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Rebuilding Iraq: What will it cost?

By CNN's Liz George


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Iraq's biggest asset -- its oil -- is tied up in a tangle of legal, diplomatic and business problems.
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LONDON, England (CNN) -- Analysts have said it could cost anything from $84 billion to nearly $500 billion to rebuild Iraq, a country battered by two wars in two decades and 12 years of United Nations sanctions.

One economist from America's Yale University predicted rebuilding Iraq could cost up to $1.6 trillion over 10 years.

But the final cost of rebuilding a battered Iraq will depend on how quickly the country manages to get back on its feet -- it does after all have the second largest oil reserves in the world, and a fertile agricultural economy.

If you want to make comparisons, so far the cost of rebuilding Afghanistan has topped $900 million.

After World War II -- the Marshall Plan -- a model for economic re-build -- cost more than $13 billion over four years, and that was back in 1948.

The bill for reconstruction and redevelopment will include:

• The cost of aid to friends and allies in the region -- Turkey, Jordan, and Israel -- expect to cost $6 billion to $10 billion.

• Humanitarian assistance -- food and medical supplies -- expected to cost $1 billion to $10 billion.

• Governance assistance -- paying Iraqi civil service and police salaries -- $5 billion to $10 billion.

• Reconstruction and recovery is expected to cost between $10 to $105 billion dollars, depending upon the amount of destruction and the detail of rebuilding.

• Debt relief is expected to cost between $62 and $361 billion dollars. (More on debt)

Jan Randolph, Head of Economics and Forecasting at the World Markets Research Center, said: "We are talking about an economy that could be reflated relatively quickly with the right circumstances of course.

"That does require new investment, mainly in the oil sector, but it will also require a certain amount of humanitarian assistance, repair of the social infrastructure, that is the schools & hospitals and such like."


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