Nepali Times
Economic Sense


While vast sections of the US public are taking to the streets in anti-war demonstrations and protests, a few economists are crunching numbers. The pundits are busy predicting the cost of a war with Iraq. Their estimates range from $25 billion to over $100 billion. To the Beed these disparate sums represent one concrete fact-wars cost money. And the economy is more likely to buckle than thrive under the financial strain.

Experts who point to the last Gulf war as an example of the US ecomomy's resilience forget one fact: that was then and this is now. Gulf War I came at a time when the economy was on the upswing. It cost the US led allies $25 billion to $60 billion, most of which-some reports say 80 percent-the US government squeezed from its allies, reducing the net impact for that war on the home economy. The remainder was absorbed easily enough by the $8 trillion GDP of the early 90s boom.

The cost of a new war is definitely going to be higher. To begin with there is the preparatory cost before the war actually takes place, followed by the actual cost of war plus the not inconsiderable expenses of reconstructing Iraq should the US succeed in implementing the "regime change" that President Bush is aiming for.

With over 200,000 forces now at the ready to go to war for peace, the costs are already sky-rocketing. As an example of conjuring numbers here's a Beed offering: with a per capita per day expenditure of $1,000, the daily costs for the deployed troops could be $200 million, amounting to a monthly bill of $6 billion-four times the annual budget of the United Nations. Now factor in the cost of equipment and other capital to watch the sum go through the roof. Concede that the cost of the fighter planes or other pieces of equipment that are not specifically produced for this war should not be included and we still end up with a massive bill. Of course there is no guarantee that the war will end quickly or decisively.

The bad news for the US if they are unable to gather enough allies is they face the rather unhappy prospect of footing a large part of the bill on their own. This would be less than welcome with a $300 billion budget for 2003. An already sluggish economy, slumping stock markets and unemployment will not be jumpstarted by war. As far as dipping into the coffers of allies ago, the Beed would point out neither the UK nor Spain are enjoying a season of surplus.

Shouldering the responsibility of reconstruction could be a heavy financial burden. International aid agencies are strongly advocating against war with various governments on a level they are bound to listen. This is about real money and governments who can label human deaths as collaterals of war tend to be less dismissive when it comes down to the dollar.

The Beed realises all this conjecture is solely from the perspective of the US and its allies but the rumbles of war will ripple through the world and affect our frail economies. Travel advisories to South Asia will once more get strict, leading to a decline in tourism. Foreign investment already at a low will not recover as regional risks for operations remains high. The price of oil will become even more volatile, which will affect the ailing Nepal Oil Corporation and that will send industry and commerce tumbling like dominoes. It is time for our government to look ahead. We need to draw up contingency plans for the war in the gulf whether it concerns evacuating the Nepali labour force from the Middle East or the procurement of crude oil. War is bad news for Nepal-even if that war is being fought thousands of miles away over the oilfields of Iraq.

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(11 JAN 2013 - 17 JAN 2013)