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Economic Consequences


Picture Credit: The Situationist
Picture Credit: The Situationist

The US led occupation of Iraq and plans for a long term military presence in the country is expected to cost the US more than a trillion dollars. In addition to the US$600 billion spent in the war up until 2007 President George W Bush requested a further US$196 billion for the wars in Iraq and Afghanistan in 2008. While the Democratic controlled Congress has begun to restrict spending on the war, commentators suggest by 2008 Iraq war costs will exceed the Korean War and approach the full cost of the Vietnam War.

Iraq experienced years of turmoil under Saddam Hussein resulting in economic mismanagement, a war with Iran and UN-imposed sanctions. After four years of US occupation, Iraq suffers from extreme unemployment and poverty, with over 4 million internally and externally displaced refugees. The country's infrastructure is in ruins and US reconstruction plans have been mired in fraud, mismanagement and incompetence. Commentators expect the country to suffer from the effects the war for years to come.


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Iraq War will Cost More Than World War II (October 25, 2011)

The over eight year long war in Iraq is estimated to cost nearly $3,000 a second. President Obama’s announcement of a complete withdrawal by the end of the year will mean a decrease in military spending. However, the withdrawing of troops, including replacement of equipment and assets from the bases, and the medical treatment and disability claims of US veterans, will increase the cost of the war. According to Colombia University economist Joseph Stiglitz the final tab for the war could reach $4-6 trillion. (Christian Science Monitor)

Iraq: $1.2 Billion Lost Going in; How Much Lost Getting Out? (September 21, 2011)

The US has promised to withdraw troops and contractor personnel from Iraq by the end of the year, as required by a 2008 security agreement between Washington and Baghdad. However, the number of State Department-hired private security personnel and personnel from the Deparment of Defense (DoD) that will remain is unclear. The DoD is facing the complicated task of withdrawing troops, contractors, equipments and other assets from the bases, while at the same preventing attacks and looting of US government assets. According to a Government Accountability Office report, the DoD and State Department are not equiped to deal with this situation and a third of the army equipment could be lost. (Truthout)


Students Fail, Like So Much Else (August 8, 2008)

The UN sanctions imposed on Iraq in 1990 weakened the Iraqi educational system. However, under the US occupation, that system has drastically deteriorated. Students in Iraq's schooling system, once known as the best in the Middle East, are failing in their studies because of harsh conditions caused by the invasion. This Inter Press Service article argues that many students, whose fathers are either dead or detained, are abandoning their studies to become their families' bread winners. Furthermore, other students cannot even attend school due to a lack of security.

US Issues Threat to Iraq's 50bn Dollars Foreign Reserves in Military Deal (June 6, 2008)

The US continues to withhold US$50billion of Iraq's money, in an attempt to pressure the Iraqi government into accepting a US-Iraqi security agreement. Many Iraqis see the bilateral treaty as a way to prolong the US occupation indefinitely and fear the government will approve the contract in return for marginal concessions. Iraq's financial reserves remain in the US Federal Reserve Bank as a consequence of the international sanctions against Saddam Hussein in the 1990s. (Independent)


Now and Forever (December 4, 2007)

The financial cost of the war in Iraq and Afghanistan may come close to US$3.5 trillion according to the Joint Economic Committee of the House and Senate. In this New York Times article, Bob Herbert argues that President Bush's US$600 billion in formal requests for Iraq does not include the untold long term "hidden costs" of treating the wounded and disabled, interest on loans borrowed for the war, repair and replacement of military equipment and increased cost of military recruitment. The costs of the war to 2007 have so far exceeded the administration's original estimates ten fold. With no move toward immediate withdrawal- the cost of the Iraq war will continue for decades to come.

