How much will the Libyan war cost?
The Guardian headlines this morning’s edition (Sep 26) with the startling news that the “true cost” of Britain’s involvement in the war to oust Muammar Gaddafi of Libya could reach £1.75 billion. See the article here (Britain’s bill for Libya could read £1.75bn, expert warns). The figure is based on estimates (on the lower side) drawn up by the military expert John Tusa, editor of Defence Analysis.
Apparently, the money will be shelled out by the ministry of defence ’special reserve’ (incidentally, the ministry has received nothing so far from the government for ‘wear and tear’). With the British public having been told all along that Libya would cost them around £260 mn, the news has been met with predictable outrage by the Left. Jim Murphy, the opposition Labour Party’s shadow defence secretary, has called for more government transparency “at time when redundancies are being made and cuts to equipment are biting…”
The obvious problem with costing, of course, is that the Libyan war isn’t over yet – Gaddafi is still out there somewhere and, although the forces loyal to him have been emasculated to a great degree, every now and then he manages to issue statements egging them on from hiding. All disturbingly similar to Bin Laden’s audio and video missives.
Financing of wars is a notoriously complex and opaque subject and this blog makes no pretense at expertise. The Guardian’s superb datablog does make a valiant attempt at unpacking the Libyan cost (unbelievable, eyepopping figure: the cost of flying two Apache helicopters, per mission, is £750,000). Here’s the blog: UK operations in Libya: the full costs broken down.
Former World Bank chief economist and Harvard academic Linda Bilmes wrote in 2008, “The British system is particularly opaque: funds from the special reserve are ‘drawn down’ by the Ministry of Defence when required, without specific approval by Parliament. As a result, British citizens have little clarity about how much is actually being spent.”
Iraq remains a great recent example of the difficulty of costing wars. The public eye glazes over after millions of dollars turn to billions and then billions to trillions but Stiglitz and Bilmes carried out a detailed audit in 2008 and concluded that the wars in Iraq and Afghanistan (which, I assume, would also include Pakistan) would cost the American government alone three trillion dollars. The cost to Britain was estimated at £18-20 billion.
There are a whole raft of things they exclude from their calculation for lack of information. Here’s a lucid account – it’s really worth reading –from their book The Three Trillion Dollar war.
Politicians like to think that wars end up making profits for Treasuries. “The successful prosecution of the (Iraq) war would be good for the (US) economy,” President Bush’s economic adviser Larry Lindsay once said. Success, of course, is the most subjective of terms. Many in Britain, including army generals, would dispute ex-prime minister Tony Blair’s dogged claim that the Iraq was politically worth it because Saddam is dead and buried.
However, at this point, whether Libya constitutes a “true cost” to the British economy remains unclear. It is hard to imagine oil-rich Libya will allow the recession-hit Brits and French to turn out their pockets and pay for what after all is a war aimed at liberating Libyans. The fact that the Brits and the French aren’t asking the Libyans to cough up the money up front can only mean one thing: there are lucrative oil deals being struck.
Setting aside talk about the Arab Spring and democracy for the moment, here’s a report that could point to the shape of things to come. Apparently, Libya has resumed oil production for the first time since the war, tapping 15 wells and producing 31,900 barrels per day.
However, there is one important bottom line: the West can’t allow the Libyan war to drag on interminably like Iraq.