www.themoscowtimes.com Thursday, Mar. 13, 2003. Page 1 By Catherine Belton Staff Writer For two weeks after the Sept. 11 attacks on the United States, President Vladimir Putin went into hiding amid a tumult of questions over whether Russia would lend vital support for a U.S. war in Afghanistan. He emerged from his silence to give the green light to a U.S. move into former Soviet military bases in Central Asia, heralding a historic shift in Russian foreign policy toward cooperation with the U.S..

But now, as the divide deepens in the United Nations Security Council over whether to approve a resolution giving Saddam Hussein a deadline to disarm or face war, that carefully crafted relationship is already on the line.

Putin's Foreign Minister Igor Ivanov has swatted aside U.S. warnings that Russia risked ruining improving relations and endangering American moves to help Russia enter the World Trade Organization. He said flatly on Monday that Russia would vote no.

But Putin has kept quiet. In a sign he has not made a final decision yet on how to play the standoff, he has made no public statements on Russia's position since his Kremlin meeting two weeks ago with antiwar ally German Chancellor Gerhard SchrÚder, when true to form, he played to both sides.

A vote on a new UN Security Council resolution, which the United States insists will come this week, could be one of Putin's biggest tests. The question on everyone's lips is how far he is willing to stick his neck out in opposing a U.S. war in Iraq. He has to weigh a delicate balance in a tough global game of brinkmanship between defending Russia's interests in trying to avoid war and its interests in strengthening Russia's new relationship with the United States, a relationship that already is beginning to pay economic dividends as investors begin to pile back into Russian markets. Russia's stock market has soared 110 percent since late September 2001.

On the one hand, there's the tempting chance to try to dent America's growing might through a closer alliance with France and Germany, Russia's allies in opposing war. There's also the opportunity to try to hold off a war that could send oil prices plummeting, hitting budget revenues just as Putin prepares for presidential elections in 2004, and a war that could spark instability in a region much closer to Russia than to the United States. "Putin right now is doing everything sensibly possible to hold off a war in Iraq," said Sergei Markov, a Kremlin-connected political analyst.

But, on the other hand, if that big risk poker game move backfires, Russia, just four years out of economic crisis, could be ostracized by the United States, which alone, analysts say, has the power to make or break Russia's bid to integrate into the global economy.

For now, going on Ivanov's recent tough line, Russia looks to be tempted by the chance to influence global decision-making after more than a decade of being sidelined as a collapsing former superpower. Now with France and Germany joining in opposition against the United States and state coffers bulging following three years of high oil prices and in no need of handouts from the U.S., Russia is feeling brave enough to make a stand. "Who thought a month ago that Russia could escape the status of a junior partner of the U.S. Now, together with France and Germany, it is step by step pressing the U.S. into making concessions. This is a very interesting development that has not happened before," said Alexander Rahr, a specialist on Russian-German relations and the author of a book on Putin. "It's a moment of history, where Putin is saying the beginning of a multipolar world can be established."

In the face of Russian and French opposition to their resolution, Britain has proposed softening it, and the United States has indicated it might go along.

"It's not about Iraq, it's about limiting the scope of U.S. action, so that America alone cannot unilaterally decide what to do," said Rahr, an analyst at the German Council on Foreign Relations. "Putin thinks the alliance is strong enough to withstand U.S. pressure. But at the same time, he is keeping the backdoor open to jump out."

"Russia is trying to put itself in a different position in relation to the U.S. than it was under Yeltsin," said Alexei Mukhin, director of the Center for Political Information. "Now Russia is trying to regain the status of a country whose opinion has to be taken into account."

Russia's political establishment, particularly the Foreign Ministry, has long been searching for ways to combat the United States' growing strength as the only superpower. In a commentary for the Financial Times soon after the initial decision in February to side with France and Germany, Foreign Minister Igor Ivanov pointed to the new alliance as having a "significance which goes beyond the Iraqi crisis."

Even some business barons are cheering this strategy on. "This is a unique chance for Russia," said Konstantin Remchukov, chairman of the advisory board of Base Element, a metals empire owned by Oleg Deripaska. "For the first time since Putin came to power there is a possibility to split the West."

