THE GLOBAL CONSEQUENCES of the invasion of Iraq are far-reaching. Iraq has borne the brunt of the damage, but the breakdown in most areas of central government there means it is difficult to secure reliable numbers with which to perform the type of cost analysis we have done for the United States.
Prior to the invasion, Iraq was a dictatorship and a miserable place to live for many of its people. Nonetheless, it had survived ten years of sanctions; it was a dysfunctional yet viable country. Five years after the United States occupied Iraq with the stated goal of bringing democracy to its people, the war has essentially ruined the country’s economy, society, and sovereignty.
In global terms, the jump in oil prices since the start of the war dwarfs all the other economic costs. The higher oil prices assumed in our moderate scenario represent a direct cost to the world economy of approximately $1.1 trillion, taking into account the macroeconomic repercussions. In human terms, it is the loss of life and the destruction of Iraqi society that is the most egregious. Meanwhile, costs continue to mount for the Iraqi people and their economy, as well as for the rest of the world.
For most Iraqis, daily life has become unbearable—to the point that those who can afford to leave their country have done so. By September 2007, a stunning 4.6 million people—one of every seven Iraqis—had been uprooted from their homes. This is the largest migration of people in the Middle East since the creation of Israel in 1948.1
Half of these Iraqis—many of them women and children—have fled the country completely. Millions of people are finding temporary haven in Syria, Jordan, and other neighboring countries. Iraqis are also the leading nationality seeking asylum in Europe. According to the UN High Commissioner on Refugees, “thousands of the Iraqis [fleeing the country] are the victims of torture, sexual and gender-based violence, car bombings or other violent attacks and are in urgent need of medical care. The majority of Iraqi children are not attending school.”2
However, the neighboring countries are themselves feeling the strain of accepting so many refugees. Syria, for example, will no longer accept Iraqis without visas. This has forced some Iraqis to return home, but in September 2007, there were still 2,000 Iraqis arriving at the Syrian border every day.3 By late November 2007, despite the fact that the Iraqi government was offering to pay $700–$800 to refugees if they returned home, plus free bus and plane rides, the UNHCR pointed out that “large scale repatriation would only be possible when proper return conditions are in place—including material and legal support and physical safety. Presently there is no sign of any large-scale return to Iraq as the security situation in many parts of the country remains volatile and unpredictable.” 4
Inside Iraq, the situation is also dire. Over 2.2 million more Iraqis have been displaced from their homes, often as the result of sectarian violence in their neighborhoods. As Syria tightened visa restrictions and few Iraqis can get visas for European countries, more people have been forced to move to safer areas within Iraq.
It is difficult to estimate the financial cost—let alone the human toll—of this humanitarian catastrophe. The countries that have accepted refugees have needed to provide food, water, sanitation, health care, shelter, transportation, legal assistance, protection, and education for millions of people. In the case of Jordan, for instance, the estimated cost is in excess of $1 billion.5 In 2007, the UNHCR budget for caring for Iraqi refugees was $123 million, but this is a small fraction of the total budgetary cost. It does not even begin to take into account the impact on the economies of the countries that have been directly affected, such as Jordan, Syria, Egypt, and Lebanon.6
As we noted in chapter 1, America has shouldered only a small share of the burden of those refugees, relative to our population. This is not the only instance where other countries have borne a heavy burden. The United States knew that Iraq could pay for its own reconstruction only if its existing debts were forgiven. But most of these debts were held by other countries. America forgave the $2.2 billion ($4.1 including interest) owed to it by Iraq, but then pressured other creditors to forgive a combined $29.7 billion in a deal struck on November 21, 2004.7
The Cost of Iraqi Deaths and Injuries
AN OBVIOUS AND sobering cost to the country includes the deaths of Iraqi soldiers fighting on our side. We have always viewed those soldiers as substitutes for Americans; indeed, our emphasis has been on training them so that they could fight instead of Americans. Had they not done so, more Americans would have been needed to do battle and more Americans would have died. As we go to press, 7,697 Iraqi soldiers fighting alongside U.S. troops have been killed.8
Oddly, the U.S. government does not keep track of the number of Iraqi soldiers injured. As we saw in chapter 3, the number of troops injured in combat is more than eight times the number killed (counting all injuries, the ratio is 1:15). Conservatively estimating the number of Iraqis injured at just twice the number killed implies some 15,394 injuries thus far. Extrapolating for two more years of war, under a conservative scenario with the same death rate, raises that number to 23,946. Of course, as Iraqi troops take on a greater role, as assumed under the best case scenario, they may face an even higher death rate.
In writing this book, we have been reluctant to put a dollar value on the lives of the Iraqis killed in the war. It is unconscionable to make calculations based on the idea that an Iraqi life is worth less than an American one. If we value an Iraqi life as equal to an American life, then the total cost of Iraqi military deaths is $172.4 billion. Valuing an injury at 20 percent of the value of a life raises that number by an additional $69 billion. Salaries are lower in Iraq than in the United States, as is the average income, but the principle is the same: the Iraqi economy is poorer as a result of the loss of its young men.9
The military deaths and injuries in Iraq pale when compared to the number of civilian casualties. These include both innocent civilians killed by Coalition troops, who are counted as “collateral damage,” and those killed in the civil war ignited by the invasion. There are also “disappearances”: by March 2006, some thirty to forty Iraqis were being kidnapped daily.10 Many of those kidnappings ended with the victim’s death.11
By December 2007, the official tallies of civilian casualties of the war had grown to 39,959.12 But this number, large as it was, was a vast undercount. The Brookings Institution’s Iraq Index puts the total at just shy of 100,000. The violence has risen to such a level that the Brookings researchers commented: “Starting in 2006, we have found it is no longer practical to differentiate between acts of war and crime.”13 During much of 2006, officially recorded deaths numbered more than 100 a day.14 Beginning in 2007, a new category of killings was introduced into the tables: “extrajudicial killings” (“death penalty punishments,” without the sanction of courts or government)—amounting to some 5,150 in the first seven months of 2007.
