Iraq IV: The Other Cost of the War
The view of many economists is that the war will cost the U.S. economy $1 trillion over a 10-year period -- about $100 billion a year -- or about 1 percent of the national income during that period.Crunching numbers for the economic impact on Iraq itself is more difficult because it is so dependent on oil production, but Colin Rowat, an expert on the Iraq economy at the University of Birmingham in England, is giving it the old college try.
The war has cost Iraq at least 40 percent of its national income.You can take him at his word or read on to find out how he reached this unhappy conclusion:
During the first period, 2000-2001, U.N. trade sanctions against Iraq were beginning to crumble, the Security Council lifted the cap on Iraqi oil sales, and the Iraqi government had become adept at getting around the remaining trade restrictions. The second period, 2002 -2003, covers the buildup to war and the invasion itself. The last period, 2004-2005, covers post-invasion years when sanctions were removed.
Rowat made several kinds of calculations, including estimating how the economy might have performed had the war never happened.
Based on the steep rise in oil prices, he estimated that without a war and with steady oil production, Iraq would have grown 12 percent a year after adjusting for inflation. That rate would have made Iraq one of the fastest-growing economies in the world, albeit one that was expanding from a very small economic base.The sum-up:
Using Rowat’s calculations, what might the economic cost of the war be for Iraq?
If there had been no war, Iraq’s economy in 2005 might have amounted to $61 billion in today’s dollars, compared with the actual $37 billion that he estimates. That works out to a loss of $24 billion because of the war, or a 40 percent cut in gross domestic product per capita — an average loss of around $900 for each Iraqi in 2005.