If the events of the first week of the war against Iraq are any guide to the future course of this unconscionable war, even those who warned against its disastrous effects, both in terms of human lives and economic fall-out, may find themselves guilty of understatement.

The optimistic protagonists of the war, led by Mr. Rumsfeld and Mr. Wolfowitz in the US and Mr. Blair and Mr. Straw in the U.K., on the other hand, will perhaps never publicly admit their folly or regret the hornet’s nest they have got themselves and the rest of the world into, may still be hoping for a miraculous collapse of the Saddam regime, which would put an end to their present misery.

It looks increasingly likely, however, that this indeed is going to be the mother of all wars, unlike the one that Saddam Hussain had bragged about a decade ago and lost disastrously. Ironically, although Saddam may not survive this war, he will certainly make his enemy pay much more dearly than in the last Gulf war, which would soon look like a picnic in comparison.

For one thing, the United States has far fewer allies this time than in the last war and they are receiving much less direct financial assistance from their Arab client states than last time. According to the Congressional Budget Office and a committee of the House of Representatives a short war could cost $50 billion-60 billion in direct military expenditures.

The comparable figure for the 1990-91 Gulf war was about $80 billion, although much of that was recouped by contributions from Saudi Arabia and other allies, which have bowed to the vociferous protest against the war on the Arab streets. However, it is already evident that the war and the Iraqi resistance to the invasion is likely to last much longer than anticipated, escalating the costs well beyond the $75 billion requested to the Congress by the Bush Administration.

Even if the military campaign against Saddam results eventually in his defeat and elimination - as the odds seem to indicate - it would have inflicted considerable damage to the already ailing US economy. It would be a long time before the United States will be able to fight its way out of the looming recession, which is threatening to engulf the world economy. With the increasing difficulties being faced by US with its allies, especially those from whom it had expected logistic support, and other contributory factors, such as the failure of its psy-op strategy to topple the Saddam regime within days, if not hours, after the start of the hostilities, the prospects of an early conclusion of the war seems to be ruled out. The long-haul is now the more realistic scenario, as both Bush and Blair have grudgingly admitted during their latest press conference in Camp David. A major question confronting the global economy is how does the United States intend to finance the conduct of a prolonged war and more importantly of financing the cost of restoring peace and stability and of undertaking the immense task of reconstruction of the destroyed and depleted infrastructure in Iraq - which is estimated to be several times larger than the direct military costs. Even while innocent blood is spilling on the battlefields of Iraq, the scramble for obtaining the juicy construction contracts has begun, with a flock of vultures descending to feed on the carcass of a mauled and besieged regime.

In a way the real war is only just beginning and will make explicit the real intentions of those who have made Saddam Hussain’s crazed passion for becoming a saviour of the Arab and Muslim nations an excuse for fulfilling their own self-serving ambitions by first destroying and then rebuilding its infrastructure.

By assuming the leadership role in the war, the United States and Britain have pre-empted for themselves, to the exclusion of any role in post-war Iraq for other nations, as well as for the United Nations and its complement of specialised agencies, which have invariably played a key role in past conflicts of this nature. The main beneficiaries of these reconstruction projects will be major corporations, such as Bechtel and Haliburton, which have a close nexus with the present political leadership in the United States.

What is being billed as the largest postwar rebuilding effort, since the Marshall Plan in Europe after World War II , which could eventually cost $25 billion to $100 billion, is now up for grabs. The contracts are being awarded with undue haste and without due diligence, necessary to avoid charges of corruption, fraud, waste and abuse are often cited in such cases. According to reports, the State Department’s US Agency for International Development (USAID), which is handling much of Iraq’s reconstruction, already has solicited bids for eight contracts for a variety of tasks, such as repairing roads, bridges, hospitals, water and sanitation systems and more.

More work, billions of dollars’ worth, will be needed after these preliminary contracts have been awarded and some semblance of peace has returned and a civilian administration, probably under the overall supervision of the American military, has been installed. In the meanwhile, the prime contractors are American, ostensibly for security reasons, even though subcontractors, who will be assigned more than 50 percent of the money, would be eligible from any country, save those on the Administration’s terror list.