But it's not just geopolitical chess games that may lie behind the move. Analysts say France and Russia are on the offensive against the United States to press the Bush administration into making concrete concessions on their economic interests in Iraq. "The U.S. has not done enough to guarantee a new regime will pay back Iraq's debts to Russia and to guarantee Russia's stakes in Iraqi oil fields," said Vyacheslav Nikonov, the head of the Fond Politika think tank. "No deal has been struck."

Iraq owes Russia over $8 billion in debt. LUKoil had the rights, potentially worth $20 billion, to develop the vast West Qurna field in Iraq, but had them snatched away in December when Hussein's regime accused it of trying to clinch a deal with the U.S. that its

contract would be guaranteed under a new regime. Since then, however, a few medium-sized Russian oil companies have clinched deals to develop smaller fields. Russian firms also have won more than two-thirds of the contracts under the UN oil-for-food program.

For France, it's a $70 billion question. France's BNP Paribas bank has exclusive rights to handle all the funds coming out of Iraq's oil-for-food trade, said a UN diplomat, who wished to remain anonymous. That's $70 billion, and after a regime change it's unlikely France would keep hold of this account. "France has always been against regime change in Iraq because of the massive revenues BNP Paribas makes in handling Iraq's account," the diplomat said.

Those combined interests in Iraq could drive a future Franco-Russian alliance. At the start of his term in power, Putin was set on forming an alliance with the EU at the expense of the U.S. In 1999, just after he became prime minister, he laid out a proposal to move Russia's trade out of dollars into euros.

On Tuesday, EU Commissioner Roman Prodi announced plans to create a free trade area with the EU for countries stretching from Russia and Ukraine to Israel and Morocco in which all citizens could move freely. In the past, Prodi has spoken against eventual membership for Russia in the EU. On Tuesday, however, he said this could not be ruled out.

From a trade standpoint, ties with the EU are much more important for Russia because over two-thirds of trade is done with Europe. When the EU expands, that is set to grow to more than 70 percent of Russia's total trade balance.

But at the same time, building ties with the European Union at the expense of Russia's relationship with the United States could easily backfire.

"Russia has only been in three years of recovery after over 70 years of communism and 10 years of economic chaos. Russia can't afford to take big economic risks like this yet," said Christopher Weafer, chief strategist at Alfa Bank.

"France and Germany are well behind the the economic importance of the United States. Russia can't afford to risk alienating the U.S. over this."

"It will be hard to achieve increased investment flows into the economy without Russia's continued integration into the world economy," he said. "There is one country -- the U.S. -- that's in a position to make that a lot tougher. It's a fact of life today that the Europeans do not occupy the same economic space as the U.S."

Meanwhile, the European Union has been Russia's most troublesome partner so far in both political and trade issues, from last year's spat over travel to and from Kaliningrad to this year's tough new curbs on Russian grain. It also has been Russia's biggest opponent over conditions for joining the WTO.

The closer relationship with Washington, however, already has reaped dividends. The United States has been making a strong case for pushing Russia into the WTO, and its invasion of Afghanistan helped clear up Russia's own security problem with the Taliban right on its own southern borders.

"If Putin acts logically he should stick with the U.S.," Rahr said. "This what the Bush administration counted on. They didn't think there was a real threat."

Another risk is that no matter what SchrÚder or Chirac may promise Putin in return for his continued support, neither of them can guarantee the promises would be implemented. Any moves to improve ties with Russia would have to be approved unanimously by all EU member states.

"France and Germany have nothing good to offer Russia," Markov said. "From a pragmatic point of view the main problem Putin has to deal with is Russia's continued isolation. The United States is the only country that can help Putin on this."

At a round table held Wednesday to discuss Iraq, Yabloko leader Grigory Yavlinsky warned against Russia's alliance with France and Germany. "This new triangle ... is an illusion," he said, The Associated Press reported. "Putting Russia in an isolated position is going to cost much."

Dmitry Rogozin, the head of the State Duma's foreign affairs committee, however, said Russia's rejection so far of a U.S. resolution that would pave the way for war has been a matter of principle, not of alliance-building against the United States.

"We do not consider ourselves enemies of the United States. We just don't understand why the U.S. considers it necessary to wage war in Iraq," Rogozin said.

"UN weapons inspectors can keep Saddam Hussein under control. This is a unique chance to avoid war," he said. "Putin and Bush have a mutual understanding that something needs to be done on how to make sure Hussein disarms, but both have different views on how this should be achieved."

