Economics of the Iraq and Afghanistan Conflicts

The conflicts in the Middle East, from an economic standpoint, have been far different than any previous war the United States has fought. Although projected costs of at least $6 trillion make the Middle Eastern conflicts the most expensive wars in U.S. history, they have been funded through a series of “Emergency Supplemental Requests” instead of being budgeted for under defense spending in the yearly budget. This has contributed to a lack of knowledge and understanding about this conflict that is widespread amongst the American people. Because our defense spending is low for war-time when compared to GDP, it creates the illusion that these conflicts are smaller and less serious than they really are.

Because the conflicts in the Middle East have been funded in a way that makes it hard to tell exactly how much has been spent on what, and because these conflicts are still going on, experts have a wide variety of opinions on the way they have effected the United States economy, and how they will continue to effect in through the end of the conflicts and beyond. Some say that, just like in most periods of war, war spending has allowed the economy to grow. However, others argue that because of the inefficiency of the spending, it has damaged our economy and contributed to the recession and slow growth experienced throughout the 2000’s.

The most obvious impact that the Middle Eastern conflicts have had on the U.S. economy is rising oil prices. Iraq alone accounts for 3% of the world’s total oil production, so turmoil there has caused oil prices to increase everywhere. U.S. involvement there has at times made it difficult or impossible for us to get oil from them, which is the main factor in the steadily rising gas prices and energy costs American’s have dealt with over the course of the war.

Part of the reason that the Iraq and Afghanistan wars have been funded so differently than other wars is because at the start of these conflicts, it was estimated that costs would be around $200 million and the war would be over very quickly. Obviously those were severe underestimations, as was essentially every estimation since then. Our government has gone through this war underestimating costs at every turn. This can highlighted by the Department of Veterans Affairs, a government agency whose purpose is to provide benefits to wounded veterans. As of March 2013, almost half of the 1.6 million Iraq and Afghanistan veterans had applied for some sort of disability benefits through the VA. Because the number of wounded soldiers and the amount of money necessary to take care of them were both underestimated, the VA is vastly under prepared to take on that type of work load. Veterans generally have to wait at least three months to even hear back from the VA after applying for benefits, and most cases take at least two years to fully resolve, leaving men and women who were disabled while fighting in the Middle East to provide for themselves during that time.

Although the long term economic effects of the Middle Eastern conflicts are not readily apparent of widely agreed upon, it is safe to say that these wars have been economically inefficient. It has cost more than any war in U.S. history, contributed to the ongoing energy crisis, and has left thousands of soldiers in economic difficulty.



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