THUS FAR, THE COST FOR INVADING AND OCCUPYING IRAQ (not counting lives lost) is approximately $166 billion. The President has just asked for an extra $25 billion on top of his FY2005 defense appropriations request — and most expect another $25 billion request during the next fiscal year, bringing the conservative estimate of accumulated Iraq related costs to approximately $216 billion.
When one considers that there are 14.38 million working age Iraqis, the per capita working age costs thus far amount to $11,548.00 — and will soon rise to $15,026.00 after this next year’s expenditures.
In a country where per capita GDP is $1,600.00 (and this is an overstatement since the broad swath of non-elite Iraqi society that lives closer to the $500 per year level), the amount spent just in defense dollars is staggering, nearly ten times the per capita income levels. If any significant portion of these defense resources were leaking out to average citizens and improving lives and choices, support levels for America would be far better. What is going on?
While I think that just pumping money into another country creates unhealthy dependencies, clearly American planners could have found ways to provide business loans, micro-credits, family support credits and grants, education vouchers, and other high quality social impact investments that might have won back the affections and support of Iraq’s citizens. One of the reasons for the relative success of the American occupation of Japan is that we engineered land reform, breaking up aristocratic estates and getting much broader distribution of rice producing land to farming families. America knew at that time that it had to leave a new class of economic and political winners in Japan; something we have not done at all in Iraq.
The real tragedy of this situation is that despite Iraq’s debt problems, and its substantial potential as a generator of hard currency through oil exports, the U.S. has nonetheless spent a vast amount of money in Iraq — though see today’s Washington Post story, “$1.9 Billion of Iraq’s Money Goes to U.S. Contractors — and not achieved security or stability there and has not succeeded in winning the support and affections of the Iraqi public whom we helped liberate from Saddam Hussein. All this money seems to be going into a black hole with little accountability for the poor returns on this investment.
At a macro level, America has 5% of the world’s population and is spending roughly half of what the entire world spends on defense but is not getting the security deliverables it deserves from the Pentagon. In the case of Iraq, the U.S. is spending about 10 times the per capita GDP of the average Iraqi citizen and is largely reviled and unappreciated.
Clearly, we are not getting good returns on this taxpayer money — and our thinking about what constitutes security and stability — and what the U.S. should spend money on to achieve its foreign policy objectives needs to be seriously rethought. More on that soon.
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