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October 11, 2002, 9:00 a.m.
Baghdad Math
Is taking Iraq bullish or bearish?

here's an 80 percent chance that Saddam Hussein will be thrown out of power by next June, and President Bush's speech in Cincinnati this week may well have raised those odds. If Hussein doesn't accept timely exile by then — perhaps to Morocco, Algeria, Mauritania, or Belarus — he likely will be captured or killed by Iraqi resistance fighters, his own military commanders, or American forces. As the Washington rumor mill buzzes with warnings that Hussein has biological weapons that could kill one million Americans, George Bush has no choice but to act.



  

If an invasion proves necessary, the odds are against it beginning before February. First, it's likely to take until then for the world to become convinced that Saddam won't dismantle his weapons of mass destruction and that military force must be used. The world may soon be treated to the spectacle of 220 United Nations weapons inspectors trying to track down trucks carrying camouflaged chemical and biological weapons on dusty back roads in a nation the size of France.

Hussein also could decide to haggle over inspector access to his eight "presidential palaces," which collectively exceed in size over half of the island of Manhattan. Furthermore, it will take until February for the U.S. to replenish its supply of Joint Direct Attack Munitions (JDAMs). These exceptionally accurate and cost effective smart bombs reduce the number of aircraft bombing runs needed to destroy military targets. U.S. commanders very effectively used many JDAMs in the Afghanistan conflict. Although defense contractors are working overtime to replace them, they can't do so until early next year.

Finally, American forces may have to wear protective suits to guard against chemical and biological attacks. Such suits are tolerable when Baghdad's February temperature averages 64 degrees, not 91 degrees, as it does now in October.

If U.S. troops "go in heavy," eventually launching a land invasion mostly from Kuwait as the professional military seems to prefer, up to 220,000 soldiers will have to be transported and housed away from their bases perhaps for several months. Alternatively, President Bush might select the "inside out" option. Under this plan, which Secretary Rumsfeld reportedly supports, 50,000 to 100,000 soldiers would storm Baghdad and topple Saddam by surprise in a matter of days — but at the cost of more American lives.

Under either plan, the U.S. would use JDAMs to their full advantage. In World War II, planners had to drop 100 bombs to be confident of destroying an intended target. Collateral damage, the polite term for civilian deaths, was considerable. In Desert Storm, only 3 or 4 bombs were needed, not 100. By relying on Global Positioning Satellite technology, a single JDAM kit attached to a bomb has a 75 percent to 90 percent chance of hitting the target. This halves air force costs, including fuel, maintenance, and munitions, by cutting in half the number of aircraft and aircraft sorties needed to achieve any military objective.

If only budgets mattered, then a bombing campaign followed by the "inside out" strategy would be selected and might cost $20 billion. If a slow land invasion were chosen, the costs could reach $50 billion.

There are considerable difficulties estimating short-term and long-term Iraq occupation costs. Baker Spring, a former Senate staff colleague specializing in military affairs and now a respected fellow at the Heritage Foundation, believes that 40,000 troops would be required. He envisions 5,000 to destroy Hussein's weapons of mass destruction and uproot Iraqi terrorist camps, another 5,000 to protect Iraq's oil fields against sabotage, and 30,000 to act as a trip wire to prevent Iran from invading Iraq and inciting southern Shiites or northern Kurds into seceding and joining Iran.

Many of these occupation troops could be drawn from current Middle East postings, cutting costs. Total peacekeeping forces could reach 100,000. Most, however, are likely to come from allied nations. America may pay for the war, but others will help pay for peacekeeping.

If the hawks are right, America would be a safer and more profitable country after Hussein is forced out and his weapons of mass destruction eliminated. Instead of an enemy, Iraq could emerge as a significant American military ally in the volatile Persian Gulf, much like the Shah of Iran was during the 1970s. From Iraq, U.S. forces could keep a close eye on Iran and Syria who also have long been on the State Department's list of sponsors of state terrorism. Chairman Mao is reported to have said, "Kill one to frighten ten thousand." The Iranian mullahs who neighbor Iraq and are also developing weapons of mass destruction would fear they are next and probably change course.

Crude-oil floor traders claim that there is a $4 to $10 war-risk premium built into petroleum prices now. As war clouds evaporate, because Hussein is forced out or unexpectedly disarms, the premium could disappear, as it did in previous conflicts. No doubt American oil companies would get chances to develop Iraqi oil fields after a successful war.

However, we'd be a seller of companies that don't have a shot at such contracts. The value of their oil reserves will fall as the risk premium collapses, and they have nothing to show for it. The run-up to Desert Storm in 1991 demonstrated that the financial markets don't like pending war. At least some of the precipitous sell-off in our equity markets in the second and third quarters is probably due to war jitters.

If I'm right about the timing and likely outcome of any conflict, those jitters unfortunately will continue until hostilities conclude — on favorable U.S. terms — next year.

Stuart J. Sweet is president of Capitol Analysts Network, a political risk-management firm based in Chevy Chase, Md.

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