Outlook: Peace dividend

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The Independent Online
THE TERM "peace dividend", now being bandied around in the press and among politicians, is an odd one, as if to imply that there is an economic benefit in war. The notion that there might be stems largely from the Second World War and the consequent economic reconstruction of Europe under the Marshall Plan.

After the Great Depression of the 1930s, the war was profoundly reflationary, harnessing as it did the means of production to a single minded pursuit. In Germany, war was deliberately pursued as much for the economic purpose of national revival as any imperial or political one. The subsequent post- war economic miracle in Germany just goes to show that even the destruction of war can have its silver lining.

Can there be any such beneficial economic consequences from the conflict in Kosovo? For Kosovo itself, and perhaps Serbia too if it eventually buckles under Western demands, the planned programme of reconstruction and aid is ultimately likely to prove highly beneficial - a brand new economic infrastructure paid for with someone else's money. The cost to Britain of the conflict so far is officially estimated at about pounds 100m. According to EU estimates, the cost of reconstruction in Kosovo itself will be $2bn to $3.5bn, of which Britain's share would be 10 per cent. Even assuming the damage is far worse than anyone yet realises, and that eventually there is a wider reconstruction to be undertaken throughout the region, including Serbia, the grand total in reconstruction aid is unlikely to amount to more than $20bn.

To this must be added the expense of servicing peace-keeping troops in the region. But however you cut the figures, the ultimate cost of the conflict to Britain is not going to be a huge one - perhaps pounds 2.5bn at most. This is not an insignificant sum but spread over several years, it is easily containable within the present parameters of the public finances.

Aid for Kosovo and the rest of the region will also mean orders for British construction and heavy engineering, so as with all government spending, the effect will be mildly reflationary. But the idea that there is any significant economic benefit to Britain in this conflict is as misguided as some of the more exagerated claims of its likely costs. War doesn't pay. Period.