Tuesday, March 11, 2008

The Costs Of War : Billions And Trillions

A Nobel prize winning economist has crunched the numbers on the Iraq War, and comes up with a total war cost bill to future generations of Americans of more than $3 trillion.

But that $3 trillion figure is just the cost of the Iraq War to Americans. For the rest of the world, the final tally is likely to be even higher (excerpts from this story) :
Next month America will have been in Iraq for five years - longer than it spent in either world war. Daily military operations (not counting, for example, future care of wounded) have already cost more than 12 years in Vietnam, and twice as much as the Korean war. America is spending $16bn a month on running costs alone (ie on top of the regular expenses of the Department of Defence) in Iraq and Afghanistan; that is the entire annual budget of the UN. Large amounts of cash go missing - the well-publicised $8.8bn Development Fund for Iraq under the Coalition Provisional Authority, for example; and the less-publicised millions that fall between the cracks at the Department of Defence, which has failed every official audit of the past 10 years.

Whatever the much argued reasons for bombing Baghdad, cheap oil has not been the result. In fact, the price of oil has climbed from $25 a barrel to $100 in the past five years - great for oil companies, and oil-producing countries, who, along with the contractors, are the only beneficiaries of this war, but not for anyone else. After calculations based on futures markets, Stiglitz and Bilmes conclude that a significant proportion of this rise is directly due to the disruptions and instabilities caused by Iraq. This price rise alone has cost the US, which imports about 5bn barrels a year, an extra $25bn per year; projecting to 2015 brings that number to an extra $1.6 trillion on oil alone (against which the recent $125bn stimulus package is simply, as Stiglitz puts it, "a drop in the bucket").
Economist Stiglitz also puts to death the long persuasive myth that the United States going to war is good news for its economy :
....in specific cases, such as world war two, one that has seemed to be true - but in 1939, America and Europe were in a depression; there was all sorts of possible supply in the market, but people didn't have the cash to buy anything. Making armaments meant jobs, more people with more disposable income, and so on - but peacetime western economies these days operate near full employment. As Stiglitz and Bilmes put it, "Money spent on armaments is money poured down the drain"; far better to invest in education, infrastructure, research, health, and reap the rewards in the long term.
Perhaps worst of all, the United States isn't even paying for its War On Iraq :
...the borrowed trillions have to come from somewhere. Because "the saving rate [in America] is zero," says Stiglitz, "that means that you have to finance [the war] by borrowing abroad. So China is financing America's war." The US is now operating at such a deficit, in fact, that it doesn't have the money to bail out its own banks. "When Merrill Lynch and Citibank had a problem, it was sovereign funds from abroad that bailed them out. And we had to give up a lot of shares of our ownership. So the largest shareowners in Citibank now are in the Middle East. It should be called the MidEast bank, not the Citibank." This creates a precedent of dependence, "and whether we become dependent on Middle East oil money, or Chinese reserves - it's that dependency that people ought to worry about. That is a big change. The amount of borrowing in the last eight years, on top of the borrowing that began with Reagan - that has all changed the US's economic position in the world."
The full story is here, but here's some of the numbers :

The amount the US spends on the monthly running costs of the wars in Iraq and Afghanistan - on top of regular defence spending

The amount paid by every US household every month towards the current operating costs of the war

The amount Halliburton has received in single-source contracts for work in Iraq

The annual cost to the US of the rising price of oil, itself a consequence of the war

$3 trillion
A conservative estimate of the true cost - to America alone - of Bush's Iraq adventure. The rest of the world, including Britain, will shoulder about the same amount again

Cost of 10 days' fighting in Iraq

$1 trillion
The interest America will have paid by 2017 on the money borrowed to finance the war

The average drop in income of 13 African countries - a direct result of the rise in oil prices.

The NeoCons are fire-selling, through further borrowing, what remains of America's assets and businesses to China, and other Asian lenders, to keep fighting a war they cannot win.

The NeoCons officially have the world's most expensive egos.