The War: Big Business for US?

by Sadhan Mishra

By now the Iraq war and the preceding events have perhaps become one of the most debated topics in recent times with the coining of several theories and emergence of different perspectives. There have been several articles discussing the economics of warfare for the US. We had a good discussion on the subject at QC. Here are some facts.

The 1991 Gulf War is in fact a profitable business for the US.An analysis of the costs bear this out. A Pentagon estimate gave the cost of Operation Desert Storm as $61 billion. Of this $36 billion was borne by the Gulf states(mainly Saudi Arabia, which gave free food, oil, water and local transport) which thought that a powerful Saddam would be a threat to their oil territories. Abouit $16 billion was paid by Germany and japan, the richest coalition partners most dependant on West asian oil. Another $2 billion was meted out by other coalition partners.

The overshadowing numerical presernce of the US troops(about 500,000 US troops were committed to the Gulf while other partners contributed only 160,000) and military hardware in the region led people to believe that the American tax payer was bearing the burnt of the war while facts have always pointed to the contrary.

So what was the heavy presence of US warships, aircraft carriers, fighter planes, tanks and missiles meant to achieve? It was in fact an excellent business oppurtunity for the US arms companies.Not all of them are as circumspect as India while buying arms. The seemingly "impressive" performance of the US military equipment in the Gulf war exaggerated manifold by the media blitz about the high tech weapon systems in the backdrop of increased insecurities led many third world countries to buy US arms in a rush availing the post-war "discounts". As a result a couple of years later the US share in the global arms market rose from 30% to an overwhelming 58%. Wihtin 4 years of the end of Operation Desert Storm , the US had sold arms worth $114 billion(some estimates say $190 billion). Comparec to this the $7 billion spent on war was peanuts.

Another fact worth noting is that every weapon has a shelf life and has to be replaced after a specified period. The weapons nearing their shelf life are usualy used in 'war exercises'. So a significant portion of the weapons used in the war( particularly in case of the US where a large number of weapons get replaced without little use) would have been disposed off anyway. Their cost was accounted for in the regular defence budget.

So instead of costing the US tax payer a fortune the war went a long way( along with the infotech boom a few years later) in reinforcing the US economy. [ Its another thing that developments in the past couple of years and the dubious policies of the Dubya govt. have offset the progress]

Though this time round the situation is markedly different ( potential cost sharers are not supporting the war) and the premise of sheer business considerations driving a war sounds a little offkey, this is certainly an aspect worth looking at.

What do you think?