Iraq war bill escalates

By Steve Schifferes, BBC News Online in Washington

Even before a shot has been fired, the costs of the possible war against Iraq have been escalating. Pentagon planners are now expected to ask Congress for a supplemental appropriation of $95bn to pay for the war if hostilities break out, up from previous estimates of around $60bn.

The request would raise the US budget deficit for 2003 to a record $400bn (250bn), above the previous high of $290bn in 1992.

Democrats were quick to denounce President George W Bush for calling for tax cuts and additional spending, instead of raising taxes to pay for the war.

"The government is going to have to borrow the money to finance this war," said Senator Robert Byrd, "overwhelming a federal budget which is already sliding into deep deficit and warping the US economy".

Pressure on Congress

The Bush administration has rejected calls for changes to its economic strategy, saying that its dividend tax cuts are essential to job creation, and arguing that the deficits are still manageable.

US forces may have to stay longer

The Pentagon wants the money approved before Congress goes on a long recess on 10 April.

But the president has resisted pressure to send an early budget request covering the initial costs of deployment.

"When the administration has something that is ready... we will share it," said presidential spokesman Ari Fleischer.

The increased costs of the war reflect uncertainty about the duration of the conflict, as well as additional costs for reconstruction and aid to key allies such as Turkey.

However, Deputy Defence Secretary Paul Wolfowitz told Congress that no accurate estimate of the cost of the war could yet be made.

"I am reluctant to try to predict anything about what the cost of a possible conflict in Iraq would be, or what the possible cost of reconstructing and stabilizing that country afterwards might be," he said.

"But some of the higher-end predictions recently, such as the notion that it will take several hundred thousand U.S. troops to provide stability in post-Saddam Iraq are wildly off the mark."

Estimates

Earlier, experts in the Congressional Budget Office had estimated the cost of a short, two-month war at around $40bn-60bn, with the deployment of around 250,000 troops.

But each additional day of high-intensity conflict would cost an additional $500m.

There are many uncertainties in any calculation.

If Iraqi president Saddam Hussein uses chemical or biological weapons, for example, there could be huge costs of a clean-up.

Large reconstruction costs

And if Saddam Hussein destroys his oil wells, that would add greatly to the cost of reconstruction - and reduce the possible revenue available from the sale of Iraqi oil abroad.

POSSIBLE COST OF WAR
1991 Gulf War:
US: $61bn
90% financed by Gulf states


2003 war estimates:
Initial war: $50bn-100b
Occupation: $15bn-45bn per year
Reconstruction: $20bn-80bn

The biggest uncertainties, however, concern the cost of a the reconstruction after the war.

President Bush's ambitious goal of rebuilding democracy in Iraq implies that a large occupation force would be needed, staying at least several years.

He has said that US forces would stay "as long at it takes" in Iraq.

And Washington plans to appoint a prominent US official to help run the country to ensure that "one brutal dictator is not replaced by another".

According to Michael O'Hanlon of the Brookings Institution, the "costs of winning the peace... may actually turn out to be a greater concern than the one-time cost of winning the war".

Refugees

There may be millions of refugees.

If 10% of Iraq's population fled to other countries, it could cost $1bn-2bn per year in humanitarian aid to help them, far more than the US and Britain are currently contributing to the UN High Commission for Refugees.

A bigger expense could be the reconstruction of post-war Iraq, including physical rebuilding and the training of personnel to run the country.

An ambitious "Marshall Plan" for the build-up of post-war Iraq could cost the US and its allies up to $75bn (45.8bn) for a six-year period, according to estimates by Yale University economics professor William Nordhaus.

A 75,000-200,000 strong peacekeeping force in Iraq could cost $15bn-45bn a year alone, according to the Congressional Budget Office and the Centre for Strategic and International Studies.

A five-year presence by 100,000 troops in Iraq could add $125bn to the bill.

Another uncertainty, however, is to what extent US allies will pay for part of that bill - or directly aid the reconstruction efforts.
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