A US attack on Iraq could profoundly affect the Us economy because the United States would have to pay most of the cost and oil price rises, it was reported today.
The Gulf War 11 years ago cost Washington and its allies almost $60 billion and helped trigger an economic recession caused in part by a rise in oil prices.
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For that war, the allies paid for nearly 80 per cent of the operation. But this time the White House is realising it will probably have to pick up the bill largely by itself, diplomats told the
New York Times
.
Senior administration officials said President Bush and his top aides had not started considering the cost of a war because they had yet to decide what kind of military operation might be needed.
But whatever choice is made, experts said, the costs are likely to be significant - potentially leading to a bigger budget deficit or cutbacks in domestic spending.
If consumer and investor confidence remains fragile, military action could have substantial psychological effects on the financial markets, retail spending, business investment, travel and other key elements of the economy, officials and experts told the newspaper.
Saudi Arabia, Kuwait and Japan divided the cost of the 1991 war with the United States, but today none has offered to help with financing a new military campaign. In fact, each has signalled that it is not eager to be asked, diplomats told the paper.
"Just open a map," said a member of the Kuwaiti royal family in close consultation with Washington. "Afghanistan is in turmoil, the Middle East is in flames, and you want to open a third front in the region? That would truly turn into a war of civilisations," he said.
PA