WASHINGTON - The cost of ousting Saddam Hussein could stretch into hundreds of billions of dollars and possibly trigger a worldwide economic downturn, analysts and economists say.
Tens of billions of dollars, or more, could be required to support the military occupation of a fractious nation of 23 million and rebuild an already degraded infrastructure that might be damaged further during a U.S. invasion, dwarfing America's current total foreign-aid budget.
Also, front-line states - Turkey, Jordan and Israel - are expected to seek compensation for the added risks from a war to their security and slumping economies.
Some analysts fear disruption in energy markets that could shoot oil prices upward and possibly plunge the United States into a new recession and the world into a downward economic spiral.
In one of the gloomiest projections, Yale economist William D. Nordhaus writes that if the war dragged on and ensuing occupation was prolonged and hazardous, the total cost could climb as high as $1.9 trillion.
Nordhaus said governments' projections have often underestimated the cost of wars.
"The historical record is littered with failed forecasts about the economic, political, and military outcomes of wars," Nordhaus wrote in a 50-page study.
Estimates of the cost of fighting a war to topple Hussein have barely caused a ripple in Washington. The nonpartisan Congressional Budget Office, in a September report, said it would cost up to $13 billion to send forces to the region, $9 billion a month to prosecute the war and $7 billion to bring the troops home. The figures are based on using about 370,000 troops and up to 1,500 aircraft.
The Democratic staff of the House Budget Committee, using what it says are optimistic projections based on the 1991 Persian Gulf war, says a 30- to-60-day war, using up to 250,000 troops, would cost between $48 billion and $93 billion.
The Bush administration has provided little information about the projected costs of war and its aftermath, with spokesmen saying that war is a last resort and that the president hopes Iraq can be stripped peacefully of its chemical and biological weapons and nuclear programs.
White House economic adviser Lawrence Lindsey sounded a hopeful note in a September interview with The Wall Street Journal. While saying the war could cost between $100 billion and $200 billion, he doubted that it would have an appreciable effect on interest rates or the federal debt.
As for the postwar costs of rebuilding Iraq, Defense Secretary Donald H. Rumsfeld suggested in a recent interview with Fortune magazine that Iraq's immense oil reserves would cover much of it. "If you [worry about just] the cost, the money, Iraq is a very different situation from Afghanistan. Iraq has oil. They have financial resources," he said.
Almost no one doubts that the United States would win a war in Iraq and eliminate Hussein's regime, given the decline in Iraqi military capabilities since its decisive 1991 defeat in the Persian Gulf war and 12 years of sanctions imposed by the United Nations.
In any scenario, numerous wild cards come into play, including what kind of resistance U.S. forces would face on the ground that could prolong the war; regional instability and its impact on oil markets; and how long, and at what cost in American lives and funds, it would take to stabilize Iraq after the war.
As a result, only "guesstimates" of the cost of a war are possible, says Anthony Cordesman, a military analyst at the Center for Strategic and International Studies.
Economic consequences
Uncertainty about war can have "powerful psychological effects on the economy," according to a group of economists who presented a paper on the economic consequences of a war in Iraq to a recent CSIS conference.
It can lower consumer confidence, discourage investors from taking risks, depress stock prices and raise the cost of borrowing, the economists said.
The combination of prolonged uncertainty, then the reality of war and a possible spike in oil prices "might give us a double-dip recession," said Brookings Institution economist Alice Rivlin.
Add worldwide terrorism threats, and the result could be "a downward spiral in the world's economy."
Optimists predict a quick Iraqi military collapse and a warm welcome to American liberators for having overthrown a brutal dictator.
But Congressional Research Service Mideast specialist Kenneth Katzman counters: "In my view, they're likely to fight much more fiercely than anticipated," particularly if Iraqis feel that Hussein tried to avoid war by cooperating with U.N. weapons inspectors.
Cordesman sees a 30 percent to 40 percent chance of a scenario that includes heavier than expected resistance in Iraq, with serious urban warfare; Iraqi attacks on oil facilities; limited use of weapons of mass destruction; an attack on Israel that brings the Jewish state into the war; and rising political unrest in the region.
The economic result of this, according to the economists who spoke at CSIS, would be tighter oil supplies and lower economic growth.
Cordesman's worst case, with a 10 percent chance, would require major American reinforcements to meet protracted Iraqi resistance, sustained chemical or biological attacks on American forces and an Iraqi attack on Israel with weapons of mass destruction, prompting at least an Israeli threat to respond in kind.
Such a sequence of events would trigger major oil-supply disruptions, sharp drops on the world's stock exchanges and in prices of homes, a decline in economic activity generally and a noticeable rise in unemployment, economists told CSIS.
The response of the oil markets to the war is key.
"Sharp oil-price increases have been associated with most of the recessions of the last three decades," says Yale's Nordhaus. Saudi Arabia has the world's best capacity to increase production in a crisis and is expected to do its best to keep world prices stable. But experts warn that the kingdom's actions could be affected by heavy political pressure or even sabotage.
The shape of postwar Iraq is another wild card that would have an impact on the whole cost. Katzman says U.S. occupation forces won't be welcome - at least not for a while: "The Iraqi people are not going to like this."
Recent American experience shows that peacekeeping and nation-building are long-term processes fraught with risk. Afghanistan remains politically fragile a year after the United States and Northern Alliance fighters drove out the Taliban. U.S. and European troops remain in the Balkans three years after the Kosovo war.
Besides fashioning a new government, the United States would have to try to prevent fighting among Iraq's Shiites, Sunnis and Kurds, and possible meddling by outside powers, notably the neighboring states of Iran and Turkey.
Drawing on recent U.S. experience, Nordaus writes that the best case would be an occupation costing about $75 billion, with reconstruction, development of a new government and humanitarian aid costing another $31 billion. In the worst case - an occupation lasting years or even decades - the cost could soar to more than $600 billion, according to Nordhaus.
Iraq's debts
Iraq is unlikely to be able to foot the whole bill, or even most of it. While it has the world's second-largest oil reserves, its oil industry is in poor condition. The country owes about $100 billion in foreign debts and reparations claims from its invasion of Kuwait.
After the 1991 war with Iraq, America's Persian Gulf allies, along with Germany and Japan, joined in paying most of the cost to the United States, which totaled about $80 billion in today's dollars. The gulf states felt a direct threat from Iraqi aggression then that they apparently don't feel now, and the world was largely behind the war effort.
The United States has begun soliciting other countries to suggest ways they could contribute to a war effort if Hussein again defies U.N. weapons inspectors and war becomes inevitable.
After last week's summit of NATO leaders in Prague, a growing number of countries, including even a skeptical France, appear likely to join in a war in some fashion, provided the invasion gets at least tacit support from the U.N. Security Council. However, none has publicly offered to defray the cost.