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Cato Daily Dispatch for September 16, 2002

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Bush Aide Estimates Iraq War Would Cost Up to $200 Billion
With U.N. Backing, U.S. Can Use Saudi Bases
Sixth U.S. Citizen Arrested In Terrorism Investigation

Bush Aide Estimates Iraq War Would Cost Up to $200 Billion

President Bush's chief economic adviser estimates that the U.S. may have to spend between $100 billion and $200 billion to wage a war in Iraq, but doubts that the hostilities would push the nation into recession or a sustained period of inflation, The Wall Street Journal reported Monday.

Lawrence Lindsey, head of the White House's National Economic Council, projected the "upper bound" of war costs at between 1 percent and 2 percent of U.S. gross domestic product. With the U.S. GDP at about $10 trillion per year, that translates into a one-time cost of $100 billion to $200 billion. That is considerably higher than a preliminary, private Pentagon estimate of about $50 billion.

In "Top Ten Reasons Not To 'Do' Iraq," Ivan Eland, Cato's director of defense policy studies, argues against war with Iraq and suggests that the cost of war would be a huge strain on the economy.

Eland writes, "At a time of economic sluggishness and of red ink for the U.S. government, an invasion and long-term occupation of Iraq could cost billions of dollars, bust the budget and throw the U.S. economy into a tailspin. The Gulf War Cost $80 billion (in 2002 dollars). Because the United States would probably be faced with a long occupation of Iraq to stabilize the country after the invasion, the cost is likely to be higher this time around. And unlike the Gulf War, no financial support from other nations can be expected to defray the costs."

With U.N. Backing, U.S. Can Use Saudi Bases

According to The Associated Press, Saudi Arabia has turned up the pressure on Baghdad, hinting that it might offer its desert installations as a jump-off base for any U.S. military campaign against Iraq-as long as such an attack had U.N. sanction.

But the Saudi foreign minister, Prince Saud al-Faisal, also said the rest of the world clearly wants the Iraq crisis resolved without "the firing of a single shot."

Saud's statement was issued yesterday in New York as the U.N. General Assembly wrapped up the fourth day of its opening general debate, a day on which other Arab leaders also addressed the explosive impasse over Iraq.

Doug Bandow, Cato Institute senior fellow, details the U.S.-Saudi relationship in his policy analysis, "Befriending Saudi Princes: A High Price for a Dubious Alliance."

Sixth U.S. Citizen Arrested In Terrorism Investigation

The Associated Press reports that an American of Yemeni descent who was arrested in Bahrain was due in federal court in Buffalo today, two days after five others arrested in western New York were charged with aiding terrorist organizations, federal officials said.

Prosecutors say the five, arrested last week, were members of a terror cell trained by Osama bin Laden's al-Qaeda network and were under investigation even before the Sept. 11 attacks. They said the men had intensified their communications this month.

The investigation into the men began in early summer 2001, about the time they returned from Afghanistan, said U.S. Attorney Michael Battle. The men were born in the United States and are of Yemeni descent.

Robert Levy, senior fellow in constitutional studies at the Cato Institute, comments on the rights of American citizens who are declared enemy combatants in "Citizen Padilla: Dangerous Precedents." ( http://www.cato.org/dailys/07-01-02.html )

Jonathan Block, editor, jblock@cato.org