How much the war on terrorism is costing financially

Beyond the loss of life and the diplomatic currency the US is having to spend, the American "war against terrorism" in Afghanistan could prove relatively cheap, financially speaking, compared to the Gulf War.

At the present level of military activity, the incremental financial costs of the operation - those above normal, peacetime defense expenditures - are running about $1.2 billion per month to the United States, estimates Gordon Adams, a veteran expert on the costs of military ventures.

Certainly, there's no way to forecast how long the war is likely to last, or what forms the fighting may take in the future. But if it continues in roughly its current form for a year, incremental costs could mount to $15 billion to $20 billion, reckons Mr. Adams, the director of the security policy studies program at George Washington University in Washington.

That compares with the approximately $60 billion of incremental costs of the short-lived but, at least so far, more intensive Gulf War of 1991.

How much a nation spends on war is important, and not just to taxpayers. If costs get out of control, it can raise doubts about an action's feasibility. Even before the bombing campaign in Afghanistan began, President Bush was widely reported to have said, "What's the use of sending a $2 million missile into a $10 tent to hit a camel in the butt?"

So far, however, costs - at least financial - have been well within the scope of what the US can afford. Analysts figure the US, with its $10 trillion economy, can easily manage the extra financial costs of the Afghanistan action.

"Anything is affordable if you have the political will to do it," says Christopher Hellman, an analyst at the Center for Defense Information in Washington.

The annual cost of this war falls within the emergency $40 billion Congress approved last month for the war on terrorism. Congress assumed half that amount would go to fighting the war, notes Richard Kogan, a budget expert at the Center on Budget and Policy Priorities in Washington. The other half was for recovery and relief in New York and Washington, funds to fight bioterrorism, and other security efforts.

Casualties, rather than dollars, are far more likely to to determine whether the American public believes the country can afford the war.

But the extra costs of an operation such as that in Afghanistan stem not just from the munitions lobbed at the enemy. There is also the combat pay for the 30,000 or so military personnel involved and the wages of the civil-defense forces called to duty. Ships and planes that may ordinarily spend most of their time in harbor or sitting on the ground consume huge amounts of expensive fuel during wartime. Instruments of war need far more maintenance and repair.

One difference from the Gulf War could be that fewer US costs are covered by allies. In that war, Saudi Arabia and Kuwait picked up large chunks of the expenses, either in kind (aviation fuel, for example) or in cash. Germany and Japan also contributed heavily. All these allies benefited from the defeat of Iraq. Kuwait got its nation back. Saudi Arabia's defense position was improved. Germany's and Japan's oil supplies were made more secure. The net cost of the war to the US shrunk to $7 billion, according to Mr. Hellman; $10 billion to $15 billion, reckons Mr. Adams.

None of these costs can be precise, note the experts.

Nor can the extra costs of providing security within the US be easily estimated. "It is like trying to pin a live butterfly to a post," says Adams.

One problem is that the Defense Department does not disclose the numbers of various munitions that have been fired at the enemy.

What is known is that many of the missiles and other ordnance are expensive, especially the "smart" weapons that can be more precisely targeted. For example, the Tomahawk, a precision-guided missile, costs more than $1 million apiece. Some older "dumb" bombs are being fitted with a device costing $20,000 to $30,000 to give them greater guidance capabilities, notes Adams. The US has huge stockpiles of such bombs in storage that probably will not be replaced. But Adams expects replacement orders for "smart" weapons to go out "almost immediately." That would benefit such weaponsmakers as Raytheon and Lockheed Martin.

Whether any of the allies will help finance the Afghanistan operation is not known. If a Muslim nation did supply fuel to US planes or transported military goods, the fact might be kept secret, speculates Adams.

From an economic standpoint, the expenditures could provide a modest stimulus to a lagging economy. "The timing is fortuitous," says Mr. Kogan.

The cost comes at a time when overall defense spending is being boosted by Congress in reaction to the tragic events at home. The House Appropriations Committee last week approved a $317.5 billion Pentagon budget for fiscal 2002, up 7 percent from fiscal 2001. Lawmakers may add more as the legislative process moves on.