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The United States has spent $550 million so far on military operations in Libya, but expects costs to stabilize at $40 million per month once U.S. forces are reduced and NATO takes over greater control, the Pentagon said on Tuesday.
The Defense Department said about 60 percent of the added costs were for missiles and bombs, with the rest for transporting troops to the region and combat operations.
NATO’s top operations commander told U.S. senators that the U.S. military operations in Libya, where Muammar Gaddafi is battling rebel forces seeking to oust the Libyan leader, had cost “hundreds of millions of dollars” so far.
“It’s fair to say that the operation will be in the hundreds of millions of dollars,” Admiral James Stavridis, who is NATO’s Supreme Allied Commander, Europe, and commander of U.S. European Command, said during testimony at the U.S. Senate.
Pentagon spokeswoman Navy Commander Kathleen Kesler said it was difficult to estimate future costs, but said the Pentagon expected to spend another $40 million in the coming three weeks as the United States reduces its forces in the region and NATO assumes more responsibility.
“Future costs are highly uncertain,” although the Pentagon expected ongoing operations in Libya to cost about $40 million per month, if U.S. forces stayed at the lower levels currently planned and the operation continued, she said.
The estimates do not include the cost of the F-15 fighter plane that went down over Libya due to mechanical failure, Kesler said.
Defense analyst Byron Callan, at Capital Alpha Partners, said the military operations in Libya were not expected to have a material effect on U.S. defense stocks, especially now that aircraft have been positioned at bases in Italy, reducing in-flight refueling needs.
Callan said he did not expect the military action in Libya to disrupt Pentagon spending for procurement or research and development, but he also did not see it generating enough replacement orders for equipment to have U.S. defense company earnings.
Defense analyst Loren Thompson at the Virginia-based Lexington Institute said the actual amount being spent was much higher, after factoring in the cost of maintaining forces that could be deployed on a moment’s notice.
“So what looks like an inexpensive military operation in Libya is actually costing taxpayers about $2 billion per day, because that’s what the Pentagon and other security agencies of the federal government spend to maintain a posture that allows the military to go anywhere and do anything on short notice,” he wrote in a blog on the Forbes.com website.
Copyright © 2011 Reuters