Iraq & Afghanistan war: Economic impact

An influential section of the commentariat believes that the current economic slump in Europe and the US owes its genesis to, at least partially, to the effect of the twin wars in Iraq and Afghanistan. They have sucked up precious resources that could have been otherwise used for bolstering and beefing up the strengths of these embattled economies. According to Brown University’s Watson Institute, a mindboggling $4-6 trillion was spent by the US government on the two wars! The figure is 60 per cent of the entire size of the national budget for the period between 2001 and 2012. One only needs to join the dots to figure out why the country’s spending limits on education, health, infrastructure and R&D, among others, was severely crimped during this period.

The war funding, following the policy of the George Bush administration, was mostly supported through external debt. That has now ballooned to $16.7 trillion (as of March 2013), triggering concerns of a sovereign debt default by America. There are already flying insinuations across the US that the nation could be headed straight for a debt crisis, like so many of its counterparts in Europe. In fact, Europe is in even deeper hock. In terms of external debt, Britain is second-in-line to the US, with $9.8 trillion (as of June 2011). As of June 2010, the British exchequer had been drained to the sum of 20 billion pounds on account of the dual conflicts. In a clear demonstration of the war obsession, as against the obsession for furthering the public good, a paltry 557 million pounds have been earmarked for the nation’s development this year.

Despite the Republicans’ reservations to Obama’s policy of troop withdrawal from Afghanistan, it is clear that the wars have brought significant collateral damage to their economies. The sooner they accept this harsh truth and work to undo the ravages that have been wrecked on their economies, the faster they will be able to get back on the rails.