America’s Second-Longest War: Taking Stock

The staggering financial costs of the Iraq war continue to rise even a decade later. Initially justified as a war that would cost about $50 to $60 billion, today experts estimate that the true financial cost is between $4 and $6 trillion. In order to understand the war’s rising price tag, Linda J. Bilmes, author of the 2008 book The Three Trillion Dollar War co-authored with Joseph Stiglitz, explained how her research team arrived at these numbers, and how since the publishing of her book she discovered that there would be at least $2 trillion more to the $3 trillion figure when taking into account rising disability benefits and claims by returning veterans.

Findings

Bilmes updated her research team’s findings on the cost of the Iraq war a decade later. Below is a summary of her findings and conclusions:

• Costly Legacy: The decision to go to war with Iraq has cost the United States trillions of dollars despite estimates before the war that the invasion would be “quick and cheap,” Bilmes said. She argued that future national security policymakers must cope with the legacy of the cost of the Iraq war. That legacy is the long-term commitment made to veterans in medical care, education, and other benefits. Historically the bills for war costs comes decades after they took place; however, the costs of the Iraq war will be higher and come sooner due to high survival rates, generous veteran benefits, and more expensive medical treatments.
   
• Veteran Affairs: Since 2011 the Veteran Affairs (VA) budget has climbed from $61 to $140 billion per year, Bilmes said. In the past eleven years, nearly 2.5 million troops were deployed, of which 1.65 million have returned home and become eligible for veteran care and benefits. It was predicted that by 2013, 45 percent of new veterans would be receiving medical care and 40 percent would be on disability. In reality, the VA is currently treating more than 56 percent of returning troops and more than 50 percent have applied for permanent disability benefits. Ninety-eight percent of these claims are approved. Bilmes concluded that when taking into account money already spent on veteran benefits by the VA, the cost of taking care of veterans is $134 billion. However, another $836 billion has already accrued in disability, medical, and social security benefits to be paid out over the next 40 years, and this is not counting costs after retirement.
   
• The Pentagon: Bilmes explained that since the war, one third of the total Department of Defense  budget is now dedicated to personnel and healthcare costs. She explained how the department had increased its personnel benefits and salaries to attract more recruits after the war and how the repercussions of that decision have put a strain on its spending ability today. For example, spending for the TRICARE system that treats troops in active duty service and their families has risen from $18 billion in 2001 to $56 billion. The health companies that make up TRICARE are some of the biggest beneficiaries of the war in terms of profits, Bilmes added. She also pointed to the department’s higher pay scale indexing after the war, which further strains the budget. She concluded that the United States will not enjoy a peace dividend due to its need to replace a generation of deprecated military equipment and its military security agreement with Afghanistan that would cost approximately another $700 billion.
   
• Unpredictable Costs: Bilmes argued that the costs of war are not only high but unpredictable and can set off a chain of events with far-reaching economic consequences. She pointed to her colleague Joseph Stiglitz’s argument that oil prices led to the Federal Reserve’s decision to increase liquidity credit, which played a role in bursting the housing bubble, leading to the financial crisis. Bilmes also explained that the way in which the war was paid for was unprecedented: the United States has borrowed all the money spent in Iraq and the decision to cut taxes and pay out of debt has added another $2 trillion to the national debt over the past decade. She concluded that the Iraq war deficit endangers the future by continuously adding to the national debt.

A System in Disarray

• Bad Accounting Matters: The United States lacks any system that tracks war costs, Bilmes said. She explained that the United States owes nearly $1 trillion in deferred compensation to the troops; however, this liability does not appear on the national balance sheet. Furthermore, the government is not accounting for the value of the 6,658 troops lost in Iraq and Afghanistan beyond a small amount of life insurance money.
   
• War Debt: Bilmes explained that the United States does not keep track of its war debt and lacks the basic accounting systems to track it. Over the last decade the military budget increased by $1.5 trillion, not including money appropriated to war spending related to personnel and medical care costs. She explained that the Pentagon’s accounting system is so flawed that a proper audit cannot be performed. This has resulted in a legacy of rampant waste, cost overruns, war profiteering, and comingling of war and non-war related funds, she concluded.
   
• Lack of Oversight: Bilmes highlighted the shortcomings of the congressional system of appropriation to military spending. She explained that Congress can appropriate vast sums of money and circumvent the entire budget accountability system by labeling them emergency funds, when in fact emergency funds appropriations were designed for actual emergency disasters like earthquakes. The United States has spent trillions of dollars through these emergency funds with little accountability, she said.
   
• Lessons Learned: The lesson of Iraq is that the government’s underestimating, ignoring, and refusing to think about how to pay for the war made it easier for the cost to grow and allowed for poor choices, Bilmes concluded. She explained that the government has spent at least $2 trillion in out-of-pocket money and has committed at least $2 trillion in veteran, social security, and defense spending. By factoring in other macro and micro costs caused, for example, by the impact of high oil prices, the cost estimate for the war reaches $5 trillion. When Afghanistan’s costs are factored in, the estimate reaches $6 trillion and counting.

