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The economics of the Iraq war

The economics of the Iraq war

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The Iraq war has been perhaps the greatest disaster and embarrassment of my lifetime, and the recent degeneration into civil war in the country makes George W. Bush and Tony Blair's decision to invade that country even less wise than it looked before.

Why? At least a million deaths, and the opportunity cost of at least $3 trillion dollars allocated by the West to that war. War is, above all, an economic decision. It is a decision to commit economic resources — money, time, energy, resources expertise, technology — to the battlefield. 

And for what? To make Iraq a freer, stabler, more successful country? To liberate the Iraqi people from oppression and spread democracy in the region? This endless sectarian bloodshed — foreseen by many of those who understood Iraq's sectarian nature — is not that. 

To avenge 9/11? It's a cruel joke that we went to war in Iraq on the pretext Saddam Hussein was in league with al-Qaeda, and now a splinter group of al-Qaeda — the Islamic State in Iraq and the Levant (ISIS) — controls swathes of the north of country, and is advancing on Baghdad.

To destroy Saddam's non-existent weapons of mass destruction?

And even if — as some allege — that the Iraq war was a pretext to grab Iraqi oil for Americans and the West, oil got much more expensive in the wake of the war, and is still much more expensive for us in the West today.

Defenders of the Iraq war often point to medical technological advances as a benefit of the war, a result of treating severely injured soldiers on the field of battle, and developing contraptions like artificial limbs for them on their return home. And no doubt, that is very impressive. So too are the technological advances made in other fields, including military technology itself, which often has non-military applications. 

But those advances were purchased with trillions of dollars of money, time, energy, expertise, technology and millions of lives. All of this, I imagine, could have been done at least an order of magnitude more cheaply without that war, and without throwing Iraq into an endless quagmire of strife, civil war and violence. And with trillions of dollars left over for investment in education, infrastructure, basic research and science.

Of course, wars are sometimes necessary. If an external threat seeks to seize or subjugate or destroy your country, then war is necessary for survival. 

But the Iraq war was not such a war. The opportunity cost of getting sucked into the tempestuous, sectarian, tribal mess that is Iraq was too damn high. And the smartest critics of the war originally knew that. They knew that the $20 billion originally requested by Bush, Cheney and Rumsfeld would pale in comparison next to the true cost of a war, which can spiral and spiral. Wars are not discrete events, they are ongoing, unpredictable money-sucking pits in the earth that can suck money, time, effort and resources for years and even decades.

This economic critique provides an outline for how the West should think about the latest escapades in the country. 

Saddam Hussein governed with an iron fist. Should the West  — and specifically the U.S. — return to provide the iron fists necessary for the country to recuperate and develop the appratus of democratic governance? Well, the first $3 trillion of effort didn't work, so why would it work now?

The U.S. should beware of the sunk costs fallacy here. Being in for $3 trillion shouldn't mean you are in for whatever it takes to remake Iraq into a successful democracy. That could be $50 trillion, and millions more deaths.

Should the U.S. provide tactical  and operational support to the current Iraqi government and governments in the region to undermine ISIS and related groups and drive them from the country? That is likely to have lower costs and opportunity costs. But it still has risks. War is still war. It still sucks money, time, effort, resources.

Targeted drone strikes and bombing missions aimed at ISIS operations and leadership also seem inevitable, and may be far less risky and money-sucking than a boots-on-the-ground invasion, which President Obama has not yet ruled out.

But tinkering around the edges does not promise vibrant democracy in Iraq tomorrow or next year. And I fear that hawkish Republicans — John McCain, Lindsey Graham and their ilk — will bang the drum and push and push for a deep, committed war effort to defeat ISIS. They will argue Obama's withdrawal from Iraq has been proven to be a failure — specious logic, given that the U.S. should have never gone in in the first place — and only through devastating force can they finish the job.

I hope Obama and the West do not listen.

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Why is it we rarely hear the petrodollar mentioned in connection with the Iraq war, surely the basis for it as Hussein was allegedly selling oil for euros instead of dollars thus threatening to undermine the hegemony of the dollar?

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