Raytheon Company (RTN), General Dynamics Corporation (GD), Huntington Ingalls Industries Inc (HII): How Much Will a War With Syria Cost?

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Photo: U.S. Navy (public domain), via Wikimedia Commons

As the United States gets closer to a missile strike on Syria, there’s one pertinent question on many Americans’ minds: How much will this cost? Considering the wars with Iraq and Afghanistan cost more than $4 trillion according to a study by Harvard’s Kennedy school, and they negatively affected the economy, this is a very good question.

Millions in missiles

Before the missile strike on Syria became an issue, the Navy’s USS Nimitz, and its escorts, were scheduled to return from deployment. Now, however, they’ve been ordered to remain within striking distance of Syria, which alone costs an estimated $25 million per week. Further, each Tomahawk cruise missile likely to be fired on Syria costs an estimated $1.5 million each to replace. That’s great news for Raytheon Company (NYSE:RTN), which builds the missile, but not for the Navy’s budget. Plus, if the U.S. fires missiles, that’ll add an additional $30 million per week for as long as the Navy’s Nimitz and Truman are engaged in combat.

Those costs may not seem like much when you factor in overall defense spending, but thanks to the nature of sequestration, the Navy, as well as the rest of the military, is hurting. For example, Chief of Naval Operations Admiral Jonathan Greenert, stated that for FY2014, the Navy needs more than a billion dollars more for “operations and maintenance” and a billion more for “procurement accounts” — like the desperately needed DDG-51 destroyers the Navy is scheduled to acquire from General Dynamics Corporation (NYSE:GD), and Huntington Ingalls Industries Inc (NYSE:HII).

The good news is that if the proposed missile strike lasts only for September, and there’s no additional engagement requirement, the Navy believes it can handle this costs. But if the strike goes into October, or if there are additional requirements, the Navy can’t afford it.

But is a U.S. missile strike on Syria likely to be quick and clean? Well, Russian President Vladimir Putin told the Associated Press that Russia will aid Syria if the U.S. attacks (although he didn’t give specifics) and China warned that a Syrian strike would hurt the world economy and drive up oil prices. More pointedly, a strike on Syria could cause a ripple affect across the Middle East, as Syria has said a U.S. missile strike will be returned by attacks against Israel. 

What to watch

As I’ve written before, before 9/11, the Congressional Budget Office stated: “Under current policies, total surpluses would accumulate to an estimated $2 trillion over the next five years and $5.6 trillion over the coming decade. Such large surpluses would be sufficient by 2006 to pay off all debt held by the public that will be available for redemption.”

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