To this grim tally we must add the people who have become seriously ill or have died because Iraq’s economy was destroyed and no adequate relief program was put in place. In difficult economic times, some people will become undernourished, and therefore less able to ward off disease. The absence of clean water and electricity, and the massive exodus of doctors (so that today Iraq has fewer than half the doctors it had at the beginning of the war) too have exerted their toll.15
One of the symptoms of the deteriorating living conditions in Iraq has been the outbreak of cholera—a disease which can occur when water supplies, sanitation, food safety, and hygiene practices are inadequate. People become infected after eating food or drinking water contaminated by the feces of infected persons. Overcrowded communities with poor sanitation and unsafe drinking water supplies are breeding grounds for Vibrio cholerae, the bacterium that causes cholera. Severe cholera cases present with profuse diarrhea and vomiting, which can lead to rapid dehydration and death if untreated. Cholera is widespread in parts of Africa, but it is rare elsewhere in the world. During 2006, there were fewer than 2,500 reported cases in the entire Asian continent (including India and China). In 2006, there were no cholera deaths in South America, North America, Europe, or Australia.16
Before the war, cholera was extremely rare in Iraq.17 Now it is a serious health crisis. A cholera outbreak was first detected in Kirkuk, northern Iraq, on August 14, 2007. It has spread to nine out of eighteen provinces across Iraq. Over 3,315 cases have been confirmed—more than in all of Asia in 2006—and 30,000 people have fallen ill with acute watery diarrhea (cholera symptoms). At least fourteen have died of the disease,18 which is continuing to spread across Iraq, especially in Kirkuk and Sulaymaniah provinces. An increasing number of cases have also been reported in the cities of Baghdad, Basra, Mosul, and Tikrit, and in the provinces of Diyala, Dahuk, and Wasit.
The World Health Organization has deployed epidemiologists to Iraq; it is sending 5 million water treatment tablets and has taken other measures to reduce the transmission of the disease. It is likely that the outbreak will eventually be controlled, but the WHO notes that in Iraq, “the overall quality of water and sanitation is very poor, a factor known to facilitate greatly cholera contamination.”19 The direct costs of controlling the disease are difficult to estimate. However, it will be an unwelcome additional cost to an organization whose annual budget of $3.3 billion (close to what we spend in Iraq during one week) is already stretched in dealing with global HIV/AIDS, tuberculosis, malaria, SARS, malnutrition, and many other conditions.
To fully understand the number of deaths that are attributable to the Iraq war, we need to look at what has happened to the total death rate in the country after the U.S. invasion. There are well-established methodologies for ascertaining changes in death rates, and a study conducted by researchers at Johns Hopkins University followed these methodologies; it looked at a scientifically chosen sample of villages, comparing death rates in those villages before the war and after.20 This sampling approach is the same methodology used in political opinion polls. A sample of 1,000 can predict voting outcomes with a high degree of reliability, often with a margin of error of 3 percent or less, for a country like the United States. The Johns Hopkins study used a large sample (over 1,849 Iraqi households with 12,801 members) and went to great lengths to make sure that the reported deaths had actually occurred. As of July 2006, the study put the increase in fatalities at 654,965.21 Since then, the pace of killing has increased. Assuming that the death rate remains at the level reported by the Hopkins study through March 2010, the total number of Iraqi deaths would exceed one million. As we noted earlier, we have no data for those seriously injured; but if we conservatively project that the numbers injured are double those killed, then that tally would exceed two million.22
Putting a value on Iraqi civilian casualties creates the same dilemmas as doing so for the military deaths and injuries. Using our methodology for American deaths generates a total cost of somewhat more than $8.6 trillion, which exceeds all the numbers we have previously calculated. The Iraqi economy is poorer, but again the principle is the same, except this: a society that has lost so many of its people is more than proportionately weakened.
As we have done elsewhere in this book, it may prove useful to consider the counterfactual: what would have happened if we had not invaded Iraq? Some studies, including those broadly supportive of the war, have suggested that 10,000 Iraqis a year likely would have died in the alternative “containment” scenario, under which UN sanctions would have continued as before the invasion. There seems to be no strong basis for that estimate; but even if it were true, it simply means a reduction of 70,000 from the projected one million deaths (with a corresponding decrease in the number of injured).
The most difficult aspect of the counterfactual concerns what would have happened at the end of Hussein’s regime—since it would have eventually come to an end. Would another equally oppressive Baathist regime have replaced it? Would there have been a more democratic—but less violent—transition? Or would the country have broken apart in civil war? If one accepts the latter view, the American invasion simply precipitated the eventual splitting apart of the country. While there are by definition no certainties on “what might have been,” it is clear that at a minimum the occupation exacerbated many of the long-standing tensions. By destroying the economic and political infrastructure, the American occupation meant that there was less reason for the country to hold together. Contemplating starting over from scratch, many Iraqis in those regions with oil thought they could do better on their own.23
The Cost to Iraq’s Economy
THE WAR IN Iraq has dealt a heavy blow to the country’s economy, which was facing serious difficulties even before the invasion. Iraq had spent eight years in a fruitless war with Iran. It had suffered a humiliating defeat in the Gulf War of 1991. The embargo on Iraqi oil, imposed by the United Nations and the United States after the first Gulf War ended in 1991, also had taken its toll. In 2001, Iraq’s GDP was 24 percent lower than it had been ten years earlier (in purchasing power terms).24 Like so many other Middle Eastern countries, Iraq’s economy was dominated by oil—accounting for almost two thirds of the country ‘s GDP.25 The country had a thriving middle class, and most Iraqis had high hopes for the future once their nation was freed from the burden of an embargo.
