Democrats are trying hard to make an issue of the cost of the Iraq War. Unlike any war in history, they have said that the White House should have presented an exact accounting prior to the onset of hostilities. Last week, Senate "moderates" got $100 billion set aside from President Bush's proposed tax cut to pay for the war, and it appears that the administration will ask for about that amount in supplemental spending very shortly to deal with war-related expenses.
At some level, it is nonsensical to do this kind of analysis. Who can put a dollar value on liberty, security and peace of mind? Still, there are those who will try. So far, the evidence strongly implies that the benefits greatly exceed the costs of the Iraq operation.
The central issue in terms of economic analysis is oil. Saying so does not imply that the war is about oil. If all we wanted was lower oil prices, all we had to do was lift sanctions on Iraqi production, as well as those on other oil-producing nations, such as Libya.
Had Saddam Hussein only been interested in enriching himself, he would have acceded to United Nations resolutions long ago. Since 1991, Iraq has produced well less than half the oil it is presently capable of producing due to U.N. sanctions. This means that Saddam Hussein probably lost over $100 billion in revenue by being obstinate. Therefore, he must have interests that go well beyond material possessions. They must involve extreme ideology and a desire to obtain weapons of mass destruction for offensive purposes. There is really no other explanation for his behavior.
President Bush has said on many occasions that Iraq's oil belongs to the people of Iraq and must be made to benefit them, rather than just Saddam Hussein and his henchmen. Its oil resources are very large -- second largest in the world after Saudi Arabia. Analysts put Iraq's proven reserves at 112 billion barrel of oil, with as much as another 200 billion barrels yet to be discovered. On top of this, Iraq has 110 trillion cubic feet of natural gas reserves.
Yet Iraq's production is very low, at just 2.4 million barrels per day. This is mainly due to trade sanctions, which limit Iraqi oil exports in order to force compliance with United Nations resolutions. But it is also the result of low investment in Iraq's oil industry. This is mainly the result of Iraq's socialist economic policies, which limited foreign investment in Iraq's oil industry even before the first Gulf War.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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