Rogozin said the United States deserved a dvoika -- one of the lowest grades in Russian school -- for its diplomacy in the UN Security Council. "Its attempts to explain the reasons for invading Iraq are laughable," he said.

He lashed out at Washington for its warnings that Russia risks damaging its political and economic interests if it votes against U.S. military action.

In an interview with The Moscow Times last week, a senior U.S. diplomat in Moscow warned that Russia risked jeopardizing U.S. support for its entry into the World Trade Organization and the lifting of Soviet-era trade sanctions under the Jackson-Vanik amendment.

U.S. Ambassador to Moscow Alexander Vershbow expanded on those threats in an interview with Izvestia published Wednesday, saying Russia also risked endangering future cooperation and investment in energy, joint work in security and anti-terrorism programs, and partnership in space, if it used its veto.

"Russia's position on Iraq cannot be connected to conditions for joining the WTO," Rogozin said. "Tying the two issues just discredits the United States. We are not America's pet rabbit that can be punished in such a manner."

Analysts said U.S. threats could only stiffen Russia's resolve. "Ivanov's latest and strongest statement [on Russia voting against the resolution] is a reaction to threats from Washington when it has been trying to convince Russia not to follow France. Instead of doing this, the United States has made matters worse," said Alexander Pikayev of the Carnegie Moscow Center.

"The Kremlin cannot show weakness ahead of elections," he said. "The Iraqi war is not popular. It would be very difficult for Russia to capitulate to such threats ahead of elections."

"This is all fairly dangerous for the development of relations between Russia and the United States," Nikonov said. "Putin has to take into account the mood of his own electorate. There is growing anti-U.S. sentiment in Russia now, and if there are worsening relations with America that could add to Putin's points.

"This won't have a big immediate impact on the Russian economy. The most important factor for the Russian economy is the oil price."

But economists argue that isolation from the United States could cost Russia its bid to diversify the economy out of its raw material base. "It's a question of whether Russia wants to catch Portugal or Venezuela," said Weafer.

With high stakes at play, Putin seems to be playing it tough for now in the hope that he will be able to avoid having to vote either way.

"The strong statements from Moscow recently are aimed at trying to pressure wavering Security Council members into not supporting the resolution," Pikayev said. If the United States does not get nine votes on the 15-member council, Russia does not have to use its veto.

"Russia's aim is not to bring the conflict to the situation where we have to vote yes or no," Rogozin said. "We need to win time. There are other methods of solving this conflict aside from war."

Deputy Foreign Minister Georgy Mamedov said Wednesday during a visit to Tokyo that Russia is hoping to avoid the use of its veto. "It would mean the collapse of diplomatic efforts and leave only military actions," Mamedov said, the Kyodo news agency reported.

As time runs out ahead of a vote, Russia may face playing a game of chicken with France and China, which have also threatened to use their vetoes against war in Iraq. "Russia does not want to be alone in using its veto. All are fearing that each side will deceive the other in this complicated game. All fear that one side will abstain instead," said Ivan Safranchuk of the Center for Defense Information.

For Putin, a tough stance from Russia is a risky play. It is unlikely Bush will step down from his threats to wage war against Iraq following the huge military build-up in the Persian Gulf. If the United Nations does not approve military action because of protests from Russia and other member states, chances are the United States will go ahead with unilateral military action anyway. It is unclear whether Russia's relations with the United States would still be undermined if this was the case. Without Russian approval of U.S. military action, U.S. officials have made it clear Russia risks being locked out of any role in a post-Hussein Iraq, including in developing oil fields.

www.euobserver.com

GIACOMO FILIBECK - "It is becoming clear that the United States is making a political and strategic mistake. In the end, this could be fatal for the West, destroying a necessary alliance between the democratic countries of the Northern Hemisphere, and fatal for the entire Middle East."

EUOBSERVER / SALT&PEPPER - The events these past few days have raised fears among some that barely a decade after the collapse of the Berlin Wall, the West will become divided into two new new blocs: an anti-American bloc and an anti-European bloc. I do not believe this to be a real prospect. The dispute between the US administration and certain European governments does not greatly involve the peoples of the two sides who are often critical of their own governments.