Iraqis' Quality of Life Marked By Slow Gains, Many Setbacks (November 30, 2007)

According to an unpublished US military poll on the quality of life in Iraq, Iraqis are unsatisfied with the provision of basic services, particularly water, gas, electricity and sanitation systems. The poll suggests that overall the conditions are worsening with some areas of Iraq receiving only 11 hours of electricity per day. While commentators suggest that it is difficult to gain accurate data on improvements in security, some witnesses argue that "it was definitely so much better for us before the war…we were never suffering the way we are now." The Pentagon is set to release a progress report to Congress in early December 2007, but this poll suggests that life in Iraq is far from "normal." (Washington Post)

House Approves Bill Linking War Funds, Troop Withdrawals (November 15, 2007)

The House of Representatives passed a bill that provides US$50 billion to fund the war in Iraq and attaches a timetable for the withdrawal of troops by the end of 2008. The bill prevents the White House from using funds to construct permanent bases in Iraq or assert US control over Iraq's oil. However, commentators say President Bush will veto the bill. Congressional Democrats claim that the bill responds to the concerns of US citizens about the length and the costs of the war. (Washington Post)

Progress Report: The Most Expensive Year of the War (September 26, 2007)

US Secretary of Defense Robert Gates requests US$50 billion from Congress in addition to the US$141.7 billion appropriated in February 2007 to fund the wars in Iraq and Afghanistan. Commentators suggest that by 2008 the Iraq war will exceed the costs of the Korean War and approach the full cost of the Vietnam War – at US$600 billion. Analysts say that "in 2004, the two conflicts cost US$94 billion, in 2005 US$108 billion, in 2006 US$122 billion … and 2008 will be higher than 2007." (Center for American Progress Action Fund)

Why Iraqi Farmers Might Prefer Death to Paul Bremer's Order 81 (September 19, 2007)

In this AlterNet article, Nancy Scola argues that Iraqi farmers face a similar predicament to that experienced by Indian farmers who are committing suicide under the strain of debt and failed crops after buying seeds from US agro-giant Monsanto. Order 81 of Paul Bremer's Coalition Provisional Authority laws opens Iraq agriculture to US companies like Monsanto. The author warns that traditional farming methods will be lost with the introduction of large agribusiness into the country.

As Iraq Costs Soar, Contractors Earn Record Profits (August 2, 2007)

The Congressional Budget Office predicts that a long-term US venture in Iraq could cost more than a trillion dollars – a sharp increase from the initial 2003 estimate of US$50 billion. Meanwhile, more and more US corporations "are cashing in" on lucrative military contracts in Iraq and Afghanistan each quarter. These gains accrue directly to the companies and not the US military, and therefore do not offset any of the expanding costs of the war. (Inter Press Service)

The War Economy of Iraq (Summer 2007)

Following the 2003 US-led attack against Iraq, L. Paul Bremer III, who headed the Coalition Provisional Authority, engineered policies to open the country up to foreign investors. Iraq had suffered years of turmoil as a result of economic mismanagement under Saddam Hussein, a war with Iran and the ensuing UN-imposed sanctions. But this corporate invasion aggravated Iraqi citizens' daily struggle to make ends meet, while enriching the war profiteers. This article describes the quagmire in Iraq as "an extreme example of the violence that underpins the wider project of neoliberalism." (Middle East Online)

War Costs are Hitting Historic Proportions (January 14, 2007)

This Los Angeles Times article states that if the US involvement in Iraq continues at the current scale, funding for that conflict and the overall "war on terror" will, by 2008, exceed the cost of the Vietnam War. Although the US occupation in Iraq has not lasted as long as the Vietnam War, the price tag is approaching a record high and the spending is taking place much faster than in the past. Further, US President George W. Bush's plan for a "surge" will impose an additional cost of US $6.6 billion, and will likely meet strong opposition from both Congress and the public opinion.


Reparations That Are Now an Absurdity (October 27, 2006)

Despite its deteriorating economy, Iraq will pay another US$21 billion in war reparations to Kuwait as compensation for the 1990 invasion, led by former Iraqi President Saddam Hussein. Yet the latest payment will not go to war victims, but to large US-owned corporations operating in Kuwait to compensate them for "lost profits" and a "decline in business." Oil companies and contractors, such as Halliburton, Bechtel and Shell will all receive compensation, as will corporations such as Nestlé, Pepsi, Philip Morris and Kentucky Fried Chicken. This Independent piece points out that, despite Hussein's absence from power, the Iraqi people continue to pay for the crimes of their former dictator.