The absence of an independent monitoring process for the award of contracts from the beginning of such operation will prove a significant handicap, especially for developing country subcontractors who are hoping to benefit from the promised construction boom in Iraq. The award of large construction contracts to US firms with known connections with the US military-political establishment also gives rise to the charge of cronyism which has plagued the US corporate sector since the emergence of Enron, WorldCom and Global Crossing scandals. A new pattern of American oligarchy is evolving in which, as pointed out by Jonathan Chait “government and business have welded into one big ‘us.’

It is clear that the United States plans to retain firm control over the occupation and reconstruction of Iraq, allowing other countries little say in how it will spend the money needed to repair the country. Although these contracts will be financed partly by the US taxpayer, a predominant part will be played by Iraqi oil revenues which will be used to both feed and rebuild the country, without any significant role of the Iraqi people or the international community in it.

The oil for food programme started by the United Nations in 1996 to ameliorate the conditions of the Iraqi people affected by the sanctions against Iraq, which was abruptly ended by the UN Secretary-General at the behest of the United States on the eve of the start of the current hostilities, is reportedly being revived again. This initiative is being undertaken primarily at the urging of the British Prime Minister, whose Overseas Development Minister was persuaded to withdraw her protest resignation from the Cabinet on assurances that the UN will be actively involved in the humanitarian and reconstruction work in post-war Iraq. However, some countries, including Russia and France, are opposed to the revival of the programme until the hostilities stop, lest this should provide a semblance of legality to the military intervention by the US and UK, without the approval of the Security Council.

Oil is indeed the kingpin of the Iraq war and perhaps of the wider problems facing the world today.In the current context, the only available resource for relief and reconstruction are its oil revenues. If Iraq could rebuild its production back to three million barrels per day, this would yield around $25 billion per year at prevailing oil prices. Currently, however, because of a slump in oil prices, proceeds from sales of oil have amounted to only about 3bn dollars in the past six months, well short of the 5.2bn dollar limit under the food for oil agreement with the United Nations.

However, there will be many claims on Iraq’s oil resources once it is allowed to produce it to its full capacity.

To begin with, much of these funds will be required for imports of food, medicines, and other necessities of daily life for which considerable latent demand exists in view of the deprivation suffered by the population under the UN sanctions regime since 1991. Some revenues would be needed to finance the rebuilding and upgrading of Iraq’s economic and social infrastructure which would have been seriously damaged by the advent of the two wars and the allied bombings in the no-fly zones. Additionally, total claims by other nations against Iraq after the 1991 war were over $300 billion, of which little has been paid or written off. It would be quite unconscionable to put any burden on Iraqi population to pay for their unsolicited “liberation” by the US and its allies. Since the war has been undertaken without UN sanction or broad international support, the US would be forced to pay most of the costs, through the ballooning of its fiscal deficits.

The United States only hope under the circumstances would be to increase the supply of oil by the restoration of the old and development of new oil wells in Iraq. Either with continued direct occupation or the installation of a puppet regime, it could try to upstage Saudi Arabia and other OPEC countries by becoming the swing supplier of crude oil and ensuring continued low prices of oil, which could jumpstart the ailing Western economies and exorcise the looming fear of recession. The dream of turning Iraq into a Texas on Tigris is expected be realized through the grant of ambitious exploration and oil well restoration projects to be given to large US oil corporations as part of the reconstruction efforts in Iraq. However, the effect of a decline in oil prices on the developing countries is likely to be negligible, since their energy consumption is still very low and since their economies generally benefit from a boom in oil-producing economies, through remittances of their workers and liberal aid from oil-rich countries.

The prospects of the project to rebuild and democratize Iraq are equally bleak. In virtually every country where the US intervened militarily over the last four decades, including its first military intervention in Iraq, 12 years ago it has followed a “hit and run” philosophy by which bombing runs have seldom been followed by construction crews. The latest war in Afghanistan illustrates the point distinctly. In the year ending September 2002, the US spent $13 billion on the war effort. By contrast, the total Pentagon effort committed to civil works or humanitarian aid has totalled only $10 million.

The imbalance between military destruction and civilian construction in Afghanistan and elsewhere is a poor testimony for US rebuilding intentions in Iraq. It doesn’t seem plausible that the US Congress will appropriate funds for such a large civilian effort, since the US today spends only $15 billion annually on foreign aid for the entire world. There is a clear danger that the U.S. and its allies even after winning the war in Iraq can lose the peace and the hearts and minds of the vanquished Iraqi people and the rest of the world affected by the war.