Analysis: Putting the cost of war in proper perspective

Few have deeply thought about the real costs of a potential war on Iraq.

Politicians and the media have taken an almost cavalier approach to the war build-up in the area, downplaying the catastrophic consequences such a conflict would have not only on Iraq but the neighbouring countries and the world.

It is fair to say that part of the problem has been finding up-to-date statistics on the "cost of the war". Reliable statistics have been a scarce commodity to ponder on and analyse in any depth or form.

Consequently, most media institutions, particularly print journalism, have played it on the "coverage" level, providing daily reports of the points of view of decision-makers about the "crisis with Iraq" and the looming war, which is still a possibility until it actually happens.

However scarce it maybe, academics, experts and indeed officials have been concerned about the costs of war.

A recent report titled War with Iraq, Costs, Consequences and Alternatives by the American Academy of Arts and Sciences and published in 2002 sought to provide an extensive picture of what the world could be facing in the event of a war.

The report is written by leading American academics that hold prestigious posts in top universities in the U.S. Based on three chapters, the report is the product of Carl Kaysen, Steven Miller, Martin B. Mallin, William Nordhaus and John D. Steinbrunner, experts in political economy, international relations and strategic studies.

Relying on extensive documentation, reports and newspaper material from top dailies in the United States, the experts draw out possible scenarios for war. One of the most important, and probably illuminating chapters is by William Nordhaus On the Economic Consequences of a War with Iraq.

The Sterling Professor of Economics at Yale University has already published this chapter in November 2002, but republished it again, together with the other articles, by the American Academy because of the succinct insight they provide.

At the outset, the report states: "The major benefits of a war are reckoned to be disarming Iraq of its weapons of mass destruction and removing a leadership that is unrelentingly hostile to U.S."

However, the report underlines that the costs of a war, must be considered and analysed. It suggests when talking about costs much methodological problems are posed from a pragmatic point of view.

"Surprisingly, there has been no systematic public analysis of the economics of a military conflict in Iraq."

Nordhaus starts off by saying from a historical point of view war estimates have always been "underestimated" and way off the mark. Decision-makers state one set of figures but actual results have been far higher.

This is what happened in America's war of Independence when the North forked out $3.2 billion, 13 per cent more than the original cost, estimated at $240 million.

The same goes for the Vietnam War whose forecasted cost was underestimated by 90 per cent and in the end was in the region of between $110 and $150 billion. But aside from that there is also the "indirect costs of war".

Examples of that include the consequences of World War I on Germany and the runaway inflation there, plus "Great Depress-ions in Britain of the 1920s or of the world of the 1930s."

Talking about the Vietnam War "the indirect costs were more difficult to gauge but comprised inflation and economic instability, civil unrest, and, some have argued, a growing disenchantment with authority and government in the U.S."

With this deep background aside, readers must actually look at the whole report to comprehend its diversity and the issues involved. Nordhaus then begins to look at the cost of a war if it is to be launched on Iraq.

It is fair to say the researchers of the American Academy report do show that past wars have actually been a great strain on the American economy.

"Major wars in the past cost more than one-half a year's GDP."

On the other hand, Nordhaus says the last Gulf War of 1991 cost the American's only one per cent of its GDP, that is about only $80 billion.

It is curious to know also that in terms fatalities, the allies' lead by the United States only lost 148 personnel, probably the lowest in modern history.

But this is something that may make policy-makers in Washington more eager to start a war not only because of the low fatalities and low casualties, but because today, in 2003, the technology for fighting war is better still.

Officials in the Bush administration have been loathe to talk about precise figures for a coming war on Iraq.

However, a rough estimate of $100 billion-$200 billion is being branded about, but the White House has distanced itself from such figures. Incidentally, although these may seem to be high figures they are only about one to two per cent of America's GDP. But on this, and the other "economic impacts", "the administration has remained silent".

But the research does point to various studies made by U.S. Congress and of the different scenarios that are put forward.

"An assessment of the costs of the war is based on "scenarios for the conduct of the war, the aftermath of hostilities, the impacts on oil markets and the macro-economic effects."

The War on Iraq report puts forward two scenarios: "quick victory" and a "protracted conflict" and these in turn look at "duration of the conflict", "total damage to Iraq", "civilian casualties", "potential for unconventional warfare" and "spread of the conflict outside Iraq".

A "quick victory" strategy is said to last anything "between 30 to 60 days of air war, ground invasion, and ground combat, followed by 2.5 months of post-victory presence by troops in the theatre."

The cost of such an operation is estimated between $48 billion to $60 billion and is based on the calculation of the 1990-91 conflict. Others put the figure at $44 billion.

But a "quick victory" may not be certain, and a war could very well become a protracted conflict as Nordhaus points out.

Different factors may increase the cost. These include the development of an "Iraqi urban defence strategy; the cost of buying support from allies; war with Israel; contagion of terrorist acts around the world; the use of weapons of mass destruction" and a host of other factors.

For the economic professor, who has many academic books to his name, and bearing in mind that Washington may have wider objectives for changing the regime in Iraq costs may rise as well because of "macro-economic shocks", "occupation and peace-keeping", "reconstruction", "humanitarian assistance", and "costs of nation-building".

Hence, there are a lot of issues and factors to consider that act against a "quick victory" strategy, leading to a war that could last at the very least up to six months, even a year if the conflict drags on where U.S. troops enter Iraq get involved in a "build-up and mopping operations" occurs.

The cost according to one study could rise from $50 billion to $140 billion. Here again, the cost to American soldiers could increase from 100 to 5,000 deaths as estimated.

If America is seriou