An analytical study done by American company Equity International (EI) and published on March 4 unveils calculations made by the EI Center for Homeland and Global Security concerning prospective spending of leading countries of the world on their own security. The sum may make up about 500 billion dollars this year, and it will reach 572 billion dollars by 2005. Experts say that America’s spending on security may make up 55.6 billion in 2003, and the showing may reach 56.8 billion by 2005. Obviously, the USA will spend majority of finance on struggle with international terrorism; at that, financing of a looming military operation in Iraq is certainly not included into the budgetary item meant for security guarantees.
Last week US President George W. Bush reported that the Congress would soon get an official report on budget of a war in Iraq to the sum of 95 billion dollars. The budget includes military operations, clearing of consequences of these operations, protection from probable acts of terrorism and compensations to allies, to Turkey firs of all. Such is the cost of a long war without serious complications, American experts say. A short-term military operation lasting for not more than 2 months and involving 250 thousand military men will require 40 billion dollars. As the Pentagon reports, one additional day of the war may cost 0.5 billion dollars. Further, countdown must be started: Iraq’s oil fields must be used as a source of financing for reconstruction of the country. At that, spending on maintenance of peacekeepers that, as the White House says, must stay in Iraq within five years at least, may exceed 100 billion dollars.
Will American lawmakers support Bush’s demands at the time when forecasts concerning expected deficit of the US budget make up 300 billion dollars in 2003? The US president is sure he will get a positive answer. Especially that many experts still insist that successful war with Iraq is the key trump card of George W. Bush for his re-election in 2004. Obviously, it is expected that by the moment of next presidential elections the military operation in Iraq will be over and restoration of the country will be underway under the command of new authorities loyal to the USA.
Great Britain is ready to shoulder a small portion of financial spending on conducting of the military operation. For this very purpose, the British Ministry of Finance reserved additional finance at the rate of 750 million pounds (1.2 billion dollars) in 2003.
International experts give different estimates concerning spending of the USA on holding of military operations in Iraq. According to the estimates of the International Institute for Strategic Studies situated in London, a long-term military occupation of Iraq will cost the allies 50 billion dollars per year; this is much more than expected spending on the army operation itself. UNMOVIC leader Hans Blix thinks that a military operation with participation of 250 thousand soldiers will cost more than 100 billion dollars, whereas the mission of UN inspectors costs only 80 million dollars per year. Some western economists report higher figures of spending on war, 120 billion dollars; at that they emphasize that spending on a peacemaking operation and reconstruction of destroyed Iraqi economy are not included into the estimate.
UN experts estimate that reconstruction of Iraq will cost 30 billion dollars within the first three months after the military operation. At that, they are not sure that Iraq will be able to pay reconstruction costs at the expense of oil supplies as Americans expect. Investments into Iraq’s petroleum industry have been poor within the past decade; UN analysts say that much financing is necessary to make it competitive. Besides, Iraq has many debts of its own. At presents, as UN experts report, the volume of commercial and governmental debts has reached 60 billion dollars. What is more, the country owes 170 billion dollars to Kuwait as a contribution for intrusion.
Arab experts on petroleum production think that even in the most favorable for Iraq scenario of war, reconstruction of the country may cost 200-400 billion dollars. Restoration of the petroleum industry to normal operation standards will require 40-50 billion dollars and may take ten years of reconstruction works. At present, out of the 74 oil fields developed in Iraq only 15 are operated. 1.500 oil wells and compressor plants serving them practically don’t operate.
By the way, in accordance with the information provided by UN, only the USA and Great Britain, and not any other state wish to finance a program meant for restoration of Iraq as it can be treated as support of the war. The United Nations Organization itself requested 37 million dollars in order to make necessary calculations, but no official response has been given yet to the organization.
In accordance with the most unfavorable forecasts of western economists, a war against Iraq, including all expenses, may cost the world economy 1.6 trillion dollars. Australian scientists, Warwick McKibbin from the Board of the Reserve Bank of Australia and Andrew Stoek, president of the Center for International Economy, gave more details on the forecast. According to their estimates, if a short-term military operation is held in Iraq (within several months), losses of the world economy will make up 1 trillion dollars by 2010; but if the operation will drag on (for about five years), losses of the world economy will at least treble by 2010. What is more, within several years after the military operation in Iraq the world economy will be losing 1% of joint GDP of all countries every year. These losses may make up 173 billion dollars already in 2003. The Australian researchers are sure that main burden of expenses on military operations in Iraq will fall upon the USA; at the same time, Great Britain, EU countries and Australia will also have to increase their budgetary spending; it is said that Japanese economy will have to make the biggest spending within the period of Iraq’s restoration.
MiK news agency
Translated by Maria Gousseva
Read the original in Russian: http://economics.pravda.ru/economics/2003/7/21/64/7913_economica.html
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