<http://www.nybooks.com/articles/15850>
New York Review of Books - December 5, 2002
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4.
We can now collect the different estimates of the cost of the war. It should be emphasized that these estimates vary in precision and in empirical evidence supporting them. Indeed, aside from the projections of direct military costs, all of the estimates should be regarded as informed conjecture. Moreover, these costs do not attempt to estimate the benefits of resorting to arms. Since avoiding future destructive acts by Iraq is the major articulated reason for undertaking war in the coming months, we cannot truly balance the costs and benefits of war without considering any re-duction in risk that would derive from disarmament and regime change in Iraq.
Table 1 <http://www.nybooks.com/images/tables/20021205010img1.gif> shows a summary compilation of the different quantifiable elements. The favorable case in the first column of numbers would entail relatively modest economic costs, on the order of $120 billion. (These are the total costs over the next decade.) This outcome assumes that the military, diplomatic, and nation-building campaigns are successful.
The unfavorable case is a collage of potential unfavorable outcomes rather than a single scenario. It shows the array of costs that might be incurred if the war drags on, occupation is lengthy, nation-building is costly, the war destroys a large part of Iraq's oil infrastructure, and there are both lingering military and political resistance to US occupation, and major adverse psychological reactions to the conflict. Putting the different adverse effects together adds up to $1.6 trillion, most of which come outside of the direct military costs.
This discussion, however, vastly oversimplifies the analysis by constructing only two cases, whereas reality presents a dizzying variety of outcomes. Returning to the metaphor of war as a giant roll of the dice, we might say that the US could end up paying the "low" costs of around $120 billion if the dice come up favorably. If some dice come up unfavorably, the costs would lie between the low and the high cases. However, if the US has a string of bad luck or misjudgments during or after the war, the outcome, while less likely, could reach the $1.6 trillion of the upper estimate.
Even the upper estimate does not show the limit of fortune's frowns. The projections I have described exclude any costs to other countries, omit the most extreme outcomes (such as chemical or biological warfare), and exclude Perry's "worst" case in oil markets. Moreover, the quantified costs ignore both civilian and military casualties suffered by Iraqis and any tangible or intangible fallout that comes from worldwide reaction against perceived American disregard for the lives and property of others.
5.
It seems likely that Americans are underestimating the economic commitment involved in a war with Iraq. This is hardly new, for the record is littered with failed forecasts about the economic, political, and military outcomes of wars. The history of war is, as Barbara Tuchman entitled her wonderful book, the march of folly.[10] Is America writing another chapter in the march of folly? It is impossible to know in advance, but historians may look back at several early warning signs of economic and political miscalculations.
The first concern is that the Bush administration has made no serious public estimate of the costs of the coming war. The public and the Congress are unable to make informed judgments about the realistic costs and benefits of the upcoming conflict when none are given. Particularly worrisome is the promise of postwar occupation, reconstruction, and nation-building in Iraq. If American taxpayers decline to pay the bills, this would leave a mountain of rubble and mobs of angry people in Iraq and the region.
Closely related is a second syndrome, frequently found in past conflicts, of entering war prepared militarily but not economically. The finances of the nation have deteriorated sharply since George W. Bush took office. The annual federal budget has deteriorated by $360 billion from the spring of 2001 to the fall of 2002, and, even with a short war, budget deficits are likely to mount in coming years. The Bush administration has not prepared the public for the cost or the financing of what could prove to be an expensive venture. Perhaps the administration is fearful that a candid discussion of wartime economics will give ammunition to skeptics of the war; perhaps it worries that acknowledging the costs will endanger the large future tax cuts, which are the centerpiece of its domestic policy. Nonetheless, the price must be paid by raising taxes, by cutting expenditures, or by forcing the Federal Reserve do the job by raising interest rates, thereby curbing investment and especially housing. One way or another, Americans will pay for the war.
Third, the predisposition of the United States under the Bush administration to undertake unilateral actions poses major risks.
From a military point of view, attacking without a broad coalition of countries can make the conduct of the war more difficult and costly, and it may raise the hopes of the Iraqi leadership that others will come to their aid, thereby extending the conflict. From a political point of view, unilateral actions, particularly those taken without support from the Islamic world, risk inflaming moderates, emboldening radicals, and spawning terrorists in those countries. From a legal point of view, America's insistence on the right to overturn foreign governments without the sanction of international law will undermine a wide variety of cooperative efforts on international finance, disarmament, the environment, nonproliferation, and anti- terrorism.
From an economic point of view, unilateral actions imply that the costs will be largely borne by the United States.
Fourth, strategists may be deluding themselves on the reaction of the Islamic world and the Iraqi people to American intervention. A key uncertainty concerns the loyalty of Iraqi troops and the willingness of the Iraqi military commanders to undertake an urban defense of Baghdad. Furthermore, even though no major Arab government is solidly behind the United States, the administration appears to be persuaded that Muslims are waiting for the overthrow of Saddam to dance in the streets and that Americans will be welcomed in Baghdad as liberators rather than infidels. But major additional costs could result if opposition proves more formidable and admiration for America less widespread than the American administration believes.
Finally, one senses an obsession bordering on woodenheadedness in the Bush administration's concentration on Iraq in general and on regime change in particular. In contrast to the clear danger from terrorist activities, there is no imminent threat from Iraq. The war in Iraq threatens to claim the scarce resources and attention of the United States for many years, distracting the country from other troubling spots, like North Korea, or from the Israeli Palestinian conflict. The administration focuses on Iraq while slow growth, fiscal deficits, a crisis of corporate governance, and growing health care problems threaten the economy at home. The domestic economy and the rest of the world will take a back seat while the US is preoccupied with war in Iraq.
Notwithstanding all the warning signs, the administration marches ahead, heedless of the fiscal realities and undeterred by cautions from friends, allies, and foes.
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