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Iraq to cost U.S. more than $2 trillion, says report

Jamie Wilson

More pressure on the Bush administration over its handling of the war

Washington: The real cost to America of the Iraq war is likely to be between $1 trillion and $2 trillion, up to 10 times more than previously thought, according to a report written by a Nobel prize-winning economist and a Harvard budget expert.

The study, which expands on traditional estimates by including such costs as lifetime disability and healthcare for troops injured in the conflict as well as the impact on the American economy, concludes that the U.S. Government is continuing to grossly underestimate the cost of the war.

The report comes during one of the most deadly periods in Iraq since the invasion, with the U.S. military on Friday revising upwards to 11 the number of its troops killed during a wave of militant attacks on Thursday. More than 130 civilians were also killed when suicide bombers struck Shia pilgrims in Karbala and a police recruiting station in Ramadi.

The paper on the real cost of the war, written by Joseph Stiglitz, Columbia University professor who won the Nobel Prize for economics in 2001, and Linda Bilmes, a Harvard budget expert, is likely to add to the pressure on the Bush administration over its handling of the war. It also follows the revelation this week that the White House has scaled back its ambitions to rebuild Iraq and does not intend to seek new funds for reconstruction.

Conservative estimates

Mr. Stiglitz told the London Guardian newspaper that despite the staggering costs laid out in their paper the economists had erred on the side of caution. ``Our estimates are very conservative, and it could be that the final costs will be much higher. And it should be noted they do not include the costs of the conflict to either Iraq or the U.K.''

In 2003, as U.S. and British troops were massing on the Iraq border, Larry Lindsey, (U.S. President) George Bush's economic adviser, suggested the costs might reach $200 billion. The White House said the figure was far too high, and Deputy Defence Secretary Paul Wolfowitz even claimed that Iraq could finance its own reconstruction. Three years later, with more than 140,000 U.S. soldiers still on the ground in Iraq, even the $200 billion figure was very low, according to the two economists.

Taking in increased defence spending as a result of the war, veterans' disability payments and demobilisation costs, the economists predict the budgetary costs of the war alone could approach $1 trillion. The paper analyses the cost to the economy, including the economic value of lives lost and factors such as higher oil prices that can partly be attributed to the war. It also calculates the effect if a proportion of the money spent on the Iraq war was allocated to other causes. These factors could add tens of billions of dollars. Mr. Stiglitz, a former World Bank chief economist, said the paper, which will be available on josephstiglitz.com, did not attempt to explain whether Americans were deliberately misled or whether the underestimate was due to incompetence.

But in terms of total cost of the war ``there may have been alternative ways of spending a fraction of that amount that would have enhanced America's security more, and done a better job in winning the hearts and minds of those in the Middle East [West Asia] and promoting democracy.'' —

© Guardian Newspapers Limited 2004

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