In an editorial on 9 March, the largest newspaper in the United States, the New York Times, clearly spoke out against an armed intervention in Iraq without the legitimate backing of the UN. The daily also published an article by former US President and winner of the 2002 Nobel peace prize Jimmy Carter who vigorously defended the stance that an attack that was not under the auspices of the United Nations would constitute a violation of international law. It would also be unprecedented in the history of civil nations and contribute to the decline of American prestige on the international scene.

Infatuation with power This reading of recent events is undoubtedly a reply to the analysis of the Democrats that is today shared by a large portion of US public opinion: for them, a unipolar, hegemonic and authoritarian system cannot produce the correct results in terms of achieving peace and democracy around the world. On the contrary, a system like this damages America’s soft power, which until now has been a successful weapon of the United States in international relations.

The true error of the George W. Bush administration from this point of view would be its infatuation with power. The illusion of the empire (hard military and economic power) would make it blind to the need to find solutions with the international community in order to achieve political stability, economic growth and democratic values.

There is no doubt that the painful events of 11 September have affected the policies of the US administration. The now famous "National Security Strategy" presented by President Bush to Congress on 17 September 2002 is extremely clear. America is facing a new and extremely serious challenge. On the one hand international terrorism is penetrating open and democratic societies, using against them modern technologies (that they themselves have produced). On the other hand, the anti-American rogue States are supporting terrorist networks, offering them hospitality and funding and through them waging a non-conventional war against the "Evil Empire".

The wrongs of preventive war In the face of instruments of mass destruction made possible by new technologies and suicide fighting techniques, it would appear impossible for a society open to the movement of goods, people and capital to fight terrorism, leaving it vulnerable to new disastrous attacks. Therefore, the preventive war would be the only possible way of defending one’s own territory and one’s own cultural model. The new and extremely dangerous corollary of this theory is, however, unilateralism whereby if the United States decides an armed intervention it can intervene regardless of the consensus of the United Nations, in contempt of international law and in total disagreement with international public opinion.

There is also another extremely weak element in the theory of preventive war: nowhere is there a direct strategy to get to the root of international terrorism, which finds fertile ground in the despair and poverty of the countries of the Third and Fourth Worlds. Today, a quarter of the world’s population consumes three quarters of the energy, food and natural resources available on this planet. The gap between North and South continues to grow, and new countries end up being sucked into the whirlpool of poverty (witness what is occurring in Argentina and Venezuela).

Snowball effect In this context, as many analysts have already underlined these past few weeks, a unilateral intervention by the United States in Iraq, with the consequent dissolution of the Iraqi State, would probably have a snowball effect and lead to more instability in the Middle East. It could further antagonise the Israeli-Palestinian conflict (already there have been dramatic first signs of this), feed fundamentalist terrorism, weaken moderate Arab governments, trigger migrations and produce a crisis in oil production.

It is therefore becoming clear that the United States is making a political and strategic mistake. In the end, this could be fatal for the West, destroying a necessary alliance between the democratic countries of the Northern Hemisphere, and fatal for the entire Middle East, destroying once and for all the legitimacy of the international institutions and their peace-keeping role. Also, it is becoming obvious that an alternative solution has to be found together with an international interlocutor capable of implementing it in the eyes of the US administration. However, as the situation stands, neither one exists.

A new Marshall Plan As regards Europe, the position taken by France, Germany and Belgium of opposing US intervention gives expression to the will of international public opinion but looks doomed to fail, because alone these countries are unable to express a Middle East foreign policy different from that of the United States. Such a policy should clearly be based on a plan of economic aid and investment, support for local production, education and social development, through the added value of international solidarity, and all this with the purpose of exporting democracy to create peace: in short, a new Marshall Plan.

The radical change in American foreign policy and the consequent Iraqi crisis have occurred at a time when the countries of Europe still do not have the instruments for a common foreign policy. In this way, the EU countries have reacted according to their own national interests, with the result that the total of individual diplomacies has not produced a common position. France’s resistance in the UN Security Council and its heightened opposition to the position of the United States have brought to the fore the paradox of a powerless Europe.

American unilateralism is in fact the product of the political inconsistency of the European Union and its incapacity to propose diplomatic alternatives to the United States’ stance. The uncoordinated national diplomatic efforts of the individual European states express nothing other than an empty game of power and sovereignty, incapable of producing any concrete result. On the other hand, there where a result could be expressed, at the level of the Community institutions, a democratic government of the Union responsible for foreign and security policy is lacking.

