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July 21, 2006

Cost of Terror War Hits $430 Billion


by Jim Lobe

Washington's self-styled "Global War On Terrorism" has cost the country at least 430 billion dollars over the past five years in military and diplomatic efforts, according to the Government Accountability Office (GAO), the watchdog arm of the U.S. Congress.

The GAO warns that future costs may be difficult to estimate because of irregularities in how the Pentagon does its accounting and because of unforeseen events in Iraq and in Afghanistan.

The report comes only weeks before the fifth anniversary of the Sept. 11, 2001 terrorist attacks in the United States, which kick-started the U.S. war on terror.

The figures are particularly important because they show how much the war is still costing the United States in Iraq and Afghanistan years after both operations began, and at a time when the country is facing rising health care costs and budget deficits.

For example, the money spent so far could have helped fund employer health insurance for some 107.5 million U.S. citizens, more than double the estimated number of people without health coverage.

The figures are also notable in that before the March 2003 U.S. invasion of Iraq, top officials in the George W. Bush administration said that they expected the invasion not to burden the U.S. budget and predicted that Iraqi oil sales would pay for reconstruction and some expenses associated with military operations.

However, current oil production remains far below the prewar level of about 2.5 million barrels per day.

The report explains that since 2001, the Department of Defense (DOD) alone received 386 billion dollars for its military operations, while other agencies, including the State Department and the Agency for International Development (USAID), have received about 44 billion dollars to fund reconstruction and stabilization programs.

Of that money, Iraq received the lion's share at 34.5 billion dollars. Afghanistan received nine billion dollars, and an additional 400 million dollars were slated for use in both countries.

For 2007, the Pentagon has requested another 50 billion dollars for military operations, and other U.S. government agencies have requested 771 million dollars for reconstruction and stabilization activities.

Most of the money went to activities in the war on terror that include combating resistance groups, civil affairs, capacity building, reconstruction operations, and training military forces of other nations.

The congressional watchdog signaled its concern over how the Pentagon reports the costs associated with the war on terror, which adds to the difficulty of estimating future costs.

For example, it says that through April 2006, the Pentagon reported only 273 billion dollars in incremental costs, which differ from the GAO findings on money allocated to operations.

"DOD's reported GWOT (Global War on Terrorism) costs and appropriated amounts differ generally because DOD's cost reporting does not capture some items such as intelligence and army modular force transformation," said the report.

The agency said previous problems with the Pentagon's accounting led the GAO to conclude that future costs are likely to be much higher than anticipated.

The report also said that GAO's prior work found numerous problems with DOD's processes for recording and reporting the war costs, including the use of estimates instead of actual cost data and the lack of adequate supporting documentation.

"As a result, neither DOD nor the Congress reliably know how much the war is costing and how appropriated funds are being used or have historical data useful in considering future funding needs," said the report.

GAO said that the U.S. war on terror would likely involve the "continued investment of significant resources, requiring decision makers to consider difficult trade-offs as the nation faces increasing fiscal challenges in the years ahead."

"Our nation is not only threatened by external security threats, but also from within by growing fiscal imbalances due primarily to known demographic trends and rising health care costs," said U.S. Comptroller General David M. Walker to Congress this week.

In his report, Walker says that many variables – such as the extent and duration of military operations, force redeployment plans, and the amount of damaged or destroyed equipment needing to be repaired or replaced – make predicting the real cost of the war a difficult mission.

It is not known how much money other U.S. government agencies will need to help form governments and build loyal security forces in Afghanistan and Iraq, or meet the healthcare needs of thousands of veterans, which include providing future disability payments and medical services.

However, the GAO said that U.S. commitments in Iraq "are likely to be in the hundreds of billions of dollars."

Walker told Congress that Iraqi needs are greater than originally anticipated and estimated that in the next several years the country will require some three billion dollars to reach and then sustain oil production capacity of five million barrels per day.

To fund electricity needs, the occupied nation will need 20 billion dollars through 2010.

"Iraqi budget constraints and limited government managerial capacity limit its ability to contribute to future rebuilding efforts," he said.

The accurate accounting is also complicated because reconstruction efforts have not taken the risk of corruption into account when assessing the costs of achieving U.S. objectives in Iraq.

Walker's report quotes U.S. government figures as saying that about 10 percent of refined fuels are diverted to the black market, and about 30 percent of imported fuels are smuggled out of Iraq and sold for a profit.

Meanwhile, lack of security has stymied efforts to rebuild electrical, sewer and water systems. A report in February by the special U.S. inspector general overseeing reconstruction said so much money was being spent on security that most sewer, irrigation, and drainage projects had been canceled.

Some funds have also been diverted to other types of projects, primarily security-related, and the reconstruction efforts have been plagued by substantial corruption and overcharging by contractors.

The cost of security has eaten up as much as 25 percent of each project, according to the inspector general.

Additional expenses facing the United States include the new U.S. embassy in Baghdad, which is projected to cost a whopping 592 million dollars, but the full cost of establishing a diplomatic presence across Iraq is still unknown.

In Afghanistan, the army and police programs could cost up to 7.2 billion dollars to complete and about 600 million dollars annually to sustain, the GAO says.


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  • Jim Lobe, works as Inter Press Service's correspondent in the Washington, D.C., bureau. He has followed the ups and downs of neo-conservatives since well before their rise in the aftermath of the September 11, 2001 attacks.

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