We noted earlier that Iraq’s GDP, in real terms, is no higher than it was in 2003, in spite of a near quadrupling of oil prices; that at least one in four Iraqis are unemployed; and that Baghdad gets only nine hours of electricity per day—less than it had before the war.26 Life in Baghdad’s 130-degree Fahrenheit summers—outside the Green Zone in which the occupation authorities live—is oppressive. Oil exports have dropped and have yet to recover to their prewar level.27
The economic disaster is, of course, an integral part of the Iraqi debacle. It has been both cause and consequence: it has contributed to the insurgency, and the insurgency has had a devastating effect on the economy. In some places, destruction is outpacing construction. Some 59 percent of Iraqis view their economic conditions today as “poor,” and only 11 percent as “good” or “excellent.”28 The failure to provide jobs and income has, rightly, lost the U.S.-backed government what little support it had. Worse, we have created an explosive combination of high levels of unemployed males between the ages of eighteen and thirty-five and ready access to arms.
The failure to provide adequate security, in turn, has made the reconstruction of the Iraqi economy nearly impossible. But the failure of the Iraqi economy is also the result of a fundamentally flawed economic strategy. Much attention has been given to the major military and political mistakes made by the Bush administration, especially in the critical days of the early occupation. Too little attention has been given to its flawed policies for the rejuvenation of the Iraqi economy.
Even before it had stabilized the country, even before there had been progress in reconstruction, the United States attempted to bring free market capitalism to Iraq. In September 2003, Paul Bremer enacted laws abolishing many tariffs on imports and capping corporate and income tax at 15 percent.29 There has also been repeated talk of privatizing state-owned industry, despite the fact that the 1907 Hague Convention “Regulations Concerning the Laws and Customs of War on Land” bar occupiers from selling off a country’s assets.30 This privatization plan was part of the mantra of the Bush administration from the beginning.
In his powerful book Imperial Life in the Emerald City, The Washington Post’s Rajiv Chandrasekaran recounts an incident in which Thomas Foley, a Republican donor appointed in August 2003 to head private sector development in Iraq, boasted that he would privatize all of Iraq’s state-owned enterprises within thirty days. Told that this was against international law, Foley replied: “I don’t care about any of that stuff…. I don’t give a shit about international law. I made a commitment to the President that I’d privatize Iraq’s businesses.”31
The benefits of privatization and free markets in transition economies are debatable, of course. But Foley and others like him failed to realize that, until Iraq was stabilized, anyone buying its assets would pay bottom dollar and then try to strip them, rather than sticking around to actually do business and invest in a dangerous country. And just when Iraqi firms needed the most help, the effect of U.S. policies was to expose them to free competition, with zero or very low tariffs. This was something that American industry would never have tolerated. The policies had the predicted effects. There has been little foreign direct investment outside of oil, and many businesses could not compete with the flood of imports and so shut down, resulting in even higher levels of unemployment.
The U.S. Treasury contributed to the debacle by insisting on tight monetary policies. A flood of dollars coming into the country from America—much of it unaccounted for—created shortages in certain parts of the economy. Prices rose. The Treasury responded in an almost mechanical way, encouraging Iraqis to raise interest rates and tighten credit. But the problem in Iraq was not a surfeit of credit. In fact, officials at USAID (the U.S. international aid agency) had been working hard trying to figure out how to stimulate small businesses, a major source of potential job creation. They concluded that a major impediment was lack of access to credit, and so they carefully designed a partial guarantee scheme that would enhance the flow of credit to small and medium-sized enterprises and hopefully help create more employment. But just as one part of the U.S. government was trying to expand Iraq’s anemic economy by increasing the supply of credit, another part of the U.S. government, worried about “overheating,” was working to decrease the supply of credit—even as the unemployment rate hovered between 25 percent and 40 percent.
America’s policy of relying on contractors also unwittingly contributed to the failure of Iraqi recovery. U.S. procurement law requires the use of U.S. contractors, except in certain circumstances. In Iraq, much of the U.S. money spent on reconstruction went to high-priced American contractors rather than low-cost local Iraqi labor. California congressman Henry Waxman pointed out that non-Iraqi contractors charged $25 million to repaint twenty police stations—a job that the governor of Basra claims could have been done by local firms for $5 million.32 This was not only wasteful but also led to resentment among Iraqis.
It was, however, not just a matter of resentment. It was in our interest to supply jobs for the large number of unemployed young Iraqi men (particularly given that, as we had disbanded the Iraqi army, many were left with arms—disgruntled armed young men who might easily be persuaded to join the insurgency). With more than one out of two Iraqi men out of work at some point after the invasion, Iraqis were begging for work. But American contractors focused on minimizing their labor costs,33 and imported workers from Nepal and other low-wage countries who were cheaper than Iraqis. This is another example where the contractors’ interests ran directly counter to America’s national interest, which was to quickly create jobs and restore Iraq’s economic strength.
Things might have been worse if the administration had been more successful in its liberalization and privatization agenda. But like so many other aspects of the Iraq agenda, it failed in the implementation of its policies just as it failed in their design. The laws of occupation blocked the most important component of the administration’s privatization agenda—the oil sector.
