Thursday, 22 May 2008

War is emptying Britain's wallets

The Daily Star

Tuesday 4 March 2008
By Michael Glackin
How much does a war cost? Not just the cost of military firepower, but the cost of compensating the families of dead soldiers, looking after injured soldiers and the war's wider impact on a country's economy? In the case of the war in Iraq the figure for the United States alone is a minimum of $3 trillion if you take the word of Nobel Prize-winning economist Joseph Stiglitz. In his book "The Three Trillion Dollar War: The True Cost of the Iraq Conflict," co-written with Harvard lecturer Linda Bilmes, Stiglitz forensically dissects America's war costs. Unusually for an economist, Stiglitz's prose is crisp and clear, but the title undersells things a bit, since Stiglitz believes the ultimate cost to the US will be nearer $5 trillion. That's a lot of money, particularly compared with current White House estimates of $645 billion - a figure itself way above Washington's initial estimate of $50-60 billion.
When I spoke to Stiglitz during his visit to London last week he insisted he had been conservative in his estimates. "We were aware people would say 'he's a Democrat and against the war.' There are a few minor quibbles but the general judgment is we've been conservative," he says.
Stiglitz factors just about everything into his estimates, from troop pay and equipment to more hidden costs, including long-term veterans' healthcare benefits, replacing military equipment, interest on money borrowed to pay for the war (the Iraq war has been paid for largely through deficit spending), and the impact of the war on the price of oil. He also throws in his view that there is a direct correlation between the current crisis in global financial markets and the cost of the conflict.
For good measure Stiglitz also has a stab at crunching the United Kingdom's numbers, estimating the cost of British participation in Iraq and Afghanistan through to 2010 to be at least $40 billion, more than two-thirds of which is attributable to the Iraq war.
Is he correct? I've no idea. But at least he's come up with a figure. When I asked the UK Treasury, the government's finance department, for an overall estimate, I was tersely informed they did not have one. Instead they referred me to the Ministry of Defense, which in turn, and quite correctly, referred me back to the Treasury. When I explained the Treasury had referred me to them, they suggested I contact Number 10 Downing Street. The prime minister's office, you've guessed it, referred me back to Defense and Treasury. Mindful of my phone bill, I gave up.
It seems bizarre that the Treasury, the government department that holds the purse strings of all government spending, has no idea of how much money has been spent in Britain's two wars. Even more bizarrely, they refused to comment on Stiglitz's estimates.
Stiglitz is amused and surprised by the Treasury's ignorance. "Parts [of the costs] are relatively easy to account for and are really part of good government, such as costs of operations and injured people. Other parts, the ones based on economic assumptions, are harder to quantify but really should still be tracked by someone in the Treasury," he says.
Stiglitz calls the British system of funding the war "opaque," which partly explains why he was unable to separate spending in Afghanistan from Iraq. In his book he states that before the war, when Gordon Brown was in charge of Britain's finances, he set aside 1 billion pounds (about $2 billion) for war spending. Brown also allocated cash to a Special Reserve fund, a cash pot that allows the Defense Ministry to supplement its regular budget. Stiglitz makes the point that because funds from the Special Reserve are drawn down by the ministry when required, without approval by Parliament, it makes it harder to quantify how much is being spent. But Stiglitz estimates the UK has so far spent almost $19 billion on military operations alone in Iraq and Afghanistan. In crude terms that's the price of a lot of hospitals and schools at a time when the government is under fire for failing to adequately fund healthcare and education.
Considering the scandals that have erupted over the government's failure to properly equip soldiers in the field - last month an inquest found that a soldier in Afghanistan was "unlawfully killed" because the Defense Ministry failed to provide him with proper equipment during Brown's tenure as chancellor of the exchequer - you could be forgiven for wondering where all the money has gone.
But $40 billion is paltry when compared with the $200 billion worth of debt that Brown has taken onto the government's books by nationalizing Northern Rock, an inept high street bank plunged into crisis by the global credit crunch and whose plight last year caused the first run on a bank in Britain in more than a century.
The fact is Iraq has slipped down the political agenda in the UK. Notwithstanding last weekend's killing of a British airman in Basra, the war in Iraq is over as far as Brown is concerned. Afghanistan still looms large of course, but tough as the fighting there is, it's a war most people still largely back. Even Prince Harry has done a tour of duty there.
Brown at the moment is more concerned with the issue of banning plastic bags in supermarkets to help reduce global warming. He even took time to write a column on the issue for The Daily Mail, middle England's favorite newspaper. Oddly enough the government's marketing department used more than 1 million plastic bags last year in the cause of promoting itself. The Treasury couldn't tell me how much that cost either.
Michael Glackin is a journalist and former managing editor of THE DAILY STAR.

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