Citizens in charge of own destiny And this is what 80% of the Union’s citizens, many of whom demonstrated through the streets of Europe on February 15, are calling on the Convention to create. A European government would have the diplomatic strength to launch a Marshall Plan for the Middle East that brings with it development, peace and democracy and that guarantees disarmament. The Union’s citizens know that they will be in charge of their own destiny only when Europe speaks in the world with a single voice.

They also know that by maintaining sovereignty for foreign affairs, Europe’s individual states are dooming themselves to division, subordination and decline. Europe’s citizens know the paradox of a powerless Europe that is leaving Europe without the capacity to act: only Europe’s leaders seem deaf to their requests and blind to the needs of the world.

The only hope is that the Convention will be able to see what the governments are not seeing and will listen to the voice of European citizens. If this occurs, the lessons of these past few days will not have been in vain and will write an important page in history. It takes courage, the courage that Europe’s citizens are asking the members of the Convention to have.

Join the debate

GIACOMO FILIBECK - President of the European Youth Convention and of the European Youth Forum Website  European Youth Forum  European Youth Convention     Written by Giacomo Filibeck Edited by Honor Mahony

www.upi.com From the International Desk Published 3/7/2003 12:46 PM -0- The anti-war movement in Europe is starting to have real impact beyond politics. Ireland's Shannon International Airport has been virtually closed to flights and refueling stops of U.S. troops and supplies by a relentless campaign of protest. Three of the four U.S. airlines hired by the Pentagon for the transports have now said they will no longer use Shannon. Over the last three weeks, demonstrators have gotten inside the perimeter and into the hangars three times, smashing aircraft with hammers, dousing their lamps and windscreens with paint. Last week, over 1,000 anti-war protesters, citing Ireland's traditional neutrality and the failure of a United Nations mandate, tried a mass trespass onto the airport, to be held back by police backed up by Irish troops. The aircraft are now using Frankfurt airport instead, and the now well-connected European movement is planning more direct action there. Belgian police last week rounded up 150 activists who were trying to stop military convoys from U.S. bases in Germany to the port of Antwerp. -0- Just when you thought these were the last days of the last dictator, the granddaddy of them all may be coming back. To commemorate the 50th anniversary of Stalin's death, Aleksandr Kuvaev, leader of the Moscow Communist Society, has proposed cloning Uncle Joe, the man fellow Bolshevik (and victim) Nikolai Bukharin once described as "Genghis Khan with a telephone." There might be one slight problem with reviving the old thug, however; among the recent revelations is that Stalin's cronies may have poisoned him with the rat killer warfarin. -0- Indian officials have been trying hard to damp down reports of their new military understandings with Iran, insisting that their deal to upgrade and modernize Iran's Soviet-made T-72 tanks and MiG warplanes does not mean India is seeking basing rights and the possibility of opening a second front against Pakistan. But the relationship is certainly intensifying fast. A team of Indian Army engineers and Navy logistics officers is now installed at Iran's Shah Bahar naval base. The cover story is that India will be helping improve the infrastructure at the civilian port and local communications, and are running a feasibility study on boosting crude oil shipments from Iran. -0- More than half of Argentine voters want the chance to elect neighboring Brazilian president Lula in their own election in April. Research carried out by the Consultoria Graciela Romer and Associates on the image of the Brazilian president in Argentina found that Lula's support was particularly pronounced among the middle and upper classes, with 56 percent choosing Lula to lead the country. Lula also withholds the majority of the support of the voters who define themselves as center-left (71 percent) and left (66 percent). Understandable, given the performance in recent years of the Argentine politicians. -0- Argentina's new ambassador, Eduardo Amedeo, has a novel idea for raising his battered country's profile in Washington -- and easing tension. He's starting weekly tango lessons at the embassy. With the U.S. Food and Drug Administration's current ban on importing Argentinian beef during the crisis, he argues, the national dance is his only recourse. He's an excellent tango dancer himself, but has now hired a couple of teachers, and says the tango is an ideal way of creating harmony for these tense times. "When you're dancing as close to someone as you have to in the tango, you can't be unfriendly," Amedeo says. Argentinian wine will be served. -0- Turkish leader Recep Tayyip Erdogan, furious at the constant foot-dragging over his country's application to join the European Union, is trying a flank move. He is going to apply for his AK (Justice and Development) Party to join the European Peoples' Party, the umbrella group of center-right that currently dominates the EU Parliament. On paper and in principle, the bid will be hard to stop. But most EPP member parties are Christian Democrats, wary of embracing Erdogan's 'moderate Islamic' party.

www.athensnews.com 2003-02-24 By Jim Phillips Athens NEWS Senior Writer

Anyone who follows international news is well aware that the European Union -- the "United States of Europe" -- is now undergoing massive growing pains and internal controversy, as it struggles to absorb a raft of new Eastern European countries, codify a constitution, unify its economy, and decide whether to support the United States in its pending war against Iraq.

