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Iraq war may cost US trillions
10/01/2006 10:49 - (SA)
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 will be manageable, reveals a new study co-authored by a Nobel Prize winning economist.
The research made public on Monday 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, argued current official assessments of the war cost fail to consider key expenses likely to dog the US budget for years to come.
They included 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 could be blamed on the military venture.
Degree of confidence
Stiglitz and Bilmes wrote: "Even taking a conservative approach, we have been surprised at how large they are. 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 $200bn.
However, other administration officials immediately dismissed the number as a gross overestimation.
Throughout the study, the authors provided "conservative" and "moderate" estimates of expenses incurred by American society since the start of the war in March 2003.
Moderate assessment
According to a "conservative" assessment, the war would cost Americans at least $1.026. Under a "moderate" assessment, the expenses would top $1.854.
According to congressional officials, the US had already spent $251bn in cash on combat operations in Iraq since the invasion was launched, and continued to fund operations there at about six billion dollars a month.
However, argue the economists, these figures failed to take into consideration disability payments to veterans over the course of their lifetime, the cost of replacing military equipment and munitions.
Recruitment bonuses
In addition, the cost of recruiting new soldiers had gone up dramatically, with the Pentagon paying recruitment bonuses of up to $40 000 for new enlistees and special bonuses and other benefits of up to $150 000 for current troops that re-enlist.
The authors pointed out: "Another cost to the government is the interest on the money that it has borrowed to finance the war."
They estimated that direct budgetary costs of the Iraq war to the US taxpayer would be in the range of $750bn to $1.1 trillion, assuming that the administration of President George W Bush would begin to withdraw troops in 2006 and maintained a diminishing presence in Iraq for the next five years.
The study warned that there were also economic costs likely to stretch out for years.
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