, according to one academic economist.

Cost estimates are rising too for the United Kingdom, which is likely to join any U.S.-led attack. Chancellor (finance minister) Gordon Brown has now earmarked 1.75 million pounds ($2.8 billion). But independent economists say the bill could be twice that much.

Brown himself said this week that Britain will spend "what it takes" to disarm Iraqi President Saddam Hussein. "Last year, I set aside 1 billion pounds to be drawn upon by the Ministry of Defense for security and military preparation if and when action became necessary. Last month, I set aside an additional 750 million pounds. Our armed forces do an outstanding job for Britain, and today I make clear our gratitude for the work that they do and my resolve to ensure that our armed forces are properly supported for whatever lies ahead," Brown said.

Analysts say that the conservative estimates are based on a best-case scenario: a short, successful war that removes Hussein from power and maintains regional stability.

But the war could get bogged down, or messy, if Hussein uses chemical or biological weapons. Oil prices could spike for a long time. It could set off regional instability. And how long or intensive would the postwar occupation and reconstruction be?

For the United States, it could all push the final bill up to the scary $1.6 trillion figure given by Yale economist William Nordhaus in December last year.

Little wonder U.S. government officials are reluctant to provide numbers. Rumsfeld last week said it's impossible to made an accurate prediction. And his deputy Paul Wolfowitz was so evasive to the House Budget Committee last week that one congressman, James Moran, accused him of "deliberately keeping us in the dark."

Keith Hartley is the director of the Centre for Defence Economics at York University in the United Kingdom. He said that politicians have every incentive to underestimate the costs. "They want to make it appear cheap, and, of course, even if they have a more accurate idea of the costs of the war, if they publicize that figure, that sends out a clear signal to a potential enemy about the scale of the involvement and the assumption behind the military campaign. So, understandably for military reasons, you'd want to be cautious about the cost figures, and for political reasons, you want to deliberately underestimate the costs so as not to appear too expensive," Hartley said.

This is a particularly sensitive area in the United Kingdom, where the public is already mostly antiwar and many people are grumbling that the money is needed at home. One contributor to a recent online debate asked, "In a country that has crumbling hospitals and underfunded schools, do you really think a war with Iraq is the best use of our tax money?"

Inevitably, comparisons are made with the bill for the Gulf War of 1991, which was around $60 billion. The difference there is that other allies shared the bill. Ron Smith, a defense-economics expert at Birkbeck College London, said that cut the costs for Britain down to a minimum. "It was offset by contributions from Kuwait and Saudi Arabia, so the net cost of the first Gulf War to the British economy was very small. It's very unlikely that other countries would contribute to the cost of the war this time," Smith said.

Hartley said that predicting the cost a potential war leads him to consider -- half-seriously -- an alternative economic scenario. If it's worth spending upward of $100 billion on a war, why not spend it on avoiding a war?

His suggestion: Pay Hussein $20 billion to leave, give $50 billion to the Iraqi people to rebuild their economy, and the United States could still save compared to the costs of a war.

That's unlikely to find a sympathetic audience, not least because it would reward bad behavior and encourage other "future Saddams." Still, if those estimates keep rising, it may start to look like a tempting bargain.