Athens residents and Ohio University students will get a chance to question academic experts about this jumbled state of affairs Tuesday night when a group of OU professors from various disciplines join in a symposium on "The European Union: For Good or Ill?" in OU's Seigfred Hall.

The event was organized by Robert H. Whealey, an associate emeritus professor of history who has written about European issues including Hitler's involvement in the Spanish Civil War. Whealey said Saturday that he hopes the symposium will spark interest in the EU among students and local citizens.

"I hope there's going to be a crowd," Whealey said. "It's my expectation that the students are going to be raising (the issues of) Iraq and oil."

The symposium will feature Whealey and four other speakers: OU associate professor of geography Timothy Anderson; assistant professor of political science James Mosher; Ohio Eminent Research Professor Alfred Eckes, who has written numerous books on the global economy; and John R. Gump, a Presbyterian pastor with experience among churches in Prague, Vienna and Budapest.

Whealey said his presentation will touch briefly on a number of issues: How World War II changed the European balance of power; the evolution of NATO; the evolution of the EU; how the collapse of the Soviet Union led to a reorganization of NATO; how the conflict in Yugoslavia changed the mission of the EU and NATO; and the question of the Balkans and the Middle East.

Each speaker will have 10 minutes to present, after which the rest of the panel will have two minutes to respond. Following the panel discussion, the symposium will be thrown open to audience questions, Whealey said. The event will be chaired by OU Ombudsman Elizabeth Graham.

Whealey said that although news about the EU isn't given major play in U.S. media, Americans have ample reason to follow developments in the Old World.

"Democracy is in better shape in Europe than America, so the EU has been helpful for democracy," he argued. He added that "the euro is competing with the dollar, and if the United States gets involved in the Middle East on a long-term basis, the value of the dollar is going to go down, and the value of the euro is going to go up."

Oil is also an important factor, Whealey said, noting that while Europe gets much of its oil from the Middle East, the United States is more reliant on Nigeria, Mexico and Venezuela -- which just underwent a crippling national strike in opposition to President Hugo Chavez, that massively cut back on the country's oil production.

Some observers have questioned whether the opposition of France and Germany to U.S. war plans might not be a kind of muscle-flexing among the older countries of the EU, testing whether the Union can effectively act as a countervailing global power to the American empire. Whealey said the issue is complex.

"The United States has the military dominance," he said. "So the problem that Europe faces is, if they do not support the United States in its Middle East war, they are going to have to appropriate the money for their own strike force." Pointing out that European countries spend a much smaller percentage of their gross national products on the military, Whealey predicted that "if there is going to be a parting of the ways, the economy is going to be re-oriented."

He added that while the United States has been a staunch supporter of Israel, public opinion in Europe is in favor of a peaceful resolution of the West Bank conflict, and views Israel as a major threat to regional peace.

"Israel is the elephant in the living room," he said. "(Europeans) see Israel as the biggest problem, not Saddam Hussein."

The symposium is set for 8 p.m., in Seigfred's Mitchell Auditorium. It is sponsored by OU's Contemporary History Institute, Institute for Applied and Professional Ethics, Ohio Program of Intensive English, and the departments of communication, economics, geography, history, interpersonal communication, journalism, linguistics, modern languages, philosophy, political science, social studies education, and sociology.

news.independent.co.uk By Jason Nissé 09 March 2003

When the First World War started, the saying was "It'll be over by Christmas". With the potential conflict in Iraq, the timeframe is even shorter. Some are talking about it being over before Gordon Brown stands up to present the Budget at lunchtime on 9 April.

