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| Iraq |
| Economic analysis of War in Iraq vs. Containment |
| 2006-03-20 |
| AEI Study. EFL of Exec Summary Forcible regime change in Iraq has proved to be a costly undertaking. As of January 2006, it appears likely that the Iraq intervention will ultimately unfold along a path that implies present value costs for the United States in the range of 410 to 630 billion in 2003 dollars. These figures reflect a 2 percent annual discount rate. They capture the estimated economic costs of U.S. military resources deployed in the war and postwar occupation, the value of lost lives and injuries sustained by U.S. soldiers, the lifetime medical costs of treating injured soldiers, and U.S. outlays for humanitarian assistance and postwar reconstruction. Containment required the continuous engagement of a potent U.S. military force in southern Turkey, the Middle East and the Persian Gulf. The United States devoted roughly 28,000 troops, 30 naval vessels, 200 military aircraft and other equipment to Iraqi containment efforts prior to the pre-war buildup. We estimate the economic cost of these military resources to be about $14.5 billion per year. Based on our assessment of the likely duration of a dangerous regime in Iraq, absent external intervention, this annual flow translates into an expected present value of nearly $300 billion. Contingencies can sharply raise the expected cost of the containment policy. We also develop an integrated analysis that simultaneously captures several possible contingencies under a policy of containment. The integrated analysis focuses on three scenarios chosen to capture a range of views about the likelihood and cost of the contingencies. Factoring the contingencies into the analysis yields present value costs for the containment policy in the range of $350 to $700 billion. These large sums are in the same ballpark as the likely costs of the Iraq intervention seen from the vantage point of early 2006. Thus, even with the benefit of partial hindsight, it is difficult to gauge whether the Iraq intervention is more costly than containment. We also consider the consequences of the war-versus containment choice in two other respects: the economic well-being of Iraqis, and the loss of Iraqi lives. Based on our analysis, we conclude that the war will lead to large improvements in the economic well-being of most Iraqis relative to their prospects under the policy of containment. If, over the course of a generation, Iraqis recover even half of the economic losses they suffered under Saddam Hussein, then they will be significantly better off in material terms as a consequence of forcible regime change. The economic failures of the Saddam Hussein regime were not its greatest crimes. The regime brought torture, repression, displacement and death to huge numbers of Iraqis and others. We review some of the evidence in this regard, drawing heavily on work by others. All told, the regime killed or caused the deaths of more than 500,000 Iraqis. Under the policy of containment after the 1991 Gulf War, a reasonable estimate is that at least 200,000 Iraqis died prematurely at the hands of the regime or as a direct consequence of its policies, including its refusal to comply with U.N. Security Council Resolutions and its diversion of oil revenues and other resources to palaces and monuments. Had containment remained in effect, the historical record suggests that premature Iraqi deaths would have continued indefinitely at the rate of 10,000 to 30,000 per year. There is, of course, a great deal of uncertainty about the number of premature Iraqi deaths under either war or containment, but we think the weight of evidence points to a greater Iraqi death toll from a continuation of the pre-war containment policy. Perhaps the strongest reason to question this assessment is the possibility that a post-war Iraq could devolve into an extended and large-scale civil war. This possibility cannot be ruled out. What can be ruled out in light of the evidence is that the leading alternative to war involved little loss of Iraqi lives. |
| Posted by:Nimble Spemble |