No one, neither foreigners nor Iraqis, thinks of Iraq as a safe place to invest.34 As long the insecurity is maintained, the prospects for Iraq’s future economy are bleak.35 We have not undertaken the ambitious task of calculating the loss to the Iraqi economy. And again, part of the calculation hinges on the counterfactual—what would have happened but for the war. Suffice it to say, no matter what assumptions one makes, it is hard to imagine a bleaker situation than the current one.
The Cost to the Rest of the World
IRAQ AND THE United States have been the biggest losers in this war; but many other countries have incurred heavy costs. First are the direct costs to U.S. allies that joined in the invasion as part of the “coalition of the willing.” Second is the cost to the global economy—and to specific countries—of the increase in oil prices, including the resulting macroeconomic effects.
There is another set of costs, about which we will say little but which may ultimately be the most important. The Iraq war has contributed to a “clash of civilizations,”36 a perception that there is a new crusade against Islam. Many in the Middle East see an American strategy of sowing dissension between Sunnis and Shiites as part of a grander strategy in this “new crusade.” Regardless of the factual basis for such beliefs, the Iraq war has intensified feelings of animosity which are likely to be a source of conflict for years in the future.
The rhetoric about a global coalition notwithstanding, the war in Iraq has been largely an American venture, with some political cover provided by the United Kingdom. According to the White House, there were an impressive-sounding forty-nine countries in the “Coalition”; yet America provided 84 percent of the troops itself and paid the costs of many of the foreign troops.37 Opposition to the war was so strong among the populations of many of these “allies” that it has played a role in unseating the governments of Italy, Spain, Poland, and Australia. By 2007, the United States was providing 94 percent of the troops; at least eighteen countries had withdrawn their troops; and our most important ally, the United Kingdom, had already begun major cutbacks. Increasingly, the “coalition of the willing” was becoming a “coalition of one.”
The total of military deaths for the allies in Iraq as this book went to press stood at 306,38 with a further 675 injured. Although these numbers will certainly rise before the war is over, the increase will probably be small, particularly since the United Kingdom, which provides the largest contingent, is rapidly reducing its presence in Iraq. If we apply the same yardsticks to valuing lives lost as for U.S. personnel, then the economic cost of these fatalities alone comes to $2.2 billion.39 Including injuries would increase the total by at least 40 percent.
A full exposition of the budgetary expenditures of our allies is difficult. However, if we postulate that costs are roughly proportional to troop commitments, then given that they have been supplying between 6 percent to 16 percent of the troops, their direct operational costs so far may be of the order of magnitude of $30 to $90 billion. If we assume America has been waging the war in a “top-dollar” manner, with less attention to costs and more reliance on contractors, and take half of that number, we get a range of $15 billion to $45 billion—numbers that are more consistent with the budgetary figures provided by the United Kingdom government (see below). Future costs—including veterans’ health care and disability—will increase that number further. Even where the United States has underwritten the short-term military costs, there will be a long trail of disability and health care costs that other countries will have to bear themselves.40
The Cost to Afghanistan
AFGHANISTAN HAS PAID a high price for our decision to invade Iraq. As Pennsylvania congressman Joseph Sestak, a veteran of the conflict in Afghanistan, has pointed out: “The war [in Iraq] was undertaken at exactly the wrong time. By not allowing us to first finish the work needed to fully secure peace in Afghanistan, the al Qaeda leadership that struck the United States on September 11 is still free. I know from first hand experience; I was first sent into Afghanistan two months after we began fighting there, and returned to the country a year and a half later. At the beginning of the war I saw what needed to be done to win the peace. I then later saw how much was still left to do in Afghanistan, as we turned our attention and valued resources toward Iraq, where the terrorist threat was not.”41
Afghanistan, where the United States was successful at routing the Taliban in 2001 (despite managing to lose Osama bin Laden at Tora Bora), is facing increasing lawlessness outside of Kabul. One result of U.S. neglect since 2001 is that Afghanistan, which had reduced its production of heroin under the Taliban, since the war has become the largest supplier to the global heroin market.42 Heroin production has been climbing every year since 2001. This money is widely reported to be finding its way into the Taliban’s coffers, fueling resistance to the NATO-led forces. Meanwhile, suicide bombings (which used to be rare in the country) and other violence have become commonplace. Despite the presence of 50,000 foreign troops in the country, including NATO-led and U.S. contingents, the situation seems to be slipping out of control.43 Afghanistan’s defense minister has said that he would need 200,000 troops (nearly three times the 70,000 troops that are planned) to ensure long-term stability in the country.44
We have not counted the cost of suffering of the Afghan people, who after years of war with the Soviet Union, followed by a harsh life under the Taliban, had hoped that American involvement would bring peace and stability at last. Instead, 2007 has been the most violent year since the U.S.-led invasion of Afghanistan in 2001, with insurgency-related violence claiming nearly 6,200 lives.45
Costs to Great Britain
FROM THE BEGINNING, the United Kingdom has played a pivotal role—strategic, military, and political—in the Iraq conflict. In the run-up to the war in 2003, the U.K. prime minister’s support was indispensable to George Bush. At a time when the United States faced loud opposition from France, Germany, Russia, China, and the United Nations, Tony Blair visited Washington and spoke in favor of military action against Iraq to a joint session of the Congress. His support was critical in enabling the Bush administration to convince Congress to authorize the war.
Blair helped Bush in two ways. First, in the eyes of the average American voter, Blair personified “sensible” world opinion. Britain had a long history of military experience in Iraq, dating back to World War I.46 French opposition was presented by the media not as a reasonable difference of opinion but as symptomatic of France’s untrustworthiness as an ally. Blair’s stance allowed the White House to maintain its argument that there was a “coalition of the willing” ready to help the United States invade Iraq. This was politically essential since the United Nations opposed the action.
