As the fifth anniversary of the start of the Iraq war comes and goes, the Bush administration touts the success of the “surge” in American force levels begun last year, while those opposed to the war point to a litany of failures to denounce the entire enterprise. Both the administration and presidential hopeful John McCain contend that success in Iraq will pay huge dividends for future generations. Which side is right, and how can we measure the true cost (and benefits) of our Iraq engagement?

An estimate of the Iraq War’s return on investment can measured by weighing estimates of its total cost against its current and projected future benefits. On the cost front, the most conservative measure of the cost of the war is $600 Billion, roughly the amount directly spent on the war over its first five years. The benefits of the war can be measured in terms of its effects on US national security, US political relations, US energy security, and potential social and economic benefits for Iraq.

In national security and diplomatic terms the Iraq War is at best a wash, with no tangible return. While America deposed an evil dictator, we learned that the dictator had no weapons, and we damaged our relationships with many allies in the process. Moreover, many commentators argue that the Iraq war has increased the numbers and fury of America’s enemies, and been a great tool for radicalization. While it’s hard to estimate, the net benefit is probably zero, since present losses might be offset by the small chance of creating a safe and free Iraq a generation from now (a huge gain).

Vice President Cheney and others touted the energy security benefits of conquering Iraq, but after five years, Iraq has just begun to pump as much oil as it did prior to the war. Interestingly, economic growth in Iraq has actually been very robust post-war, driven by high oil prices. The CIA estimates total Iraqi GDP of $100 Billion, and Iraqi GDP growth at 5% for 2007. But Iraq’s GDP is 1/6th of our spending on the war, and GDP growth will have to continue at this rate for another five years before Iraq’s GDP even equals America’s annual spending on the Iraq war!

Returning to the concept of ROI, for a moment: we’ve spent $600B on a war that has produced little tangible benefit, except perhaps in terms of Iraq’s economic growth. But viewed from an economic standpoint, we are still spending more than Iraq’s GDP to control the country, so we’re failing even on that count. It appears that at best, our $600 Billion was spent on a dream that might take shape a generation from now. Unfortunately, most businessmen would call that an ROI of -100%.