Costs of Gulf Operation? Administration Won’t Say

The Bush Administration is going to extraordinary lengths to avoid telling Congress how high the costs of Operation Desert Shield will be, how much U.S. allies will pay and how the shortfall will be made up.

By virtually all independent estimates, the financial contributions pledged by allies such as Saudi Arabia, Kuwait, Japan and Germany are turning out to be much smaller in comparison to total U.S. costs than Bush Administration officials expected four months ago. As a result, the Administration is now playing a hide-the-button game with Congress to avoid giving out numbers.

Administration officials refused to testify before a House Budget Committee hearing last Friday on the financing of Desert Shield. And a Senate Budget Committee meeting scheduled for Wednesday had to be canceled when the Administration, for the second time in a week, declined to provide any witnesses.

“I buttonholed both (Secretary of Defense Dick) Cheney and (Secretary of State James A.) Baker,” Sen. Jim Sasser (D-Tenn.), chairman of the Senate Budget Committee, told The Times. “Cheney said they don’t know how much the costs to the U.S. will be. And Baker says he doesn’t know how much our allies are going to contribute, because they haven’t been asked yet.

“So they say they have nothing to tell us. I think this is just another effort to stonewall the Congress and to marshal their lobbying forces before the vote (on the use of force).”

Administration officials respond that they are not ready or able yet to talk about the costs of the Persian Gulf operations. “They (members of Congress) were interested in the costs for 1991. We’re not in a position where we can testify about 1991. It was too early to try to testify about it,” said one senior State Department official.

However, a study this month by the General Accounting Office, an independent agency that is an arm of Congress, estimated that even without a war, the gulf crisis will cost the U.S. Treasury an additional $37 billion this year. (This figure includes $30 billion for the U.S. deployment and another $7 billion for forgiveness of Egypt’s debt and other non-military expenses.)

That amount would wipe out the entire $36 billion in savings for fiscal 1991 that was carved out of government spending during the agonizing months of budget negotiations between President Bush and Congress last year.

The GAO also calculated that Operation Desert Shield would use up for the next two years the so-called “peace dividend” that was expected to accompany the end of the Cold War.

And if shooting breaks out, U.S. expenses will mount astronomically. “You’re talking about costs of $1 billion to $2 billion a day, depending on how you fight the war,” said Lawrence J. Korb of the Brookings Institution. He is a former assistant secretary of defense. “An all-out war would be about $2 billion a day.”

Korb, a manpower specialist who was once responsible for about 70% of the Pentagon’s budget, rejects the Administration’s claims that it is unable to estimate the costs of the gulf operations. “It’s not that they don’t have the figures,” he said. “They could tell you to a nickel how much they’re spending over there.”

According to GAO Comptroller General Charles A. Bowsher, the U.S. Army is now spending money so rapidly that it will use up its current $21.5-billion operations and maintenance budget for 1991 by May, four months before the end of the fiscal year on Sept. 30.

The Marines, with 75% of their forces in the gulf, will exhaust this year’s operations budget by mid-April and the Air Force will similarly run out of money by June, Bowsher said. The Navy is not spending its money as fast as the other services because, even without the gulf crisis, it would have had ships at sea.

Because of the mounting costs, virtually everyone in Washington expects President Bush to ask Congress for more money to finance the gulf effort.

“A supplemental appropriation to cover the costs of Operation Desert Shield seems inevitable,” Bowsher concluded in testimony to the House Budget Committee last week. Sasser said that he has been told unofficially that the Administration will ask Congress next month for an extra $30 billion for this year’s budget to cover the increased defense costs.

If this money is not obtained through increased taxes, then it would increase the U.S. budget deficit, now estimated at about $300 billion in this fiscal year.

Last September, when Baker and Treasury Secretary Nicholas F. Brady traveled around the world to raise money from allies for Operation Desert Shield, Administration officials repeatedly suggested that contributions from U.S. coalition partners would cover most if not all the costs of the American deployment.