Second, Blair was critical in creating bipartisan support for the war in Washington. Democrats remembered his close relationship with Bill Clinton. Many saw him as a kindred spirit. This was one of the reasons why Democrats (including Hillary Clinton, John Kerry, John Edwards, and the rest) fell in line behind Bush’s rush to war with so little protest. Indeed, it is arguable that if Blair had urged the United States to postpone action for six months to allow more UN inspections (or if he had chosen to play the role of honest broker who forged a consensus between the Americans and the Europeans), Blair and the United Kingdom might have thwarted the administration’s invasion plans in March 2003. Perhaps history would have been different.
Instead, Britain facilitated every aspect of the war. Militarily, the United Kingdom contributed 46,000 troops, which was 10 percent of the total force. The British Ministry of Defence noted that, while overall planning for the operation was led by the United States, “the UK was fully involved, including through personnel embedded in US Central Command in Tampa and elsewhere.”47 Unsurprisingly, then, the British experience in Iraq has paralleled that of the United States—rising casualties, increasing operating costs, poor transparency over where the money is going, overstretched military resources, and scandals regarding the squalid conditions and inadequate medical care for some of its severely wounded veterans.
Before the war, Chancellor of the Exchequer Gordon Brown set aside £1 billion for war spending. As of late 2007, the United Kingdom had spent an estimated £7 billion (U.S. $14 billion) in direct operating expenditures in Iraq and Afghanistan (76 percent of it in Iraq). This includes money allocated from a supplemental “Special Reserve,” plus additional spending from the Ministry of Defence.48 As in the United States, the Special Reserve comes on top of the regular defense budget, which has also increased, and which covers ordinary costs such as military salaries. The British system is particularly opaque: funds from the Special Reserve are “drawn down” by the Ministry of Defence when required, by arrangement with the Treasury, without specific approval by Parliament.
As a result, British citizens have little clarity about how much is actually being spent. As the Iraq Analysis Group notes, “With no standard reporting procedure in place, it is extremely difficult to trace where sums are going. While the Special Reserve has been fairly well publicized, information such as how much of the Reserve is being spent in Iraq as opposed to the wider ‘war on terror’ has not been put into the public domain. It should not be the case that this information has to be discovered through Freedom of Information requests.” Moreover, Britain (like the United States) will face heavy costs to restock its military once the conflict—or Britain’s part in it—is over.
British Casualties and Veterans
AS OF THE end of 2007, the United Kingdom had some 5,000 troops in Iraq and some 7,000 in Afghanistan. It was planning to halve the number in Iraq and to increase deployments in Afghanistan.49 British casualties in Iraq included 174 deaths, 206 serious injuries, and 2,372 other injuries requiring hospitalization. In Afghanistan, casualties included 82 deaths, 89 serious injuries, and 957 other injuries requiring hospitalization.50 These figures include a significant number who were medically evacuated as a result of disease, wounding, and non-combat injuries. It does not include those suffering long-term psychological problems such as PTSD.
Wounded veterans in the United Kingdom are provided with more generous compensation than is typical for the United States, including lump-sum payments of up to £285,000 for serious multiple injuries. Additional financial support includes a guaranteed income payment based on soldiers’ salary, index-linked and tax-free for life.51 In addition, the U.K. “standard of proof” for making claims is based on the “balance of probabilities,” which is the accepted approach in other U.K. claims law, such as the Criminal Injuries Compensation Scheme, and in the civil courts. Veterans can claim the lump-sum payments within five years, and longer for certain late-onset illnesses such as cancer, mental illness, and PTSD. The result is that the United Kingdom will face a significant cost in providing disability benefits for its disabled servicemen and women as a consequence of the Iraq and Afghan conflicts.
Medical care in the United Kingdom is provided free by the National Health Service, and wounded British soldiers are cared for in specialist units within the NHS. However, in 2007, shortly after The Washington Post revealed horrific conditions at Walter Reed Army Medical Center, the British Sunday newspaper The Observer discovered wounded British troops who were enduring vile conditions at Birmingham’s Selly Oak Hospital. The newspaper published letters to the Ministy of Defence from the families of British soldiers describing deplorable conditions, including how the youngest soldier wounded in Iraq, Jamie Cooper, eighteen, was forced to spend a night lying in his own feces after staff allowed his colostomy bag to overflow. His parents wrote that their son had been “sent to Iraq straight from training with no real military knowledge and [is] not receiving the care and attention that is needed for his recovery.”52 Letters from parents described “grubby” surroundings, unbearable noise levels, and inadequate visiting facilities. Parents reported that they were being left no choice but to give up their jobs in order to care for their sons. In the United Kingdom, “Selly Oak” now conjures up the same images of disgrace and shame that “Walter Reed” has taken on in America.
The British public reacted with outrage to the Selly Oak revelations. The Royal British Legion, which has 600,000 members (British veterans), put forward a motion questioning medical treatment for the first time in its eighty-six-year history. The British media has provided wide coverage of the lack of adequate medical care for troops, especially for those with mental health problems, the difficulties in making the transition from the army to civilian medical care, and the cover-ups in the total number of injured.53 Official figures show that since 2003, 2,123 troops have been treated for mental health problems resulting from deployment in Iraq, but army charities claim many more cases have fallen through the net.54 The government is also using private health care providers to treat returning servicemen where the waiting times for NHS treatment are too long. It is not clear how widespread this practice is, but there is evidence that it may add billions of pounds in costs to the medical bill for British veterans.55
Even senior officers currently serving in the British forces are speaking out in protest at how the war has been conducted. General Sir Richard Dannatt, Chief of the Army General Staff, described in a 2007 report how underfunding, undermanning, and overstretching had left British troops feeling “devalued, angry, and suffering from Iraq fatigue.”56 He concluded that “the tank of goodwill now runs on vapour; many experienced staff are talking of leaving.” General Dannatt also emphasized (as we did for the United States) that the Iraq war has meant the United Kingdom is less prepared to face other external security threats.
