Three trillion dollars: the true cost of Iraq

The Nobel Prize-winning American economist Joseph Stiglitz is making waves with a new book, co-authored with fellow economist Linda Bilmes, in which he lays out in stunning detail the cost to America and the rest of the world of the Iraq and Afghanistan wars.

After three years of research, Stiglitz calculates that the cost to America alone is $3 trillion. As for Britain and the rest of the world, one can assume roughly the same again.

Stiglitz and Bilmes, who both worked as economic advisors to President Clinton, decided to add up the cost of the war after the official Congressional Budget Office estimated in 2005 that the cost so far was approximately $500bn. Neither economist believed it could be that little.

Their findings are shocking: costs have spiralled out of control, and will affect American tax-payers for years to come. These are some of the bullet points from The Three Trillion Dollar War, published in Britain by Allen Lane:

• By March 2008, America will have been in Iraq for five years - longer than it spent in either world war.

• The monthly 'running cost' of the war in Iraq and Afghanistan is $16bn - a monthly cost to every American family of $138.

• $5bn, which pays for ten days' fighting, is what America spends in supporting Africa for a whole year. The monthly cost of $16bn is equal to the entire annual budget of the UN.

• The true ratio of wounded to dead, seven to one, is the highest in US history. (Injured troops who are treated on the battlefield are not counted in official records, Stiglitz discovered.)

• The US Department of Veterans Affairs, responsible for caring for the wounded from Iraq and Afghanistan, is still clearing a backlog of claims from the Vietnam war.

• By the year 2024, the US will face an annual bill of $4bn for caring for disabled servicemen, with about 40 per cent of troops returning home severely injured.

• A contractor working as a security guard in Iraq earns about $400,000 a year: a typical soldier's annual wages are $40,000.

• Sign-on bonuses, introduced in an effort to recruit more men and women to the war effort, have to be repaid by soldiers who are injured in their first month.

• 1,500 Americans were killed by roadside bombs before Robert Gates replaced Donald Rumsfeld as US Defence Secretary in 2006 and Humvees were replaced with mine-resistant ambush-protected (MRAP) armoured vehicles.

• Because postwar reconstruction jobs went to US firms instead of local Iraqi companies, one painting job cost $25m instead of $5m.

• One American company alone, Halliburton, of which Vice-President Dick Cheney (right) was CEO from 1995 to 2000, has received a total of $19.3bn in single-source contracts for work in Iraq.

• The price of oil has climbed from $25 a barrel to $100 a barrel over the past five years - and a significant proportion of this rise is directly due to the instabilities caused by the Iraq war.

• Before the war, Gordon Brown, then Chancellor, set aside £1bn to pay for Britain's share of the cost; as of late 2007, UK operating costs in Iraq and Afghanistan had already hit £7bn.

• By 2017, the interest alone on America's cost of borrowing to pay for the war will be $1 trillion.

• Because the saving rate in the US is zero, the war has been financed by borrowing abroad. "So China is financing America's war," says Stiglitz. ·