Economists: Iraq Containment Nearly as Costly as War

Amid estimates that the cost of the war in Iraq could run into the trillions, some economists say the real expense could be only slightly higher than what it would have cost to merely contain Iraq instead of invading.

A study by three economists at the University of Chicago's business school - Steven Davis, Kevin Murphy and Robert Topel - gives seven scenarios for the war, and the likeliest two indicate a final cost of between $410 billion and $630 billion.

But the economists also evaluate a range of possible outcomes if the U.S. had chosen the alternative to war.

They note that even before the 9/11 attacks, the United States had 28,000 troops in the region around Iraq, as well as about 30 ships and 200 aircraft enforcing no-fly zones. These forces alone were costing $11 billion to $18 billion a year, according to a report on the study in the influential publication The Economist.

The economists estimate that, without an invasion, there was a 3 percent chance each year that the rule of Saddam Hussein or his sons would collapse.

"Given what America was spending on Iraq, the authors reckon, it would have cost at least $200 billion, in present value terms, to keep containing it until it no longer posed a threat," The Economist reports.

Furthermore, containment would have involved a few contingencies, such as the periodic need for a show of force.

The University of Chicago economists figure that there would have been a 10 percent chance every year of having to send troops to the region again to keep Saddam under control.

Under these assumptions, they "estimate that the expected cost of containment would have been around $400 billion, only a little less than the $410 billion that they now expect the war to cost," according to The Economist.

Predictions of the war's cost by the Bush administration have proved too low. Defense Secretary Donald Rumsfeld cited a figure of $50 billion to $60 billion, and Bush's top economic adviser Larry Lindsey put the figure at $100 billion to $200 billion.

Now an estimate by Linda Bilmes of Harvard University and Joseph Stiglitz of Columbia University put the cost at an astronomical $2.24 trillion through 2015.

But The Economist points out that the Bilmes-Stiglitz estimate takes into account higher oil prices, which are only slightly dictated by the war in Iraq, and interest payments on U.S. spending in Iraq. It also includes $3 billion annually to be spent on veterans' care over the next 20 to 40 years.

A third study by Scott Wallsten and Katrina Kosec for the AEI-Brookings Joint Centre predicts that the war will eventually cost America from $540 billion to $670 billion.