[PEN-L:32870] Iraq War May Cost US $1.9 Trillion

[Yoshie Furuhashi <furuhashi.1@xxxxxxx>]

*****   Study: Iraq War Could Cost $1.9 Trillion

War With Iraq Could Cost U.S. As Much As $2 Trillion Over Decade,
Researchers Estimate

The Associated Press

WASHINGTON, Dec. 6 - In the worst case, a war with Iraq could cost
the United States almost as much as the government spent in the last
budget year nearly $2 trillion, according to new projections.

Researchers concluded in a study released Thursday that war with Iraq
could cost the United States from $99 billion to more than $1.9
trillion over a decade.

The lower figure assumes a successful military, diplomatic and
nation-building campaign; the higher figure assumes a prolonged war
with a disruption of oil markets and a U.S. recession, the authors
say in a study by the American Academy of Arts and Sciences.

Both figures assume a U.S. involvement in the country for 10 years.

White House spokesman Gordon Johndroe said it was premature to
comment on cost estimates.

"War is the last resort," he said. "We're hoping for a peaceful solution."

The 1991 Persian Gulf War cost America an estimated $61 billion, but
allies reimbursed all but about $7 billion. By some accounting
methods, the United States may have even made a profit.

Direct military spending could range from $50 billion in a short
campaign to $140 billion in a prolonged war with Iraq, said the study
titled, "War With Iraq: Costs, Consequences and Alternatives." The
study was done by the academy's Committee on International Security
Studies.

The report cautioned that aside from the estimates of direct military
costs, all the numbers should be "regarded as informed conjecture."

Occupation and peacekeeping costs could be $75 billion in the best
case to $500 billion in the worst, the study said. Reconstruction and
nation-building costs are estimated at $30 billion to $105 billion,
and humanitarian aid at $1 billion to $10 billion.

Economic ripples of war with Iraq are likely to spread beyond
budgetary costs, with the prospect of raising the cost of imported
oil, slowing productivity growth and possibly triggering a recession,
the report said.

A prolonged disruption of world oil markets could cost the U.S.
economy up to $778 billion, the researchers estimated. On the other
hand, Iraq's huge oil resources could satisfy U.S. needs for imported
oil at current levels for almost a century and otherwise benefit the
economy by $40 billion.

A short war could actually benefit the United States in terms of its
macroeconomic impact, which includes employment, by $17 billion. A
long war, in contrast, could have a $391 billion negative effect.

The American Academy of Arts and Sciences, founded in 1780 and based
in Cambridge, Mass., is an international society of scientists,
scholars, artists, business people and political leaders.

On the Net:<http://abcnews.go.com/wire/World/ap20021206_218.html>   *****

*****   <http://www.amacad.org/publications/monographs/Iraq_Press.pdf>
Tuesday, December 03, 2002 Contact: Suzanne Morse
For Immediate Release (617) 576-5047

Official Projections Underestimate Cost of Iraq War, According to
American Academy Report

A report issued today by the American Academy of Arts and Sciences
finds that the political, military, and economic consequences of war
with Iraq could be extremely costly to the United States. The report,
"War with Iraq: Costs, Consequences, and Alternatives," is being
published under the auspices of the Academy's Committee on
International Security Studies (CISS).

William D. Nordhaus (Yale University) estimates the costs of war with
Iraq in scenarios that are both favorable and unfavorable to the
United States. He projects that the war could cost $99 billion over
the next decade in the best case, and in excess of $1.9 trillion
during the same period in less favorable circumstances. The latter
figure is nearly 10 times the comparable "worst case" estimate
offered by the administration.

Analyzing the few publicly available studies of the cost of a
potential war with Iraq, Nordhaus finds a number of postwar costs
that have been largely ignored, including:

* A prolonged occupation and peacekeeping, which could cost between
$75 to $500 billion
* The funds needed for Iraq's reconstruction, which could reach $105 billion
* Humanitarian assistance, which could have a price tag of $10
billion at minimum
* A macroeconomic impact over the next decade that could result in a
gain of $17 billion in the best case and a loss of nearly $400
billion in a disruption of oil markets and a resulting recession, as
has been the case in previous Middle East wars.