The key donors were Kuwait, Saudi Arabia, the United Arab Emirates, Japan and Germany. After a stop by Baker in Saudi Arabia, State Department officials gave out figures suggesting that the money Baker and Brady had raised overseas was roughly equal to the costs of Operation Desert Shield.

Asked specifically whether the allied contributions would cover all the expenses of the U.S. intervention, Baker did little to dispel the idea. “I will let you be the judge of how we are doing,” he said in September. “We are making, it seems to me, some pretty good progress.”

Administration officials insist that at that time--four months ago--they sincerely believed that the allied contributions might equal U.S. expenses. But it hasn’t worked out that way.

So far, the Administration can count on, at most, about $9 billion to $13 billion from its allies--or less than half the total cost of Operation Desert Shield for this fiscal year. And the percentage would be much lower should war break out.

Figures for the allied contributions are inexact, because the Saudis, in particular, have refused to release any overall numbers for the amounts they are giving the United States.

The total pledged by other countries for this year adds up to $6.7 billion. That total includes $2.5 billion from Japan, $2 billion from Kuwait, $1.1 billion from Germany, $1 billion from the United Arab Emirates and $95 million from South Korea.

Saudi Arabia reportedly promised roughly $500 million per month to cover all the fuel, water, transport and other costs for American troops within its borders. If the spending were to continue at that level, it would amount to $6 billion for the year.

The widening gap between U.S. expenses and allied contributions can be attributed mostly to the fact that the Bush Administration doubled its troop deployment last November but has not yet formally asked for any more money from overseas.

In other words, the pledges obtained by Baker and Brady last September were based on the initial U.S. deployment of just over 200,000 troops. But the Pentagon is now paying for the much-larger deployment that is expected to grow to more than 400,000 in the next week or so.

Since November, Administration officials have said publicly that they intend to ask for more financial help from the United States’ coalition partners, and U.S. officials have told a number of foreign officials that they should expect such a request.

But the Administration has not actually asked for the new money yet.

One reason, U.S. officials say privately, is that the Bush Administration would prefer to have foreign governments volunteer to raise their contributions.

“We would like it if, out of the blue, the Japanese came in and said, out of the blue, ‘Hey guys, here’s your check,’ ” said one Administration source who deals with Asian governments.

Some foreign officials already have hinted that their countries would be willing to give more than they have so far pledged when asked.

“If the request comes (from the United States), we will consider it very seriously,” says Takayuki Kimura, the deputy chief of mission for Japan’s embassy in Washington.

But the Japanese official argues that it is still too early to judge whether the United States will need more money from its allies. Cost estimates such as the GAO’s $37 billion figure, Kimura notes, assume that the U.S. expenses in the gulf will continue at current levels throughout the fiscal year.

“Right now, we are hoping that things will be solved very quickly,” Kimura said. “If the situation is solved peacefully not too long after Jan. 15, then the additional costs (to the United States) will be small.”

Even if there is a peaceful settlement and the United States begins to bring its troops home soon, however, it will take many months to draw down the massive U.S. deployment. And the expenses of transporting the American troops out of the gulf region could be nearly as high as the costs of dispatching them there.

The second passing of the hat overseas has also been delayed, U.S. sources say, by disputes within the Administration over how much money to request.

Officials in the Defense Department, whose budget would have to absorb expenses the allies do not pay, are said to favor asking for more than some State Department officials would like.

Some U.S. allies have argued privately that their governments should not have to pay the costs of the increased U.S. troop deployment since the Bush Administration’s decision was made unilaterally, not in consultation with foreign governments.

A diplomat for one member of the multinational coalition, who declined to speak for the record, invoked the slogan the American colonies once used against King George III: “No taxation without representation.”

A few State Department officials have voiced similar sentiments.

“Are we the world’s tax collector?” asked one State Department official.