Afghanistan Drawdown: How Much Money Can the U.S. Save?

6/22/2011
By Sandra I. Erwin
President Obama will announce tonight the first phase of the Afghanistan troop drawdown. The decision comes 18 months after the president ordered a 30,000-troop surge. Currently there are more than 100,000 U.S. forces there.
In the face of awar-weary public and growing unrest over the mounting national debt, Obama will seek to make a case that the drawdown will help alleviate the war’s $10-billion-per-month financial burden.
So how much money is the nation going to save in the wake of this initial drawdown?
According to defense industry analyst James McAleese, the president’s announcement will not translate into immediate savings but rather will set the stage for reductions in war spending in 2013. He projects that the war budget for 2013, known as “overseas contingency operations” or OCO, will fall in the $77 billion to $83 billion range. By comparison, the current 2011 OCO funding is $157 billion, which covers the wars in Afghanistan and Iraq. The administration’s pending 2012 OCO request is $117 billion — $11 billion for Iraq and $107 billion for Afghanistan.
Each deployed troop costs on average $1.1 million per year.
The drawdown that will begin next month will be phased over the next two years: 5,000 to 10,000 troops by 2012, and another 20,000 by 2013.
The remaining 70,000 would remain at least until 2014.
The projected sudden contraction of OCO funding — from $157 billion to $117 billion in 2012 — surprised most analysts, according to McAleese. An even more significant reduction comes in 2013 OCO funds — to $77 billion if the final 20,000 “surge” troops are redeployed by September 2012 before the fiscal year ends, or $83 billion if those 20,000 troops stay until December 2012.
The impact on contractors is still uncertain. Byron Callan, defense industry analyst at Alpha Capital, said some stocks of companies that have been supplying equipment for operations in Afghanistan could be affected. “We would be reluctant to take a big directional bet within the defense sector based on troop plans without having a better understanding of what 2012-2015 intelligence/surveillance needs will be not just in Afghanistan but also in places like Yemen where conditions have worsened,” Callan wrote in a report to investors. “The pace of the drawdown may not be as abrupt as some feared after the death of Osama bin Laden and there will be political pressure to ensure that nothing is done too hastily.”
Defense hawks on Capitol Hill still may find a way to slow down troop withdrawals. A Heritage Foundation statement said the president “must signal that the U.S. remains committed to finishing the job of stabilizing Afghanistan and ensuring it never again becomes a base of operations for terrorists who intend harm on America. … The best way forward is for President Obama to largely stay the course with troop deployments in Afghanistan until recent progress is more sustainable. He must give commanders on the ground the flexibility to determine the pace and scope of withdrawals in order to achieve the overall objective of ending combat operations by the end of 2014.”

Topics: Defense Department, DOD Budget

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