Pondering the imponderable as US readies for war
By James Harding
Financial Time - March 3 2003:
When asked about the costs of a possible war in Iraq, Donald Rumsfeld, the defence secretary, said last week: "To pretend that someone can even marginally, usefully speculate on that, when no decision has been made, is obviously not, I don't think, a very useful exercise."
That may be so. But it is precisely the task consuming a small group of Pentagon, State Department and White House budget officials as they prepare to present President George W. Bush with an estimate of how much it will cost to topple Saddam Hussein and rebuild Iraq.
Dov Zakheim, the comptroller at the Pentagon, has already submitted estimates. Richard Armitage, deputy secretary of state, has also sent expectations on humanitarian and reconstruction expenditure as well as the price of aid to allies.
It has fallen to Robin Cleveland, who oversees national security spending at the Office of Management and Budget, to put together a supplemental budget which Mitch Daniels, OMB director, is expected to submit to Mr Bush.
Ms Cleveland has been vague about the total costs. She said last week: "It will be a big bill." US officials and defence experts have estimated a $60bn-plus price tag for the military in Iraq and a further $30bn for reconstruction, refugee care and aid to allies.
The figures, of course, vary. But putting together a budget to fight a battle you have not begun, to rebuild a country not yet ravaged by war and to replace a government not yet overthrown, is more than just guesswork.
People working on this budget as well as those for previous conflicts involving the US military, say some items can be calculated with relative precision. And the process of putting together the war and reconstruction budget itself reveals much of what the US is expecting from the battle and, more alarmingly, what it cannot predict.
John Hamre, comptroller at the defence department between 1993 and 1997, says calculations start with what is known - the daily cost of a soldier's rations, the expense of dismantling, packaging, transporting and reassembling a Chinook helicopter and the price of the guided missiles which will be heavily used in the early stage of a war. They will then include cost estimates for items that are harder to forecast, such as losses and the cost of chemical weapons protection.
"What is unknowable is how hard the fight is going to be and how long it is going to last."
As the Pentagon's own economists calculate what Mr Zakheim, the comptroller, calls "coherent, scrubbed, careful estimates" there is some frustration from Congress and think tanks at the "back-of-the-envelope" speculation on the costs.
The supplemental budget has become highly politicised. As the Bush administration's plan for $674bn in tax cuts has accelerated the US return to an era of record-breaking deficits, Congressional critics are warning that a potential $100bn-plus bill for the war will send the deficit over $400bn.
Mr Zakheim said last month that even the Congressional Budget Office's estimate of $13bn to deploy the troops and $9bn a month to prosecute the war was "garbage". In 1991 the CBO forecast a $28bn-$86bn range for the cost of war - the end figure came in at $61bn.
Still, the Pentagon and OMB teams are trying to make estimates for the unknowables.
Former White House officials say the Pentagon tends towards the pessimistic. For Desert Storm in 1991 it forecast 3,000-10,000 casualties; 148 Americans were killed in battle.
Gordon Adams, who used to do what Ms Cleveland does at OMB, says the White House team has probably broken the budget into four parts: military deployment and combat; post-war reconstruction and humanitarian affairs; long-term peace-keeping arrangements and civil administration; and assistance to allies.
He said: "One of the real uncertainties is going to be whether we have to work in chemical and biological [weapons] environments. We do not really know if it is going to be a cake walk or a real slog."