Out How: The Economics of Ending Wars-10 points

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Out How: The Economics of Ending Wars
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Michael D. Intriligator

Ten points of Michael D. Intriligator, professor of economics, political science and public policy, UCLA, and vice chair of Economists for Peace and Security:

1. On the economics of ending wars, the decision to prolong a war or to terminate it in various possible ways can be studied using the economic tools of cost-benefit analysis and expected utility theory. One of the belligerents, such as the U.S. currently in Iraq (and also in Afghanistan) will continue the war if it sees the potential future benefits exceeding the costs, where each is weighted by its probability of occurrence and future benefits and costs discounted to the present. On the costs of the Iraq War, the most detailed study was done by Joseph Stiglitz and Linda Bilmes, presented at the 2006 ASSA meetings and published in the Los Angeles Times. They recently updated their study, which they published as “Encore: Iraq Hemorrhage, Update of “The Economic Costs of the Iraq War,” in The Milken Institute Review, Fourth Quarter, 2006, pp. 76-83. They estimated the total price tag for the war as $2.267 trillion, a stunning figure. Future costs will probably continue at more or less the same rate, depending on whether the U.S. changes its strategy by, for example, a surge in troops committed to the war.

As to the benefits, one must consider the real reasons for the Iraq war, in contrast to the reasons given by Bush and others that were excuses, rationales, or simply wrong. The ostensible reasons given by Bush were 1) Iraqi possession of WMD, 2) to fight terrorism, 3) retaliation for 9/11, and 4) building a democracy in the Middle East that would spread throughout the region. The real reasons, however, were: 1) retaliation for Saddam’s attempted assassination of President Bush’s father, 2) desire for U.S. bases and influence in the region, 3) protection of Israel. In my view, retaliation was the main motivation for President Bush while U.S. bases and influence and protection of Israel were the motivations for the “neocons” in the Project for a New American Century (PNAC), Century (PNAC), many of whom became important players in the Bush Administration, occupying many high offices. They were able to use Bush’s powerful personal grievance against Saddam in 1) to convince him to invade and occupy Iraq, as they had been planning for many years when they were out of office, during the preceding Clinton Administration, when they planned the operation as part of PNAC. In fact this plan came up in the very first meeting of President Bush’s Cabinet, to the surprise of some who had not been members of PNAC. None of these neocons had direct personal military experience and thus they were all “armchair generals.” They also had no deep knowledge of Iraq or the region as a whole and did not consult with people in the State Department and CIA who did know the country and region. The neocons had no appreciation for a culture that they did not understand and they had no opposition in the White House or Pentagon. Many people have alleged oil was the real reason for the invasion, but, as I see it, this was only a secondary reason for the neocons as well as for President Bush.

Of course, it is hard to quantify the value of these benefits based on the motivations for the war, and some were achieved, including the overthrow of Saddam and his execution as well as the establishment of U.S. bases in Iraq. No WMD were found, and as to the fight against terrorism, Iraq has become a training base for terrorists, which it never was under Saddam, and these terrorists are now much closer to Israel. It is hard or impossible to justify the continuation of the war based on these past and potential future costs and benefits.

2. Historically, most wars end when one of the belligerents is defeated, as in World Wars I and II or the Vietnam War, but some lead to a stalemate or a truce, as in the Korean War and the Iran-Iraq War. In others, one of the belligerents withdraws, as in the Soviet invasion of Afghanistan. The current Iraq War may, in fact, follow the pattern of the Soviet invasion of Afghanistan, involving the invasion of a poor and powerless Muslim nation, a neighboring country to Iraq, by a superpower. After many deaths on both sides, the Soviet superpower eventually withdrew without making any gains and left a civil war in its wake. The Soviet Union invaded in December 1979 and withdrew 10 years later, in 1989. If the current Iraq War follows the same course then the U.S. will withdraw in March 2013, ten years after the 2003 invasion without making any gains and leaving a civil war behind. Of course, 10 years for the Soviet Union in Afghanistan does not automatically imply 10 years for the U.S. in Iraq, but this war could drag on much longer than anyone is now considering. Recall that in the Vietnam War large numbers of American combat troops began to arrive in 1965 and the last left the country in 1973, with the war finally concluded on 30 April 1975, with the fall of Saigon to North Vietnamese forces. Thus the U.S. involvement also lasted some 10 years, just as in the case of the Soviet war in Afghanistan.

3. The Harvard philosopher George Santayana stated in a book published in 1905 “Those who cannot remember the past are condemned to repeat it.” Life of Reason, Reason in Common Sense, Scribner’s, 1905, p. 284, and this seems to be applying to the Middle East, such the U.S. establishing a puppet government in Iraq much as the British did in the 1920’s modeled upon their own government with a disastrous outcome. We are repeating the British experience in Iraq. They set up a mini British constitutional monarchy with a young King Faisal on the throne. After Britain granted Iraq independence in 1932 the country fell into a period of strife. A military strong man overthrew the monarchy in 1958, and Saddam Hussein eventually deposed him. This may be the most likely future course of Iraq, not a democracy or civil war or partition or a continued U.S. presence, but rather an eventual takeover by a strong man, the leader of one of the militias, perhaps Moktada al-Sadr, who is the strongest militia leader today and has credibility based in part on the legacy of his father and family. There are earlier historical precedents as well.

4. A point I have been making in recent talks builds on one of the recommendations of the recent Baker-Hamilton Iraq Study Group report, which advocated negotiations with Iran and Syria. Many others have been suggesting the use of diplomacy such as these negotiations for some time, including me. What these proposals omit is the agenda for such negotiations. My proposal would be a “Grand Bargain” under which Iran, is very influential in Iraq, could help us exit gracefully from Iraq, while the U.S. in return as a quid pro quo could make a deal with Iran similar to the one that we made with India. Under it we would help them with nuclear technology for energy production and other peaceful purposes but they would have to continue as a non-weapons state member of the NPT and sign on to the Additional Protocol of the IAEA, involving full-scope IAEA safeguards of their nuclear facilities, which would help guarantee that they develop only nuclear energy, as Iranian President Mahmud Ahmedinejad has stated is their avowed goal, and not nuclear weapons. Whether such a “Grand Bargain” will emerge or not it is important for other nations, particularly those in the region to see that we are willing to talk with Iran and Syria. (For a related proposal see Abbas Maleki and Matthew Bunn. “Finding Compromise in Iran.” The Boston Globe, 15 June 2006).

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