War on Iraq 'Will Cost US $80 Billion'
July 31, 2002
From Roland Watson in Washington
AMERICA has dramatically increased its oil stockpiles over recent months amid concerns about the effect on worldwide supplies and the economic impact of a potential US military conflict with Iraq.
White House officials have begun calculating the potential cost and domestic effect of a war for which, unlike the Gulf War in 1991, Washington would have to pay entirely.
Oil additions to America’s strategic reserve have reached record levels in recent months, increasing by some 150,000 barrels a day. The Bush Administration is aiming to add more than 100 million barrels to the reserve, which would bring it close to its 700-million barrel capacity.
The $61 billion cost of the 1991 war to evict Saddam Hussein’s army from Kuwait was divided between Saudi Arabia, Kuwait and Japan, who together paid $48 billion, and the US. A comparable war would cost some $80 billion at today’s prices, although the highest estimate of US troop requirements being considered by the Pentagon is 250,000 — half the 500,000 that the US sent to the Gulf in 1991.
But unlike a decade ago, the US cannot count on any of its allies to make financial contributions, even though Tony Blair has hinted broadly that Britain would play a part.
War with Iraq would disrupt oil supplies and mean a likely increase in prices. Saddam is the sixth largest oil supplier to the US. It contributed 8 per cent of American oil imports last year, which was a million barrels a day at its peak.
While the US is boosting its oil reserves, an act that has accounted for a large part of the growth in demand for oil this year, there is less it can do to guard against the wider economic impact of a war.
Due to the repercussions of September 11, combined with Mr Bush’s ten-year, $1.3 trillion tax cut, a $127 billion budget surplus has been transformed into a $165 billion deficit in less than 12 months.
No congressional representatives would suggest that America should tailor its military action according to budgetary constraints. But they said there would be a price to pay.
John Spratt, the senior Democrat on the House Budget Committee and a member of the Armed Services Committee, said Washington would spend what was needed on a war with Iraq but that domestic issues would suffer. Mr Spratt said: “While it’s not beyond our means, we can’t have it all. Since there is no surplus in the budget from which the cost could be paid, there will be trade-offs and there almost certainly will be deeper deficits and more debt.”
US military planners have come up with a range of plans but military analysts said that the “lighter” option was more likely to be guided by Washington’s failure so far to persuade Turkey or Saudi Arabia to allow US troops access.
* Two al-Qaeda suspects linked to Sheikh Abu Hamza al-Masri, who preaches at the North London Central Mosque in Finsbury Park, and arrested in recent days by the FBI, had documents that described how to poison US water supplies, it has emerged. James Ujaama, who has been in FBI custody since last week, and Semi Osman also had several other documents related to terrorism, officials said.
http://www.timesonline.co.uk/article/0,,3-370150,00.html