Monday, December 9, 2002
War Games 101
WASHINGTON - Many
combinations of unanticipated events
will come back to haunt governments in the Middle East region and
beyond. The economist George Perry, spoke of the unintended economic
impacts of disruptions of world oil supplies, for example.
His study mostly focused on the underlying
economic world crises from the oil reduction in supply the supplay
of food and heating fuels, world wide.
His worst case scenario is an outcome which
assumes a decline in world oil production of seven million barrels
per day. Some of this deficit might be provided by US strategic
oil reserves of about 2 1/2 million barrels per day.
In the event of an OPEC boycott, oil production
might be reduced to less than 20 percent.
Such impacts would readily drive up oil
prices to around $75 per barrel or more. Perry estimates that gasoline
prices would skyrocket overnight to more than $3 per gallon.
The Bush administration assumes the negative
effects on rising price of gas can be offset by obtaining the supply
of oil from other regions. Under White House strategy, this would
lead to a decline of slightly under $1 per barrel over the next
decade. With a forecast of $25 a barrel, this could lead to a decrease
in the cost of US oil imports of $30 billion over the next decade.
However, if the US is on a Wartime footing, things
could be much darker. In World War II, for example, and Vietnam
military buildups and defense jobs rose and fell just as fast at
the end of the war.
If the IRAQ war went badly in the initial
phases, the economic effects could quickly turn the entire US economy
Putting the different adverse effects together
adds up to $1.6 trillion, most of which come outside of the direct
If the US has a string of bad luck
or misjudgments during or after the war, the outcome, while
less likely, could reach the $1.6 trillion of the upper estimate
The first concern is that the George W.
Bush administration has not made public his estimate of the costs
of this war. The public and the Congress are unable to make informed
judgments about the realistic costs and benefits of the upcoming
conflict when none are given.
Postwar occupation, reconstruction, and
nation-building costs in Iraq have not been made public. If American
taxpayers decline to pay the bills, this would leave a mountain
of rubble and mobs of angry people in Iraq and the region.
According to Treasury reports this
week, the federal budget has deteriorated by $360 billion from last
Spring to this Fall and with a war, Mr. Bush's budget deficits are
likely to become enormous. The Bush administration has not prepared
the public for the cost or the financing of what could prove to
be the most expensive wartime adventure in world history.
Another caution -- Bush advisors may have
undrestimated the homicidal reaction of the Islamic world and the
Iraqi people to American intervention.
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