From a loss of American credibility in the international community to continued instability and sectarian violence in Iraq, the geopolitical consequences of the Iraq War are still reverberating across the Middle East and beyond. Seeking to gain a better understanding of the geopolitical lessons that can be learned from America’s second longest war, Carnegie’s Jessica Mathews moderated a discussion with former national security adviser Zbigniew Brzezinski and Major General H.R. McMaster in the final panel of the day. 

Iraq and the Realities of Modern Warfare 

• “Faith Based” Reliance on Technology:  McMaster argued that Iraq taught the United States that relying on technological prowess alone will not be effective in confronting an enemy that has “a say in the future course of events”.  He explained that in the 1990s, a great deal of momentum built up behind a “fantastical theory” about the nature of future armed conflict. Many believed that advances in communication technologies, computing power, and precision munitions had completely revolutionized warfare, allowing future wars to be waged quickly, cheaply, and efficiently. However the United States confronted very different realities on the ground in Afghanistan and Iraq, which demonstrated that the technological “revolution in military affairs” had not paved the way for fast, low-cost warfare. 
   
• War is an Extension of Politics:  Sustainable political outcomes must take into account not only U.S. strategic objectives, but also the local conditions in which the strategy for achieving those objectives must play out.  McMaster explained that the U.S. failed to effectively define its end goals in Iraq in the context of the country’s religious, tribal, and political dynamics and the geopolitical landscape of the region more broadly. This was one of the main failures of the U.S. effort.
   
• War is Uncertain: McMaster stated that although the United States tries to estimate the cost of war, American war planning is often “narcissistic” when leaders assume that U.S. goals will be decisive in the outcome of the war and fail to take other factors into account. He asserted that US war planning in Iraq failed to consider enemy moves in response to the U.S. military effort.  Instead planners acted “as if only our decisions affect the circumstances and the outcomes.” In fact, U.S. forces on the ground in Iraq faced a determined and constantly adapting enemy that evolved over time as a decentralized hybrid local insurgency coalesced and extremist Shia and Sunni groups turned the conflict into a sectarian civil war.  This scenario was not planned for and it took some time for the U.S. to adjust its response.

Lessons for U.S. Policy in Iran and Syria 

• American Credibility and Deterrence: Brzezinski explained that the Iraq war had seriously undermined American standing around the world.  In particular, the decision to proceed with a massive military operation that fell so far short of its stated objectives has reduced America’s credibility. Brzezinski argued that the United States should be careful not to repeat these types of mistakes Iran, for example.  The U.S. is able to protect Israel through credible security guarantees rather than by drawing red lines and using vague language that leaves all military options on the table. Just as Washington deterred the USSR from attacking Europe during the Cold War by clarifying that any action against Europe would be tantamount to an attack against the United States, he stated that it would be possible today to protect Israel through similar guarantees. 
   
• Impossibility of a Surgical Strike in Iran: Brzezinski explained that a “surgical strike” in Iran would mean striking nuclear facilities, some of which are close to population centers. The nuclear fallout and civilian casualties could be “lethal on a massive scale.”  He suggested that it would be highly improbable that the Iranian people would “join us in justified outrage at the Mullahs, rise in righteous indignation, and overthrow the regime” The more likely probability, he stated, is that Iranians would join the regime in a “fierce, frustrated, protracted anger at us,” he said.  Brzezinski warned that the consequences of such a conflict were likely to be high as Iran could impede world access to energy and drive up oil prices.  He also predicted that a strike on Iran would lead to a protracted conflict against a “politically aroused population” that might choose to fight for a variety of ethnic, religious, and nationalistic reasons.
• Shortsightedness in Syria: Brzezinski asserted that U.S. policy toward Syria has been “shortsighted and ineffective.” Washington declared that Assad “had to go” without committing to a strategy to achieve this objective. He explained that by alienating the Russians and Chinese early-on, and by agreeing to provide money to opposition groups despite refusing to arm them, the U.S. strategy has been contradictory and unsuccessful. An international settlement that involves the Russians, Chinese, and Iranians remains the best option, he asserted. Without such a settlement, he predicted the conflict will persist and have a very destabilizing impact on the region. 

Bearing Responsibility 

• Motivations for War: Mathews opened the event by recounting her own efforts to slow the rush to war by underscoring that all declassified available information suggested that there was nothing other than very old chemical weapons shells in Iraq, many of which were inactive. Furthermore, history showed that past military interventions to change the nature of governments had a “very slender record of success,” and the idea pushed by the Bush Administration that toppling Saddam’s regime would trigger a tsunami of democratic change cross the region was “faith based” at best.  Brzezinski recalled his own trepidations and doubts about the existence of WMDs.  He recounted his surprise at the Bush administration’s insistence that there were such weapons, despite its lack of detailed information about their military order of use.   As it turned out, the war was initiated “on the basis of assertions that were, most charitably, described as inaccurate, and probably simply fraudulent.”
   
