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| Volume X, Spring 2003, Number 1 |
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| EXCERPT: The Cost of Conflict in the Middle East, 1956-2002: What the U.S. Has Spent |
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| Thomas R. Stauffer |
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Dr. Stauffer is an engineer and economist who taught energy economics of the Middle East at Harvard University and the School of Foreign Service at Georgetown University.
The economic costs of U.S. policies in the Middle East have burgeoned and
accumulated since the early 1970s. Identifiable costs now exceed $2.6 trillion --
some four times as much as the entire Vietnam War, fortunately involving far
fewer American casualties. Prior to 1973, the U.S. costs were modest and the profits were attractive, especially in relation to the substantial oil investment income and the growing export trade after World War II. That balance has changed radically, however, since the 1973 Arab-Israeli war. The costs have burgeoned, the economic advantages have been dissipated, and the total costs of U.S. policies have aggregated dramatically, accumulating to more than $2.6 trillion over the past 20-25 years.
Many, but not all, of the costs have derived from U.S. support for Israel, directly or indirectly. This is especially true since 1973. Other, lesser costs are legacies of the Cold War, while still others arose from conflicts or postures that were only peripherally linked to U.S. support for Israel. But the bulk of the costs are inextricably linked to U.S. support for Israel, so this paper will focus on those. The types of costs have been broken down into the following categories:
• Oil-crisis costs: the burden of quantum increases in oil prices that followed most Middle Eastern political crises;
• Aid to Israel, including off-budget items such as contracts directed to the Israeli arms industry in competition with U.S. firms;
• Support for Israel involving third parties, such as enhanced aid to Egypt, Jordan or Turkey, tied to their relations with Israel.
• Consequential costs, such as the very expensive programs under the rubric "Project Independence," whereby the United States tried to reduce its reliance on oil imports from the Middle East.
• Exogenous costs -- those remaining costs that may be related to U.S. support for Israel, but where the causal link is either disputed or less clear, such as those related to the Gulf War in 1990-91.
• Direct costs of Middle East conflicts, such as the 1990-91 Gulf War or the engagement in Somalia. Ironically, these costs turn out to be the least.
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