Backbenchers in Parliament have repeatedly criticized the government’s handling of the conflict, with regard to underfunding of troops, lack of housing for military families, and the growing strain on the armed forces in general. Lord Astor of Hever’s recent comments in the House of Lords provide a flavor of the British sentiment:
I am sure that all noble Lords will have seen elements of General Dannatt’s staff briefing team report. The bleak reality, based on interviews with thousands of soldiers, is an Army at the end of its tether. There is a profound level of dissatisfaction with the conditions under which the soldiers have to live and serve—that leave is often cancelled or constrained because of operational overstretch and that housing is often inadequate. We are sending soldiers out to Afghanistan to fight pretty much 24 hours a day….
Many noble Lords and many noble and gallant Lords, including the noble and gallant Lords, Lord Guthrie, Lord Boyce and Lord Bramall, have argued that these conditions are largely the result of a decade of underfunding by this Government. It has not been lost on the armed services that the Government are willing and ready to risk more on bailing out the financially inept bank, Northern Rock, than is spent on the entire defence budget.57
The strain on the military is appearing in the officer corps. The number of officers leaving the army and the RAF early are at a ten-year peak, with recent surveys showing that this is mostly due to the frequency of deployments and the “inability to plan ahead” in their lives.58 In November 2007, Lieutenant Colonel Stuart Tootal, the commander of 3 Para,59 reflected the mood of the rank and file when he resigned in protest at the troops’ poor pay, the lack of equipment for recruits to train with, the state of army housing, and the lack of dedicated facilities for injured soldiers. Colonel Tootal led his men in some of the war’s most intense fighting in southern Afghanistan’s Helmand Province, for which he was awarded the Distinguished Service Order. During his six-month tour between April and October 2007, Colonel Tootal said he had to contend with lack of food, water, and ammunition, as well as insufficient helicopter support.60
Prime Minister Gordon Brown has announced that Britain will reduce its troop level to 2,500 by the spring of 2008, although it appears likely that this number will remain in Iraq for the foreseeable future.61
Social and Economic Costs in the United Kingdom
IN ADDITION TO the costs of military operations, replacing military equipment, caring for veterans, and reinvesting in the armed forces, Britain also faces economic and social costs. Keith Hartley, at the Centre for Defence Economics, University of York, has written extensively on this topic. Hartley points out that “there are costs to the UK civilian economy through such impacts as higher oil prices, possible recession effects and the need for higher defence spending which has to be financed through either higher taxation or reduced public spending in other areas.”62
Certainly the social costs in the United Kingdom are similar in nature to those in the United States. We observe the same pattern in terms of families who leave jobs to care for wounded soldiers, long waiting times for care, poor medical conditions that require the families to take up residence at hospitals, and diminished quality of life for those thousands left with disabilities.
By the same token, there are macroeconomic costs to the United Kingdom as there have been to the United States, though the long-term costs may be less, for two reasons. First, the United Kingdom did not have the same policy of fiscal profligacy. And second, until 2005, the United Kingdom was a net oil exporter. Going forward, as its production declines, it will have to import more, and the adverse effects of the higher oil prices will be felt more strongly. As in the United States, the weaknesses in the economy that might otherwise have shown up as a result of the higher oil prices did not evidence themselves because the United Kingdom, like the United States, had a housing bubble, which fueled high levels of consumption. The mortgage problems that first became apparent in the United States have had even greater repercussions in the United Kingdom, with the first major run on a bank in more than a century, requiring a 30-billion-pound bailout. Because net imports into the United Kingdom remain so uncertain, we have not included any explicit estimate of the macroeconomic costs; but using plausible numbers, the macroeconomic costs could easily double or triple the overall economic costs. For instance, some standard estimates put projected imports of oil in 2010 at 500,000 barrels per day; if half the forecasted difference between the price of oil then and the prewar price is attributed to the Iraqi war, then the increased oil bill—the income transferred from those in the United Kingdom to oil exporters—is $6.4 billion; with a multiplier of just 1.5, this translates into a macroeconomic cost, for 2010, of $9.6 billion. For the period of the study for which we have futures prices, 2003 through 2015, the figures easily accumulate to mind-boggling totals of $100 billion or more. Had the war been fought somewhat earlier, when the United Kingdom was an oil exporter, it would have been among the beneficiaries, along with Venezuela and Iran. As it is, it joins the United States as one of the big losers from the war.
Total Cost Estimates for the United Kingdom
WE HAVE ESTIMATED the costs to the United Kingdom to date, assuming that British forces in Iraq are reduced to 2,500 in 2008 and remain at that level through 2010. We expect that British forces in Afghanistan will increase slightly, from 7,000 to 8,000 in 2008, and remain stable for the subsequent three years. Future spending estimates are based on these assumptions. We also estimate a cost of $1 billion for military reset costs, based on comments by Lord Astor of Hever in Hansard, November 2007. We anticipate that the increased defense spending in the Ministry of Defence budget that has characterized the war period will continue through 2008, and then taper within three years. However, this may well underestimate the costs of demobilizing and transporting back to the United Kingdom the enormous amount of equipment that is currently based in Iraq. The House of Commons Defence Committee has recently found that despite the cut in troop levels, Iraq war costs will increase by 2 percent in fiscal year 2008 and personnel costs will decrease by only 5 percent. Meanwhile, the cost of military operations in Afghanistan is scheduled to rise by 39 percent. The estimates in our model may be significantly too low if these patterns continue.63
We assume that those who have been “very seriously injured or wounded” in Iraq and Afghanistan will qualify for the maximum lump-sum payments, as well as lifetime benefits and pensions; and that servicemen and women who are recorded as “seriously injured or wounded” will receive lesser lump sums (we assumed 25 percent), as well as lifetime benefits. We estimated that half of the remaining number of soldiers who were hospitalized with wounds, injuries, or disease will not receive any lump-sum benefits, but will qualify for the lowest level of lifetime veterans’ disability benefits.