• Democracies and Total War: Brzezinski argued that democracies are only able to wage total war if they are attacked or seriously threatened. This, he said, explained why the U.S. inflicted massive civilian casualties in Germany and Japan, but settled for compromise in Korea, withdrew from Vietnam, and pulled out of Iraq. He added that the United States bears ultimate responsibility for initiating the Iraq War, unprovoked, for dubious and fraudulent reasons.
• Antecedents of Conflict: On the question of responsibility, McMaster argued that the ultimate blame for the protracted nature of the conflict should be placed on extremist groups who used mass murder, terrorism, and sectarianism as principle tactics of war.

Ten years after the U.S. invasion of Iraq and fifteen months after the departure of U.S. combat troops, the outlook for Iraqi stability, security, and democracy remains deeply uncertain. Sectarian tensions continue to drive political decision-making, while the central government led by Nouri al-Maliki is further consolidating its hold on executive power. Ryan Crocker, former U.S. ambassador to Iraq, Samir Sumaida’ie, former Iraqi ambassador to the United States, and Emma Sky of Yale University examined the current state of Iraqi domestic politics, the country’s role in the region, and its relationship with the United States. The panel was moderated by Washington Post journalist Rajiv Chandrasekaran, author of Imperial Life in the Emerald City: Inside Iraq’s Green Zone.

Domestic Political Turmoil

• A Difficult Past: Crocker emphasized that Iraq continues to be haunted by its dictatorial past which has shaped the behavior and priorities of key actors. Prime Minister Nouri al-Maliki’s conspiratorial outlook and autocratic ruling style are a legacy of  his experience as a political opponent of Saddam Hussein’s regime and as a member of the previously repressed Shia population. According to Crocker, Maliki’s  political priority remains to consolidate his own power,  not to strengthen the countries new national institutions.
   
• Patronage Politics: Sumaida’ie added that political power in Iraq continues to rest on a patronage system controlled by those with access to the country’s natural resources. The political transition process was based on the flawed assumption that Iraq’s political elites would simply adopt the new democratic rules. Instead, Sumaida’ie argued that the autocratic Iraqi rentier state based on oil revenues and control of the security apparatus survives beneath the country’s democratic institutional façade and is increasingly under the control of the Prime Minister and his associates.
   
• Rising Kurdish–Arab Tensions: Sky pointed out that while Iraqi Kurdistan to some extent represents the country’s economic and political success story, relations between Kurdish leaders and the central government in Baghdad are worse than ever before. Besides unresolved land disputes and tensions over natural resource control, the Kurds fear a power grab by the central government, and the U.S. military is no longer present to serve as a mediator between the two sides.
   
• Sectarian Divisions: According to Sumaida’ie, Iraqi society has historically not been divided along ethnic or religious lines. However, Saddam Hussein’s policy of nurturing sectarian divisions fostered a strong sense of mistrust among the country’s Shia population, which, having finally acceded to power, is determined not to relinquish control. Sumaida’ie further underlined that the recent return of extremist violence can be traced back to the general sense of dissatisfaction and frustration among the population.

Iraq’s Role in the Region

• Rising Iranian Influence: Crocker highlighted the complexity of Iranian-Iraqi relations: on the one hand, Iranian influence has continued to grow since the waning of U.S. influence in the country and plays a crucial role in Iraqi political calculations. On the other hand, Iraq has historically been a vanguard of Arab nationalism and its past relationship with its Persian neighbor has been marked by violent and protracted conflict.  The relationship is driven more by shared interests, than by domination of Baghdad, by Tehran.  Growing Sunni extremism in Syria is a development that is of real concern to Maliki, as well as the Iranians.
   
• Estrangement From the Arab World: Sumaida’ie explained that Iranian support for Iraqi Shi’a political forces following the overthrow of Saddam Hussein alienated regional Arab powers and to some extent estranged Iraq from the wider Arab world.   He indicated that is important for Iraq not to turn its back on its historically important role in the Arab world.
   
• The Syrian Crisis: Sky also underscored the Iraqi government fears that the Sunni Gulf states could unite to overthrow the Shia-dominated regime in Syria and bring more radical Sunni forces to power, which in turn would have significant repercussions for sectarian and religious divisions within Iraq.

U.S. Policy in Iraq

• Need for High-Level Engagement: Crocker argued that the United States has failed at positioning itself as a long-term strategic partner of the Iraqi government, and since its military withdrawal it has not used the full extent of its political leverage to seek to affect change in the country. He recommended that the United States rely on the Strategic Framework Agreement to increase its high-level engagement with Baghdad and signal its continued involvement in the country and region.
   
• Speaking out Against Undemocratic Practices: Addressing the domestic perspective on U.S. involvement in Iraq, Sumaida’ie emphasized the diversity of views in Iraqi society, as well as the sense of disillusionment felt even by those who initially supported the U.S. intervention. Sumaida’ie suggested that the U.S. government should take a stronger stance with regard to the Iraqi government’s human rights abuses and oppressive political practices, while explicitly affirming its support of the Iraqi political process and secular political forces in particular.
   
• Supporting Iraqi Political Institutions: Sky criticized the lack of U.S. investment in the country’s political institutions and the excessive focus on al-Maliki and his government. She argued that the existing Strategic Framework Agreement provides one avenue for strengthening Iraqi institutions and democracy, but that the United States should also further engage its allies in the region and could potentially use its arm sales to the Iraqi government as a tool for political leverage.