Iraq war set to be more expensive than Vietnam

The Iraq war has already cost the United States $320bn (£180bn), according to an authoritative new report, and even if a troop withdrawal begins this year, the conflict is set to be more expensive in real terms than the Vietnam War, a generation ago.

The estimate, circulated this week by the non-partisan Congressional Research Service (CRS), can only increase unease over the US presence in Iraq, whose direct costs now run at some $6bn a month, or $200m a day, with no end in sight.

The Bush administration has refused to provide any specific overall figure for the war's cost. But the Senate is set to approve another emergency spending bill in May, meaning that Iraq will have consumed $101bn in fiscal 2006 alone, almost double the $51bn of 2003, the year of the invasion itself - and all at a time when the federal budget deficit is running at near record levels.

But these figures pale beside what lies in store, the CRS says in its analysis. The Bush administration is desperate to announce a reduction in the 130,000-strong US force before November's mid-term elections, where public disillusion with the war threatens disaster for the Republicans.

However, even if everything goes relatively smoothly, costs until a phase-out is complete could top $370bn. This would make the Iraq conflict, now into its fourth year, more expensive financially than the Vietnam War, which lasted eight years. Vietnam claimed 58,000 American lives, far more than the almost 2,400 lost in Iraq thus far. But in today's dollars it cost "only" $549bn, much less than the $690bn for Iraq, and a projected combined $811bn bill for the wars in Iraq and Afghanistan.

It is a far cry from the weeks before the war, when a White House official was rapped on the knuckles for suggesting the cost might be between $100bn and $200bn, and Donald Rumsfeld, the Defence Secretary, was touting "a number that's somewhere under $50bn".

Paul Wolfowitz, now president of the World Bank but then Mr Rumsfeld's deputy at the Pentagon, even theorised before Congress that the post-invasion period might pay for itself as Iraq's oil revenues soared.

The financial analysis by the Congressional Research Service lists various "key war cost questions" and "major unknowns", such as future troop levels, but its financial conclusions are restrained compared with other non-official figures.

Scott Wallsten of the American Enterprise Institute, a conservative think-tank, has estimated an overall cost of $500bn thus far, with as much again possible. Most, he says, will be paid for by the US (unlike the 1990-91 Gulf War, which the US fought almost for free, thanks to contributions from Saudi Arabia, Japan and other allies).

In January, a study by Joseph Stiglitz, the Columbia University economist and former Nobel Prize winner, and the Harvard lecturer Linda Bilmes reckoned the conflict could ultimately cost $2 trillion, if all factors are taken into account. These include the long-term healthcare costs for the 16,000 US soldiers already wounded in the conflict, and other indirect or hidden costs such as the rise in the price of oil, the need to finance larger budget deficits, higher recruiting costs and losses to the economy caused by the wounded.

The Pentagon has treated such outside estimates with disdain. But it resolutely refused to give a detailed picture of its own. Some experts suggest, however, that the Pentagon may have deliberately inflated its financial needs now, fearing that as the war becomes ever more unpopular, Congress will grow less willing to provide funds in the future.