We have assumed a value of statistical life (VSL) of $7.2 million (as in the United States) for soldiers who were killed or “very seriously” injured or wounded (less the lump-sum payment); and 20 percent of that amount for those who were “seriously” injured or wounded.64 We have not attributed a cost to those who were otherwise hospitalized.
Based on this set of assumptions, the budgetary cost to the United Kingdom of the wars in Iraq and Afghanistan through 2010 will total more than £18 billion (U.S. $30.6 billion). If we include the social costs the total impact on the United Kingdom will exceed £20 billion.
Other Global Costs
THE MOST DIRECT global cost imposed on the rest of the world results from the increase in the price of oil, a price paid by all oil importers. Of course, the costs to some have been a benefit to others—namely, the oil exporters. The losers include traditional U.S. allies in Europe and Asia. Those who have gained are, by and large, dictators in the oil-producing countries—including some who have been quite open about using their increased wealth to advance an agenda that is anti-American and in some cases anti-Western. This redistribution of global economic power is not something to be enthusiastic about. Indeed, it is hard to think of anything else that the United States could have done that would have been, on a global scale, so much against its own interests.
Table 6.1. U.K. Iraq War Costs (2007) Through 2010 in sterling pounds (thousands)
| Military Spending | |
| Spent to Date | 8,738 |
| Future Spending | 7,015 |
| Veterans’ Disability and Medical Payments | 2,265 |
| Total Budgetary Costs | 18,017 |
| Social Costs of Death and Disabilities (Net of Budgetary Costs) | 2,076 |
| TOTAL COSTS | 20,094 |
In chapter 5, we described how higher oil prices have hurt America. Higher oil prices have also hurt the economies of Europe, which import some 3.7 billion barrels a year.65 If $5 per barrel of the increase in the price of oil is attributable to the Iraq war, the increased oil cost they will pay will total $129 billion in the best case (conservative) scenario of a seven-year war-related price surge, while the total paid by Europe, Japan, and other OECD-importing countries together will amount to $235 billion.66 In our more realistic estimate, based on an increase of $10 per barrel over eight years, the total comes out to $295 billion for Europe and $539 for Europe, Japan, and other OECD-importing countries—more than half a trillion dollars.67
Europe has been hampered from offsetting the dampening effects of high oil prices by its Growth and Stability Pact, which limits the size of deficit spending, and even more so by a European Central Bank focusing exclusively on inflation.68 Higher oil prices have led to higher inflationary pressures, and thus to higher interest rates that, in turn, slow growth. That is why the appropriate oil price multiplier is higher in Europe than in the United States. Still, if we use a conservative multiplier of 1.5, we get a total cost to Europe of $194 billion in the best case scenario. More reasonably, we should use a multiplier of 2 (see the discussion in chapter 5), obtaining our realistic-moderate estimate of $590 billion for Europe.
Japan’s ability to respond to the depressing effect of higher oil prices is hampered by a different set of constraints. High deficits and a huge debt-to-GDP ratio (in excess of 164 percent)69 constrain fiscal stimulation. With interest rates near zero, further monetary stimulation is a virtual impossibility. If we use a multiplier of 1.5, the cost to Japan in the best case scenario is $101 billion; using the more realistic scenario (with a multiplier of 2), it is $307 billion.
Putting it all together, in the best case scenario, the total cost to oil-importing advanced industrial countries other than the United States (Europe, Japan, South Korea, and others) in the best case scenario is $354 billion, but in the more realistic-moderate scenario, the cost of the increase in the price of oil to our allies in Europe, Japan, and elsewhere in the advanced industrial countries will amount to some $1.1 trillion.
The problem is that the increases in income generated to the oil-producing countries do not fully offset these depressing effects. Just as America’s oil companies have done well by the war, so too have the oil sheiks of Saudi Arabia, Hugo Chavez in Venezuela, and Mahmoud Ahmadinejad in Iran. Arms sales to those who control oil assets—and those who would seek to control them—have increased, another reason that the defense industry and arms firms have never had it so good. But, even with their profligate spending, these countries’ “marginal propensity to consume”—the fraction of the income that is spent on goods and services—is lower, and hence global GDP is lower. Oil-producing countries know that the high oil prices almost surely will not last, so prudence requires that they set aside a large fraction of the bonanza—one of the reasons that the world has been awash with liquidity.
Another major group of “losers” from the war and the surge in oil prices which followed are poor oil-importing countries all over the world. A study by the International Energy Agency, for instance, showed that the post–Iraq war increase in oil prices for a sample of thirteen African importing countries had the effect of lowering their incomes by 3 percent—more than offsetting all of the increase in foreign aid that they had received in recent years, and setting the stage for another crisis in these countries.70 Given the high cost of transportation in many of these countries, the higher fuel prices are translating into higher food prices.