Rising Price of the War on Terror (November 21, 2006)

The US Congressional Research Service estimates that the total cost of combat in Iraq alone has reached US$300 billion. With the US military's continued presence in Afghanistan, the total expenditure of the "global war on terror" now stands at US$500 billion, "making it one of the most monetarily costly conflicts in which the nation has ever engaged." The author of this Christian Science Monitor article reveals that each individual soldier deployed in Iraq currently costs US$275,000 a year, but expenditures could rise substantially if troop levels increase or military equipment and facilities are upgraded.

Civil War or Not, Iraq Economy Faces Vast Challenge (August 16, 2006)

This article assesses the consequences of the US-led war on Iraq's domestic economy. Despite the world's third largest oil reserves, a well- educated work force, an abundance of water and other valuable resources, Iraq's economy has suffered. Dire security conditions, inefficiency and endemic corruption have increased poverty and reduced employment. Inflation has soared since the 2003 invasion, "sapping the living standards of Iraqis as they cope with bombs and sectarian killings which kill 100 every day." (Reuters)

The Assault on Iraqi Agriculture - US Agribusiness Targets the Fertile Crescent (August 2006)

This Coastal Point article analyzes the effects of the US-led invasion, combined with 20 years of bombing, sanctions and the Oil-for-Food program, on Iraq's agricultural industry. The author reveals US plans to control the industry through Order 81, a provision promulgated by US Administrator Paul Bremer in the early days of the occupation, to protect the interests of US agribusiness. The result diverts profits away from local farmers, and will inevitably lead to increasing food prices for the Iraqi people, privatization and the elimination of subsidies.

IMF in Iraq: The Second Invasion (May 20, 2006)

In return for a US$ 685 million loan from the International Monetary Fund (IMF), Iraq has accepted a package of economic "reforms," including an end to fuel, food, and health subsidies. For a country suffering the humanitarian consequences of a decade of economic sanctions and the ongoing US occupation, food rations and fuel subsides have helped millions of Iraqis to survive. Despite rising unemployment, malnutrition, and inflation, IMF officials have pointed to Iraq's growing economy as a sign of "success." (Uruknet)

How the Bush Administration Deconstructed Iraq (May 18, 2006)

US failures in Iraq, ranging from the stalled reconstruction effort to brutal military operations, have not resulted from "unexpected hurdles" or a "thoroughly incompetent" occupation administration. Rather, as Professor Michael Schwartz points out, "death, destruction, and disorganization" in Iraq represent a "direct consequence" of US efforts to forcibly restructure Iraq's economy and society. In one case involving the Al Fatah pipeline north of Baghdad, US forces deliberately destroyed the pipeline to "stop the enemy," then contracted Halliburton subsidiary KBR to overhaul the entire system, rather than relying on the experienced state oil company to make repairs. (TomDispatch)

War Costs Approach $10 Billion a Month (April 20, 2006)

The costs of the occupation of Iraq and Afghanistan are rising dramatically. Even though expenditures on personnel will drop by 14 percent, overall costs will skyrocket to US$ 100 billion in 2006. The three years of combat have strained the equipment, therefore repairing, rebuilding and replacing it gets increasingly expensive. The annual costs of the occupation of Iraq are "easily outpacing the $61 billion a year that the US spent in Vietnam between 1964 and 1972, in today's dollars." Costs both in Iraq and Afghanistan are rising now, because Bush administration officials postponed procurement and maintenance to keep the war price tag down, according to this San Francisco Chronicle article.

Cut in Food Rations Hurting Poor Iraqis (April 3, 2006)

Iraq's poorest citizens suffer the most from economic restructuring and the elimination of basic subsidies. Backed by the US and the International Monetary Fund, the Iraqi government has begun eliminating food rations as part of the transition to a free market economy. Nearly all Iraqis, approximately 96 percent, benefit from food subsidies – a result of crippling economic sanctions upheld by the US and UK. According to the UN's World Food Program, one fourth of the Iraqi population depends on food rations for survival, and cannot meet their food requirements without them. (Environmental News Service)

Further Steps toward Long-Term Oil Contracts (April 2006)

