Paying for the War

Author: 
Arab News Editorial 4 April 2003
Publication Date: 
Fri, 2003-04-04 03:00

The first Gulf war was paid for largely by Saudi Arabia and Kuwait. Who pays this time round? Certainly not Saudi Arabia, which has opposed the conflict from the start. Nor Kuwait, even though it supports the invasion; it has made it clear that it will not pay a cent toward it.

So who? That is the question that vexes the Bush administration because, at the moment, it looks as if it is going to be the American taxpayer and to a lesser extent his British counterpart who pick up the bill. For President Bush, whose father won the last Gulf war but then lost the election because of public dissatisfaction over the economy, the last thing he needs is to hit the American public with a massive war bill.

It will be massive. Bush has already asked the US Congress for $75 billion to fund the war, to which a further $3 billion has already been added by Congress itself to help US airlines which have lost business because of the war. Although more than half the amount requested is contingency funding, it is a fair bet it will be all used up. That will not be the end of it. The sky is the limit when it comes to Iraqi reconstruction. The cost will run into tens of billions more. Paying for all this will mean cuts elsewhere, largely in the $726 billion tax reduction program that was part of Bush’s campaign promise. Mindful of the war costs, the Senate has already voted to slash the cuts to $300 billion.

That is bad news for Bush’s re-election dreams but it is the least of the economic troubles he is heading for. Far more dangerous will be the jobs lost, profits cut and companies facing meltdown that will flow from this war. Even before the war started, the US recorded a record trade gap which, together with other economic data, suggests that the road to recovery is going to be a long and bumpy ride. Inevitably, shares will bounce back the minute it is clear that Baghdad is about to fall, so too will the price of oil, but that will not save jobs and businesses in the US. The troubles so prominently facing American Airlines and shared by the rest of the US airline and US travel industries did not start with the war. But the war has compounded them. Bush will inevitably be blamed.

It is not surprising then that Washington is looking for UN and European money for the reconstruction of Iraq. It needs to spread the load. Money will undoubtedly be forthcoming from the Europeans who have just been lobbied to that end by Secretary of State Colin Powell; they will conveniently associate moral with political and economic advantage. They will feel a moral imperative to help rebuild Iraq but appreciate that not only will large checks provide the easiest route to rebuild shattered relationships within the EU and between the EU and the US but that investment in the early stages of reconstruction means they get a foot in the door for longer-term business in Iraq.

But none of this is going to happen without a new row between the US and everyone else. Washington wants UN and EU money but it also wants a dominant role in post-Saddam Iraq, economic as much as political. That will be unacceptable — to France, Russia, China and to all the opponents of war worldwide, probably even to its prime ally, the UK. The row will not be so bitter as before; not even France wants to get into another bruising public battle. This time, though, the US simply cannot afford to go it alone. Bush’s re-election prospects will not allow it.

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