In short, there have been global losers and winners in the Iraq war. Our long-standing friends in Europe and Japan are among the global losers. But net, the world is a loser—and by a considerable amount.
Global Peace and Security
THE DREAM OF the U.S. invaders was to create a stable, prosperous, and democratic Middle East. But America’s intervention in Iraq is laying the foundations for precisely the opposite result—and the consequences of America’s Iraqi venture for global peace and security extend beyond the Middle East. It has helped feed extremism throughout the Islamic world and beyond. This growth of extremism has made the task of leaders in moderate Islamic republics all the more difficult. They have been forceful in encouraging Bush to withdraw, knowing that if the war continues, they will face an increasingly hard time containing more fundamentalist forces.71
America’s standing in the world has never been lower. Anyone who has traveled abroad knows this. It is also confirmed by every poll and opinion survey. Of course, there have always been mixed feelings: envy mixed with admiration, respect for American democracy and its advocacy of human rights mixed with resentment toward its brashness and overconfidence. But the positives have outweighed the negatives in most countries. This was true not just of traditional allies, such as Great Britain (where 83 percent of the population had a favorable rating of the United States in 1999–2000) and Germany (78 percent), but even in Islamic countries, such as Indonesia (75 percent), Turkey (52 percent), and Morocco (77 percent). Franklin D. Roosevelt, John F. Kennedy, and Bill Clinton were global heroes, even more in some places abroad than they were at home. The war has dramatically changed this picture: compared to 2002, favorable ratings of America are now lower in twenty-six of thirty-three countries surveyed by the Pew Research Center.72 The situation has worsened in most Muslim countries in the Middle East and Asia—and even among historically steadfast U.S. allies.
By 2007, favorable ratings had fallen to 9 percent in Turkey and 29 percent in Indonesia.73 That same year, confidence in President Vladimir Putin’s leadership exceeded that of President Bush in Canada, Britain, Germany, and France. In chapter 1, we noted that citizens of many countries saw America in Iraq as a greater threat to global peace than Iran. More remarkably, another recent Pew Survey showed that in every country surveyed, the U.S. presence in Iraq was viewed as a greater threat to world peace than North Korea. In short, all over the world, the United States was viewed as a greater danger than the countries President Bush included in his “axis of evil.”74 In Indonesia, a moderate Islamic republic, 80 percent of the public reported being either “very” or “somewhat” worried about America as a military threat to their country. Indeed, a vast majority of those in Islamic countries—and a majority among many of our allies—believe that the Iraq war has made the world a more dangerous place. In Islamic countries, majorities (in some cases, large majorities) see America’s motives as dominating the world and gaining control of Middle East oil.75 Most disturbing is that America is no longer seen as a bastion of civil rights and democracy. The Iraq war “for democracy” has almost given democracy a bad name. Some 65 percent of those in Germany, 66 percent of those in Spain, and 67 percent of those in Brazil expressed a dislike for American ideas about democracy; but these numbers were still more favorable than the reactions in Islamic countries such as Palestine, where the number stood at 71 percent, Pakistan at 72 percent, and Turkey at 81 percent. Even among our former allies in the United Kingdom and Germany, America was seen as doing a bad job in advancing human rights: 78 percent in Germany said so, while only 16 percent said America was doing a good job. Before the war, 61 percent in Germany thought it was doing a good job.
Why does this matter? In earlier chapters, we discussed (but did not quantify) how changing perceptions of America have hurt U.S. businesses and the U.S. economy. It is inevitable that those who see the Bush administration and its conduct of the war unfavorably also begin to see America and its conduct of business in the same light. It is no surprise that the countries that have been most critical of American ideas about democracy are also most critical of American ways of doing business: a majority of those in Germany and France have an unfavorable view, while some 83 percent of those in Turkey do.
But there is a far larger cost. Globalization has made countries more interdependent. Many of the world’s most pressing problems—from climate change to the AIDS pandemic to poverty—are global in nature and cannot be solved by any one country acting alone. Wars and conflict in one part of the world can easily spill over to another. The Iraq war has shown that even the sole remaining superpower, a country that spends almost as much on defense as all other countries combined, cannot impose its will on a country with 10 percent of the population and 1 percent of its GDP—at least not without inflicting a cost on itself greater than it is willing to pay.
America has done a good job in selling the idea of democracy—so good that there is a global consensus that decisions about how to run the world need to be made in a way that pays at least some respect to democratic principles and the rule of law. But, in its march to war, the United States trampled on these very same principles.
While the world has become more interdependent and integrated, there are markedly different views about how to approach the myriad global problems facing us. One thing agreed on by all is that real leadership is required. Today, there is a serious lack of confidence in American leadership. And whether it will be easy or difficult to restore that confidence will, in part, depend on who is chosen to be the next American president, and how forthright he or she is in rejecting not just the Bush administration’s conduct of the war but the process by which the United States entered the war.
The costs and consequences of the failure to restore American leadership—both to America and to the world—are likely to be enormous. Democracy does provide an important check on wars—only the American electorate has been able to put a check on the military adventurism of the Bush administration. Americans may overestimate their importance in providing leadership, and certainly, in areas like global warming, key agreements have been made without us. Still, America looms so large in the global economy that it is hard to imagine progress on any of the key issues facing the world without its playing a pivotal role.
This book has emphasized the costs of the war in Iraq: the economic costs as well as the opportunity costs—the diversion of funds that could have been used in so many other and better ways. In the long run, though, the squandering of America’s leadership role in the international community, and the diversion of attention from critical global issues—including issues like global warming and nuclear proliferation in North Korea that simply won’t go away on their own, and that cannot simply wait to be addressed—may represent the largest and most long-standing legacy of this unfortunate war.76