Estimated Iraq war cost - US$1.8 trillion more than previous evaluation

WASHINGTON - The Iraq war could cost America US$2 trillion ($2.91 trillion), far above pre-conflict estimates, when lifetime healthcare for thousands of wounded US soldiers is included, a study says.

Columbia University economist Joseph Stiglitz and Harvard's Linda Blimes included costs for the 16,000 wounded US troops, about 20 per cent of whom suffer brain or spine injuries.

"Even taking a conservative approach, we have been surprised at how large [total war costs] are," said the authors. "We can state, with some degree of confidence, that they exceed a trillion dollars."

The projection of a total cost of $2 trillion assumes United States troops stay in Iraq until 2010 but with steadily declining numbers each year.

Before the invasion, then-White House budget director Mitch Daniels predicted Iraq would be "an affordable endeavour" and rejected an estimate by economist Lawrence Lindsey of total war costs at $100 billion to $200 billion as "very, very high".

Unforeseen costs include increased recruiting to replenish a military drained by multiple tours of duty, slower long-term US economic growth due to the war and healthcare bills for treating long-term mental illness suffered by war veterans.

They said about 30 per cent of US troops had developed mental-health problems within three to four months of returning from Iraq as of July 2005, citing Army statistics.

Stiglitz and Blimes based projections partly on past wars.

The researchers also included the economic cost of higher oil prices, a bigger budget deficit and greater global insecurity caused by the war.

They said a portion of the rise in oil prices - about 20 per cent of the $25 a barrel gain in oil prices since the war began - could be attributed directly to the conflict and that this had already cost the United States about $25 billion.

"Americans are, in a sense, poorer by that amount," they said, describing that estimate as conservative.

They projected the number of troops in Iraq in 2006 at about 136,000. Currently, the United States has 153,000 troops in the country.

Pentagon spokeswoman, Marine Lieutenant Colonel Roseann Lynch, said that the Iraq war was costing the United States about US$4.5 billion a month in military "operating costs". This figure did not include expenses related to the procurement of new weapons and equipment.

Lynch said the war in Iraq had cost US$173 billion to date.

Another unforeseen cost, the study says, is the loss to the American economy from injured veterans who cannot contribute as productively as they otherwise would.

Costs related to American civilian contractors and journalists killed in Iraq were another "hidden" expense, Stiglitz and Blimes said.

Death benefits to military families and bonuses paid to soldiers to re-enlist and to sign up new recruits are additional long-term costs, it said.

Stiglitz was an adviser to former US President Bill Clinton and served as chief economist at the World Bank.

He won the Nobel Prize in Economics in 2001 and has been an outspoken critic of US policy on Iraq.

- REUTERS