The very high cost of rebuilding Gaza and other regional disasters is on people’s minds in the Middle East and beyond. Whether we are talking about the havoc wreaked by Israel’s summer war in 2006 against Lebanon, the more recent Nahr al-Bared conflict there, or numerous other episodes during the past few decades of large-scale fighting, there is no shortage in the region of massive destruction caused by war. Of course, the first and biggest cost in conflict is the incalculable loss of a human life, and there is no yardstick to measure this. With so many people in the region suffering, it may seem callous to discuss the economic costs of conflict. Yet, these are enormous and go well beyond budgetary outlays, so quantifying things might be a good way to wake everybody up to the enormity of our problems. Done properly, this will hopefully show decision-makers and the average person alike that war is a bad idea, if only because it is so expensive.
In that vein, a major project called ‘The Cost of Conflict in the Middle East’ has recently come to fruition with the publication of a report launched at the United Nations in Geneva. This initiative by the Strategic Foresight Group (SFG) think tank of Mumbai involves an innovative approach to engage people of the Middle East in collaboratively assessing future risks, at a time of failure of negotiation to find lasting solutions to the conflict.
The initiative has attracted interest from various regional and international actors, including the ruling party of Turkey, which hosted the project’s planning workshop in March 2008 in Antalya to define the parameters of the project. This was followed by a scenario-building event convened in Zurich in August and co-hosted by the Department of Foreign Affairs of the Government of Switzerland. Norway and Qatar also supported the exercise.
The Cost of Conflict in the Middle East project aims to quantify the numerous costs incurred by the region due to protracted conflict and to encourage public opinion to reflect on this. Researchers worked on developing a number of parameters to outline these costs, especially since the first event held in Turkey. The aim of the second workshop was to develop a “conflict escalation ladder” and a “peace building ladder,” outlining war and peace scenarios, with opinion makers and heads of think tanks from the countries of the region, as well as Europe and beyond.
The report produced from this exercise is now available in a comprehensive volume rich in graphics. After a preface by Sundeep Waslekar president of SFG, and an introduction by Swiss Ambassador Thomas Greminger, the book discusses multiple aspects of the cost of Middle East conflict since the early 1990s, including its $12 trillion “opportunity cost.” The latter expression is one used by economists to indicate “what could have been,” in this case, how much richer the region would have been without conflict. More precisely, this amount is the increment the Middle East would have earned from 1991 to 2010 (in 2006 dollar terms) under peace.
The past year also saw the unveiling of other efforts to measure the costs of fighting in the region — an especially notable one being by Linda Bilmes and Joseph Stiglitz, whose book The Three Trillion Dollar War estimated the economic cost of the current Iraq war to America at $3 trillion and the costs to the rest of the world to be another $3 trillion — in effect a $6 trillion conflict.
This is far more than the US government’s initial estimates and this is the first war in American history that has not demanded some sacrifice from citizens through higher taxation. Instead, the cost is being passed on to future generations. Yet, the largest cost has been borne by Iraq. Apart from the many people killed, unemployment is rampant, having soared to 60 percent a couple of years ago. Out of Iraq’s total population of around 28 million, two million have fled the country, creating additional costs for neighboring economies.
Like the Iraqi conflict, for which the US taxpayer will pay and the Iraqi people are paying, the war in Gaza has hit the population there directly and will also have an outside financial impact. As regards to the latter, the American people are involved through massive support for Israel, but the treasuries of European and Arab countries alike will also be footing bills. However, in the present world economic crisis, this is becoming less affordable, and efforts by SFG and others will hopefully wake people up to this expensive state of affairs.
Riad al Khouri is senior fellow of the William Davidson Institute at the University of Michigan in Ann Arbor