Banker sees U.S. war cost at $300 billion

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GENEVA -- The campaign in Iraq will have cost American taxpayers more than $300 billion by the time the last U.S. soldier leaves the country, a former governor of the Central Bank of Iraq predicted yesterday.

Salah Al-Shaikhly said the huge price tag belies the conspiracy theory, believed by a majority of Arabs and Iraqis, that the Americans and the British invaded Iraq to "steal its oil wealth."

The theory "fails simple economic tests," Mr. Al-Shaikhly said at an international business conference on the future of Iraq's oil industry, where many executives forecast a return to normalcy by the end of next year.

U.S. officials hope to pass off part of the Iraq funding burden at a donors conference beginning Thursday in Madrid, where countries will be asked to pledge money toward the estimated $50 billion to $100 billion cost of rebuilding Iraq over the next five years.

President Bush has been urging his colleagues at a conference in Thailand to contribute generously and will be telephoning European leaders over the next few days, National Security Adviser Condoleezza Rice was quoted as saying yesterday in Bangkok.

U.S. officials expect to have in place by Thursday a new World Bank-administered trust fund for Iraq in the hope that some countries will contribute to that more willingly than to the U.S.-run Development Fund for Iraq.

"This is another vehicle by which we can reconstruct the Iraqi economy," the Associated Press quoted Miss Rice as saying.

State Department spokesman Adam Ereli said in Washington that the new fund probably will have two arms, one administered by the World Bank and one by the United Nations. Both will be overseen by an international coordinating committee, he said.

In Geneva, Mr. Al-Shaikhly, who served as Iraq's top central banker in 1976 and 1977 and held senior U.N. posts from 1978 until 1991, told more than 300 oil industry executives that the high costs of staying in Iraq would force the United States to leave as quickly as possible.

"Once the American Congress and public opinion realizes the true cost burden of the Iraqi campaigns on the American taxpayer, they will force this, and any future administration, to quickly look for an honorable exit strategy," he said.

He argued that the costs will overwhelm any economic benefits to the United States, estimating Iraq's reconstruction costs through 2008 at $100 billion and the total military costs of the operation through the middle of 2005 at $200 billion.

Meanwhile, oil production is unlikely to top 3.5 million barrels per day until needed technical improvements can be completed around 2010, oil professionals estimate.

"The arithmetic of the 'conspiracy theory' does not add up," Mr. Al-Shaikhly said.

Interviewed on the sidelines of the conference, the former central banker predicted that major foreign investors would begin coming back to Iraq around the end of next year.

"You need transparency, you need to build an investment environment in the country, you need proper business legislation, you need a working banking system. This I cannot see taking place except 12 months from now. In other words, the third or fourth quarter of 2004," he said.