How the Recession Could End the Iraq War

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Maya Alleruzzo / AP

A U.S. Army soldier from Dog Company, 2nd Squadron, 2nd Stryker Cavalry Regiment, right, is seen on patrol with one of his replacements from Charlie Company, 1st Battalion, 5th Infantry Regiment, 1st Brigade, 25th Infantry Division, left, in Baqouba, Iraq.

John McCain has made a point throughout his campaign of pooh-poohing Barack Obama's promise to withdraw all U.S. combat forces from Iraq within 16 months of assuming office. McCain has steadfastly refused to set a withdrawal date, suggesting that to do so would be defeatist and vowing instead to bring the troops back when they've won. During Wednesday's debate, McCain saw progress in the fact that U.S. and Iraqi negotiators are close to reaching a Status of Forces agreement governing the future presence of U.S. troops there. But the agreement they're reportedly close to concluding does, in fact, set a withdrawal date: At the insistence of the Iraqis, it requires that all U.S. forces leave Iraq by the end of 2011. The schedule may be longer than Obama's, but the Iraqis appear to have walked the Bush Administration back to accept the principle of setting a departure date. The plan reportedly also requires U.S. troops to withdraw from Iraq's cities by next summer, and removes their right to continue the practice of open-ended detention of Iraqi citizens.

The agreement is not yet complete, of course. There are still points of contention over immunity for U.S. forces, and over the Iraqis' demand for the right to inspect weapons and military equipment being brought into the country "to ensure they are suitable for the security mission", as Prime Minister Nouri al-Maliki put it in an interview with The Times — i.e. to ensure that Iraq's territory is not being used as a staging ground for any U.S. action against Iran. The pact will have to be approved by Iraq's cabinet and parliament, where it could still encounter opposition. Iraqi government officials have also suggested that a new agreement could be negotiated in 2011 if conditions required it.

Still, the deal leaves little doubt that the Iraq war is being drawn to a close —and not necessarily because the U.S. has achieved its benchmarks on the ground. A new U.S. National Intelligence Estimate on Iraq, intended to guide the next U.S. president on the situation there, is reportedly near completion. Reflecting the consensus among the 16 U.S. intelligence agencies, the new NIE will reportedly warn that, contrary to the rosy picture of progress stressed by McCain on the campaign trail, the situation in Iraq remains precarious. Although violence has been reduced to its lowest levels since early 2004, U.S. intelligence officials believe that the surge involving an extra 30,000 U.S. combat troops was only one contributing factor. Other key factors in tamping down violence may yet be the cause of further violence and instability; these include the truce declared by the radical Shi'ite cleric Moqtada al-Sadr, and the anti-Qaeda alliance the U.S. forged with the Sunni insurgents of the Awakening Movement. Deep distrust remains between the Awakening Movement, many of whose members were aligned with the Saddam regime, and the Shi'ite dominated Maliki government. The recent move by the U.S. to transfer control, and responsibility for paying the wages, of the Awakening militias to Maliki's central government is likely to exacerbate those tensions.

Meanwhile, intra-Shi'ite political competition between Sadr, Maliki and the Supreme Iraqi Islamic Council — all of them backed to some degree by Iran — continues, and may intensify in local elections scheduled for early next year. Relations between Baghdad and the Kurdish autonomous region in the north remain troubled, with tension rising over the future status of the oil-rich city of Kirkuk. Indeed, General David Petraeus, the man most quoted by McCain in making his case on Iraq, has warned that the gains achieved in Iraq over the past year are "fragile" and "reversible." While the security situation has improved dramatically, progress has been limited on the political reconciliation that the military surge was intended to foster.

That assessment could back up McCain's case against a hasty withdrawal from Iraq, although the fact that the Iraqi government has demanded it makes that a more complicated argument. Then again, if the intra-Iraqi power struggle creates a new security breakdown, various Iraqi political leaders may yet see considerable value in a continued U.S. presence, if directed against their foes.

But it may not be the situation on the ground in Iraq that determines the future of the U.S. military mission there. For one thing, the fragile calm in Iraq coincides with an increasingly perilous Taliban resurgence in Afghanistan, raising pressure on the U.S. to divert more combat resources from its over-stretched military into that theater — an expanded military commitment favored by both John McCain and Barack Obama. Sending more troops to Afghanistan will require drawing down in Iraq.

Then, there's the financial crisis and looming global recession that will inevitably impose a far greater austerity on Washington. America's military deployments in Iraq and Afghanistan are expected to cost close to $200 billion for 2008 alone, and maintaining that commitment will become considerably more burdensome as Washington is forced to funnel many hundreds of billions of dollars into simply averting financial collapse. The looming global economic recession will further slash tax revenues available to the U.S. government.

A year ago, the Congressional Budget Office estimated the cost of funding the Iraq and Afghanistan wars from 2001-2017 to be around $2 trillion, or more — factoring in some $705 billion in interest payments in recognition of the fact that the war is being funded with borrowed money. (Nations typically increase taxes in order to finance protracted military conflicts; the Bush Administration, having cut taxes, has had to rely on the credit of others to wage its wars.) The current credit crisis and economic slowdown will considerably raise the pressure on the U.S. national debt, which had already grown from around $6 trillion in 2001 to near $10 trillion today.

Financial pressure is not, in itself, sufficiently strong right now to hasten a pullout from Iraq. But the fact that it coincides with a gloomy intelligence assessment of that country's political prospects, growing demands for U.S. reinforcements in Afghanistan, and the elected Iraqi government's insistence on a withdrawal deadline, suggests that the end of the U.S. mission in Iraq may be coming into view — and that its terms may fall short of victory as defined by the war's authors.

Click here for photos of Iraq's revival