In January 2005, conveniently after the December elections but before the appointment of a new Iraqi government, the International Monetary Fund (IMF) agreed to cancel 30% of Iraq's debt in exchange for Iraqi compliance with IMF conditioned economic policies. Nestled in the fine print, the agreement forces Iraq to pass an oil law by the end of 2006 and allow the IMF to help draft the law. With little public oversight or discussion, Iraq's Oil Ministry has begun negotiating with multinational oil firms, and may soon sign long-term production sharing agreements as part of the IMF-mandated oil law. Studies indicate that Iraq could lose up to US$ 200 billion in revenue from the deals, and Iraqi trade unions have unanimously opposed the foreign control of Iraqi oil. (Carbon Web)

What Dreams May Come (March 29, 2006)

On the third anniversary of the US invasion of Iraq, Herbert Docena of Focus on the Global South examines the economic restructuring of Iraq. Under the US occupation, Iraq has received a "shock therapy" of market-oriented economic reforms. Though half the Iraqi labor force already lacks jobs, and 20 percent live below the poverty line, "more and more families will sink into destitution" as the Iraqi government sells off state-owned enterprises, eliminates food subsidies, and slashes wages under IMF- and WTO- mandated reforms. Nonetheless, Docena points out, Iraqis have resisted the externally imposed neoliberal drive, opting instead for economic self-determination. (Al-Ahram)

The Economics of Occupation (March 28, 2006)

As Professor Michael Schwartz points out, the media rarely acknowledge US attempts to "neo-liberalize" Iraq, and the subsequent resentment of the Iraqi public. US occupation officials disbanded various state-owned factories and enterprises, representing 40 percent of Iraq's economy, and "opened" Iraq to multinational competition, further eroding the domestic economy. Combined with the dissolution of Iraq's military and police forces, the destruction of Iraq's economy has pushed unemployment levels as high as 60 percent, giving tremendous inspiration and manpower to the Iraqi resistance. (TomDispatch)

The Iraq Quagmire: The Mounting Costs of the Iraq War (January 30, 2006)

This fact sheet from the Institute for Policy Studies/Foreign Policy in Focus provides a running tally of the various costs and consequences of the US war and occupation in Iraq. As of January 30, 2006, 2,238 US troops and as many as 100,000 Iraqi civilians have been killed. In addition, the $251 billion spent on the war to date (less than a quarter of the war's $1.3 trillion total projected cost) could have been used to fully immunize every child in the world while also fully funding global anti-hunger and HIV/AIDS programs.

Joint Statement Concerning the Programs of the World Bank and International Monetary Fund in Iraq (January 17, 2006)

Several Iraqi Trade Unions have issued a joint statement addressing Iraq's economy and interference from the International Monetary Fund (IMF) and the World Bank. The unions assert the Iraqi people's right to full sovereignty over their natural resources and economic decision-making, while demanding that the World Bank and IMF stop imposing structural adjustment programs and the privatization of public industries, such as oil, health, transportation, and construction. (ZNet)

Economists Say Cost of War Could Top $2 trillion (January 8, 2006)

According to economists Joseph Stiglitz and Linda Bilmes, cost estimates for the Iraq War have been vastly understated. While US congressional budget data estimate the war's cost at $500 billion through 2006, Stiglitz and Bilmes put the war's total cost at $2 trillion. Their detailed analysis includes long-term costs like ongoing healthcare for wounded troops and the war's related effects on investment, oil prices, and the growing US budget deficit. To view the report, click here. (Boston Globe)

IMF Occupies Iraq, Riots Follow (January 3, 2006)

According to the Progressive, the International Monetary Fund has joined with the US in occupying Iraq. As part of a debt-forgiveness deal, the IMF has forced market-oriented reforms on Iraq's energy sector, which severely raise the cost of cooking and heating fuel and public transportation. In a country already wracked by the US occupation, the IMF's "swift and brutal extortion" has sparked intense protests and contributes to further instability.

Accession Through the Backdoor (January 2006)

When bullying fails, the US uses military force to further its trade agenda. On February 11, 2004, less than a year after the US invasion, Iraq was granted observer status at the World Trade Organization (WTO) while under the rule of Paul Bremer's Coalition Provisional Authority. Though not yet a WTO member, Iraq has steadily progressed in the secretive process of WTO accession thanks to heavy US prodding. UK Attorney General Lord Peter Goldsmith has warned that structural economic reforms, as imposed by the US occupation and required for WTO membership, "would not be authorized under international law." (Focus on the Global South)




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