Unequally Sharing the Costs and Dividends of War
WHILE the toll in United States casualties in the Gulf war was mercifully light, the economic costs are already high. A recent study by the Institute for Policy Studies calculates the direct costs of the 43-day war at around $50 billion, plus another $12 billion in wind-down costs. Under realistic assumptions about the generosity of allied governments, about half of this will be paid by US taxpayers. Beyond the direct costs, over $100 billion more will be spent in the decades to come for veterans benefits, a bill that will be paid exclusively by Americans.
Since the money for all these expenditures will be borrowed by the US government, add another several hundred billion dollars over the next three decades in new interest payments on the national debt. These costs will be born by US taxpayers and their children.
Now, in the euphoria over military victory, there is strong political pressure to restore the Patriots, tanks, bombs, and planes lost in the war so that the US can be prepared to take on the next Saddam Hussein. These expenditures will be considerable, but the opportunity costs of such outlays will be even greater - schools not built, bridges not repaired, and workers not trained. The shortage of federal funds that are the legacy of President Reagan's eight years of amassing the world's largest military arsenal, and President Bush's penchant for using it, severely limit America's social and economic options.
However, a small number of US citizens stand to gain handsomely from the devastation of this war. Executives from some of America's largest corporations have trekked in recent days to the remote western Saudi city of Taif, where Kuwait's cash-rich government-in-exile has been awarding contracts for the country's postwar reconstruction. Kuwait's rulers have made it clear that bidding will favor heavily those nations whose troops did the fighting.
Of the first 200 contracts awarded, some 70 percent went to US firms like IBM, Motorola, and Caterpillar. Raytheon, whose Patriot missiles starred in the air war, will play a lucrative role in rebuilding Kuwait International Airport.
For these firms, the devastation of the ground war not only assured profitable military contracts but postwar reconstruction contracts as well. In the wake of Saddam's deliberate wreckage of Kuwaiti assets and the destructive effects of the ground war, Kuwaiti estimates of the total sum of contracts to be awarded over the next five years soar as high as $100 billion.
By way of comparison, it is worth noting that in current dollars, the post-World War II Marshall Plan cost $70 billion. In a world starved for capital, Kuwait is one of only a handful of countries with the foreign-exchange reserves to meet such a price tag.
AMONG those most likely to benefit are the foremost oil-service and construction firms of the US, the same companies in many instances that benefited during the 1960s and 1970s from lucrative contracts to build the industrial infrastructure of the Gulf states. Bechtel, the world's largest engineering firm, played a major role, but it has suffered severe cutbacks in the 1980s because of lower oil prices. It has now signed an agreement to manage the reconstruction of Kuwait's petroleum industry.
Dallas-based Halliburton, America's No. 2 oilfield-services firm, is trying to win the contract to repair a $2 billion oil refinery that it constructed. Red Adair, the famous Texan oil-well capper, has signed a contract to cap the several hundred Kuwaiti oilfields set ablaze by Saddam Hussein.
All wars involve sacrifices, and all raise questions of how fairly such sacrifices are to be shared. In this war it appears that the distribution of costs and benefits will be especially unfair. Combat veterans will be paying the costs of war for years to come. Meanwhile, US firms rebuilding Kuwait will reap windfall profits, yet no one is suggesting they pay higher taxes; a legacy of the Reagan years is that corporations are paying a reduced share of US taxes.
It is appropriate that US corporations be rewarded for the US effort to push Saddam Hussein out of Kuwait, but only if the benefits are widely shared with local American communities, workers, and taxpayers. Corporations that fly our flag but make only a marginal contribution to the US economy or have a negative impact on the physical environment should not be rewarded for the sacrifices of the men and women who fought in the desert.