Even if these optimists are right, though, this conflict will end up as one of the most expensive in history. Last year Larry Lindsey, George Bush's chief economic adviser, estimated that it would cost America $140bn (£87.5bn). But this figure has already been exceeded and the bill is getting larger by the day.

First there is the direct cost of the build- up of troops in and around Iraq, along with the ships and planes carrying them, their supplies and logistics, the potential cost of the weapons and fuel they will use up, and the potential loss of expensive machinery and soldiers' lives. Last week the Bush administration gave an indication of how much extra it would need from the Federal budget to cover all this, quoting between $60bn and $95bn. Few people think the final bill will come at the lower end of this range.

This doesn't include the UK's expenditure. Last week the Chancellor said he would need to allocate more than the £1.75bn he has put aside so far for the war, but could not say how much. This could take the total allied bill past $100bn.

To put this in context, this is about 50 per cent of the cost (in today's money) of America's late involvement in the First World War, just under a third of the cost of the Korean War and a fifth of the expenditure on the conflict in Vietnam.

It is also a third more than the last Gulf War in 1991. This is not because it is any more expensive to wage this conflict, just that the UK and the US have to pay for all of it. "The allies have to foot their own bill this time," explains Mark Cliffe, chief economist at ING Barings. "In 1991 the Gulf states, Japan and Germany all paid out to help cover the costs."

This $100bn assumes a short conflict. The Congressional Budget Office has priced war at between $6bn and $9bn a month just for the cost of munitions and supplies, while deploying troops would cost another $9bn-$13bn a month, and occupation would come in at between $1bn and $4bn a month. A month-long war with a year-long occupation would cost up to $70bn, but a three-month war and two years of occupation could cost $200bn.

The $95bn estimate includes some of the compensation the US government is going to offer Turkey for letting US troops use its bases. But as the Turkish parliament has thrown out the US plans and intense negotiations are under way, there could be substantially more aid for Turkey. The total bill could exceed $30bn and it is not clear how much of this is included in the war funding being put before Congress.

And Turkey isn't the only country looking for compensation. Israel has asked for $12bn in a mix of aid and loan guarantees, Egypt is pressing for up to $8bn and Jordan is likely to seek up to $2bn. Others may also look for help, leaving a total bill for assistance to "friendly" countries of over $50bn. This means that in the case of a long but successful war, the total direct cost could be at least $250bn.

All this ignores the impact on the world economy, which is much harder to quantify. The most obvious effect is on the oil price. On Friday it closed at $33.60 a barrel, over $10 higher than it was before this crisis started. But economists and oil traders cannot agree on how much of this rise is due to the Iraq situation and how much to problems in Venezuela.

However, assuming the price would be around $25 without the crisis, then it is making oil some $8 a barrel more expen- sive. The world consumes 75 million barrels a day, which makes the daily increased cost $600m. Even given a short war, the crisis will have lasted about six months, for a total extra cost to the world of $36bn.

Optimistic economists believe the oil price will drop once the war is over, as it did in 1991. But others have changed their view. "We thought the price would fall back to $20, but we now think it will only be to around $27 or $28," says Keith Wade, chief economist at Schroders Investment Management. "This is because inventories are so low and it will take some time before Iraqi oil comes on stream."

HSBC estimates that each $5 rise in the price of oil would cut world economic growth by 0.1 per cent, or $32bn. So if the oil price stays $8 higher for the year, this would cost the global economy $51bn.

The knock-on effect could be even more marked. Already the world's economies are suffering as investment decisions are put off and people are thrown out of work. "Early estimates of US GDP growth for the first quarter ranged around 3 per cent, but these seem wide of the mark," says Stephen Lewis at Monument Research. "There must be some doubt about whether there will be any growth at all." In effect, this means the crisis has cost the US economy $300m in the first three months of this year alone.

And what happens after the war? Mr Cliffe at ING Barings was initially derided as too bearish when he said world economic growth could be cut by up to 1.7 per cent because of the conflict. However, many are coming round to his view. If Mr Cliffe is right, this would mean a bill for the world of $530bn this year – and he was assuming a sharp recovery in global activity after the war. But now he is not so sure, pointing out that recovery could be slow or even negligible until the political uncertainty is sorted out.

Mr Wade agrees: "The cost of the war and of occupation is pretty open-ended. And if Bush then goes after Iran or North Korea, the uncertainty will continue. Even an ideal, short war will not put the world economy back on a recovery path."