US war costs could hit $2,400bn

The cost of the US’s operations in Iraq and Afghanistan, together with wider efforts in the “war against terror”, could reach $2,400bn (£1,175bn, €1,700) over the next decade, with interest payments representing more than a quarter of the total, the US Congressional Budget Office said on Wednesday.

The figures, presented to the House of Representatives budget committee by Peter Orszag, the CBO’s director, are based on an assumption that US troops in Iraq and Afghanistan will be reduced to a total of 75,000 by 2013 and stay at that level for a further four years.

They come as falling mortality rates in Iraq have taken some of the heat out of the US political debate on general Iraq strategy.

Lt Gen Raymond Odierno, the US military’s second in command in Iraq, said in Baghdad on Wednesday that the US hoped to hand over half of the city to Iraqi security control by the end of next year, in the wake of the decline in attacks to the lowest level since January 2006.

“You will see steady pro­gress over the next 12 months of us turning large portions of Baghdad [over] to Iraqi security forces,” he said. “I think it will be somewhere between 40 and 50 per cent by the end of the year.”

Mr Orszag told the budget committee that direct ex­penditure on US operations in Iraq, Afghanistan and elsewhere could amount to as much as $1,700bn between 2001 and 2017. Even if only 30,000 troops were deployed, rather than 75,000, the cost would be $1,200bn.

He said interest payments for expenditures so far would total $415bn between 2001 and 2017 if the US continued to use deficit financing and avoided financing operations by raised taxes or reduced expenditure elsewhere.

Future expenditures could add a further $290bn in interest payments, bringing total financing costs to more than $700bn for 2001-2017.

On Monday, George Bush, the US president, asked for another $54bn in supplemental war funding, bringing the total for this year to $194bn.

Meanwhile, the issue of private security contractors in Iraq has moved up the political agenda since last month when Blackwater, which provides security for the state department in Baghdad, allegedly shot at Iraqi civilians, killing 17.

A state department report to Condoleezza Rice, the US secretary of state, this week concluded the US government did not have enough forces in Iraq to provide security for diplomatic personnel but also highlighted what Ms Rice called in Congressional testimony on Wednesday “serious weaknesses in oversight of contractors”.

Ms Rice responded by imposing more controls on private contractors. The Iraqi government has also indicated it is planning to remove the legal immunity that such contractors have enjoyed since an occupation-era order.

Ms Rice said on Wednesday that she had discussed the use of contractors with Robert Gates, US defence secretary, who expressed concern about their activities in Iraq.

“We believe there may be further steps that we need to take, because it’s not just state and defence (departments) that have contractors,” she said, adding that she and Mr Gates had asked their deputies to report back by the middle of next week on the issue.

Additional reporting by Reuters