The Iraq war, begun in 2003, has been justified through several different reasons. One of the primary causes was the fear of Saddam Hussein housing Weapons of Mass Destruction in the country, as the Iraq leader had repeatedly failed to disclose their number and location. In 2002 it was revealed that Tony Blair had agreed to support US President George W. Bush for an invasion of Iraq, with the aim of removing Hussein from power. Despite a UN investigation and refusal to support a US led attack on Iraq, the United States issued an ultimatum on March 17, 2003 to Hussein. When this was not met, a formal declaration of war against Iraq was made on March 20, with the support of Great Britain. Bush has also argued that Hussein refused to conform to the policies on human rights, and terrorist activity following the first Gulf War in the early 1990s. A large amount of criticism has been made of the US for declaring war despite a lack of support from the UN and other countries. The subsequent failure to locate WMDs and the high death tolls and civilian casualties in the region have led others to suggest that the US invaded Iraq as part of a longer plan to consolidate oil power in the Middle East.

Geopolitical Risk and Market Psychology

Experts say some of the gravest economic effects of the wars in Iraq and Afghanistan are also among the hardest to define quantitatively. Markets build assessments of financial and geopolitical risk into their pricing of just about everything. To the extent that political unrest in Iraq threatens the stability of Middle Eastern and global markets more generally, it also has a broad, though somewhat ambiguous, dampening effect on asset prices. Yale economist William D. Nordhaus outlined the plethora of ways different fallout scenarios from the Iraq war could weigh on the global economy in a December 2002 article in the New York Review of Books. Though Nordhaus quotes cost estimates that have now been surpassed, his general outline of