"The economic ripples of a war with Iraq are likely to spread beyond
the direct budgetary costs, with the prospect of raising the cost of
imported petroleum, slowing productivity growth, and possibly
triggering a recession, " writes Nordhaus. "The dangers of tipping
into recession are real, particularly given that the U.S. economy was
growing very slowly in the fall of 2002," he explains.

Importantly, Nordhaus also addresses the question of who will be
asked to pay the price for military action with Iraq. "If the war is
undertaken without UN sanction or broad international support, the
U.S. could be forced to pay the lion's share of the costs," Nordhaus
asserts.

Steven E. Miller (Harvard University) challenges claims that war with
Iraq will be cheap, beneficial, and hard to avoid. He examines these
assertions in light of a number of potentially disastrous outcomes of
a war with Iraq, all of which could realistically occur yet have
received scant public attention. Among these outcomes, Miller
considers how Iraq's use of weapons of mass destruction, its
disruption of the flow of oil, its drawing the United States into
urban combat in Baghdad, or its attacking Israel would affect the
American war effort. Miller also lays out a scenario in which Saddam
Hussein could "fund, fuel, and facilitate a campaign of terrorism
against his attackers. Given the amount of warning that the Bush
administration has provided him, Saddam has had plenty of time to
pre-deploy his own terrorists in the United States or elsewhere..."

Miller also examines the consequences that a conflict with Iraq might
have on the administration's war on terror and its longer-term affect
on the United States' position as a global superpower. He concludes
that although the administration's case for war against Iraq is
attractive, it is also a gamble with enormous stakes and a
significant risk of adverse consequences. "If the Bush
administration's predictions are correct, then a desirable end will
have been achieved at modest cost with few, if any, adverse
consequences. But what if some of those predictions are incorrect?
What if all does not go well? How far does the course of events have
to diverge from the rosy scenario painted by the Bush administration
before this war ends up looking like a costly, counterproductive
mess, or even a disaster?" Miller asks.

Carl Kaysen (Massachusetts Institute of Technology), John D.
Steinbruner (University of Maryland), and Martin B. Malin (American
Academy of Arts and Sciences), examine the broader national security
strategy behind the move toward a preventive war against Iraq. They
find that the new strategy differs sharply from a long tradition in
American foreign policy, particularly in its neglect of the utility
of international law and institutions for achieving the United States
principal aims. They suggest that the strategy's reliance on U.S.
military forces, maintained to a standard that aspires to be "beyond
challenge," is impractical and likely to stimulate precisely the
"asymmetric responses" to America's global dominance that the
strategy is designed to prevent.

Founded in 1982, the Academy's Committee on International Security
Studies (CISS) plans and sponsors multidisciplinary studies of
current and emerging challenges to global peace and security. Recent
and ongoing CISS projects examine: the governance of outer space; the
global security implications of joint missile surveillance,
international security relationships in the post-Soviet space, the
implications of the International Criminal Court for U.S. national
security, and the global diffusion of light weapons to areas of
conflict.

The American Academy was founded in 1780 by John Adams and other
scholar-patriots "to cultivate every art and science which may tend
to advance the interest, honor, dignity, and happiness of a free,
independent, and virtuous people." The current membership of over
3,700 Fellows and 600 Foreign Honorary Members includes more than 150
Nobel laureates and 50 Pulitzer Prize winners. Drawing on the
wide-ranging expertise of its membership, the Academy conducts
thoughtful, innovative, non-partisan studies on international
security, social policy, education, and the humanities.

To order a copy of the report, call 617-576-5024. "War with Iraq:
Costs, Consequences, and Alternatives" is also available at the
American Academy website at
<http://www.amacad.org/publications/occasional.htm>.  [Download the
full text of the report "War with Iraq: Costs, Consequences, and
Alternatives" at
<http://www.amacad.org/publications/monographs/War_with_Iraq.pdf>.]
*****
--
Yoshie

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<http://www.osu.edu/students/sif/calendar.html>
* Anti-War Activist Resources: <http://www.osu.edu/students/sif/activist.html>
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