Daily Kos
Political analysis and other daily rants on the state of the nation

Monday | August 18, 2003

Smells like ... victory

A U.S. army Black Hawk helicopter drops water on the blazing pipeline near the northern Iraqi town of Beji, August 18, 2003. U.S. Army engineers battled a blaze on Iraq's main oil export pipeline - a crucial lifeline for the floundering economy - after two attacks by saboteurs last week set it on fire. (Oleg Popov/Reuters)

Before the war begun, chickenhawk boosters claimed that nation's occupation and reconstruction would cost the US nothing -- it would be paid by Iraq oil revenues. Heck, even thoughtful war supporters like Tacitus assumed oil revenues would do the trick.

But the anti-war camp has been proven right -- under the best case scenario, Iraq oil revenues would not be sufficient to pay for reconstruction.

Bremer has said reconstruction will cost $60-100 billion. Yet

the cumulative effects of more than 20 years of underinvestment, mismanagement, neglect and lack of modernization due to sanctions have left Iraq's oil sector in a sorry state. Since before the war many US officials said reconstruction would be paid for by oil revenues, this is a huge problem. Iraq only earned $12.5 billion in oil exports in 2002, and its current export capacity may be down from over 2 million barrels a day in 2000 to around 800,000 - if there is no further sabotage.
Indeed, oil revenues will not be enough to provide basic government services much less reconstruction:
Iraq's oil production is expected to return to prewar levels - of about 2.8 million barrels daily - by next spring under an industry rehabilitation plan approved recently by American and Iraqi authorities. That plan calls for the US to pay $1 billion of the $1.6 billion initial refurbishing costs - much more than some supporters of an Iraq invasion estimated when they said rebuilding could be self-financing.

Even after production returns to prewar levels, oil revenues will probably only be able to pay part of Iraq's operating expenses - such as government salaries. Iraq needs $20 billion just to keep services at bare-bones levels, a UN official said recently. But revenues from oil and whatever other income the country can muster - such as repatriation of frozen assets held overseas - is likely to provide no more than $15 billion [...]

That scenario helps explain why officials now say oil revenues won't play much of a role in financing the country's reconstruction for years to come - and why the success of an international donors' conference set for October is increasingly crucial.

Overall, rebuilding Iraq could cost as much as $100 billion over the next few years, says Paul Bremer, Iraq's American administrator. US spending of $1 billion a month is likely to continue for a while, other US officials say. In any case, Iraq is likely to need at least $5 billion from donors just to keep existing services running next year, says the UN's humanitarian coordinator for Iraq, Ramiro Lopez da Silva.

We've noted the lives that have been lost, including hundreds of allied and thousands of Iraqis. Now's the time to note the treasure we will piss away.

I used to write, "The US will expend treasure in its unecessary war against Iraq, while our infrastructure at home crumbles". And the trolls would shout, "What infrastructure?" Last week was exhibit A:

Industry consultant Eric Hirst estimates that at least $56 billion will have to be spent in the next decade just to maintain "adequacy" in the nation's 157,000 miles of high-voltage transmissionlines. Investigators suspect several of those lines in northern Ohio had a role in the power failure, the worst blackout in U.S. history [...]

Yeager estimates a $100 billion price tag for a retrofit. But he says improved reliability would more than compensate: "Thursday was an extreme situation, but there are smaller events that happen all the time that have economic implications." Those episodes already cost the economy close to $100 billion a year, he says.

In any case, what meager oil revenues the US hoped to extract from Iraq will clearly be reduced by rampant vandalism and sabotage. It was all forseable. It was all obvious.

Except to those who wanted to get their war on.

Posted August 18, 2003 09:11 AM | Comments (79)


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