The Kosovo war is proving to be a much bigger and more expensive affair than Nato military planners had anticipated.

Viginia Easterman reports on the growing cost of the conflict

The air campaign is now costing the United States around $1bn a month for munitions, fuel and other operating costs. As the number of aircraft committed to the operation increases, this rate of spending is likely to rise further.

Other Nato members are providing far fewer aircraft than the US. Nevertheless, Britain, France and Germany are probably now spending around $100m a month each on the operation. The entire Nato campaign may therefore be costing around $1.5bn a month.

On the fourth day of bombing, Nato lost of a stealth fighter worth £35m

These costs will increase sharply if Nato begins to mobilise an invasion force. Deployment of 150,000 soldiers could cost Nato a further $1.5-2bn a month, of which perhaps half could be financed by its European members.

On the illustrative assumption of a four month war ending in October, the total cost of the war to Nato members could come to around $20bn.

Whatever happens, Nato is now faced with having to maintain a substantial military presence in the Balkans - perhaps as many as 50,000 troops - for many years to come.

Such a force will probably continue to face a hostile Serbia, and new conflicts could emerge at any time. Its cost is unlikely to be much less than $5bn a year, most of which will probably have to be provided by European countries.

Reconstruction

Europeans will also have to pay most of the costs of economic assistance to the region.

Emergency aid for refugees will cost around $2-3bn this year, and a further $2bn in aid is likely to be provided to help neighbouring states cope with the effects of the conflict on their own already struggling economies.

Once the conflict is over, the international community will also be faced with the task of reconstruction in Kosovo itself, where hundreds of villages and towns have been destroyed. Recent estimates suggest a cost of at least $5bn, comparable to the commitment made to Bosnian reconstruction after the 1992-95 war.

As Nato's campaign against economic targets intensifies, the eventual cost of rebuilding the factories, bridges and cities of Serbia is rising steeply.

The Yugoslav government estimates a total cost of $100bn, though $20-30bn seems a more realistic figure for now. Western powers will refuse to pay for reconstruction, however, until a new democratic government in Belgrade is installed.

Beyond these immediate demands, the Kosovo crisis has also persuaded European leaders - including British Prime Minister Tony Blair - to call for a 'new Marshall Plan' for the region.

At the Berlin summit in March 1999, the European Union agreed to commit a total of E60bn ($70bn) over seven years for spending in Central and East European countries (such as Poland, Hungary and Estonia) earmarked for early membership.

Partly as a result of the conflicts of the last decade, however, none of the Balkan states will be ready to join in the next wave of EU membership. If an additional programme of 'pre-accession assistance' to Balkan states (including Bulgaria and Romania) can be agreed, however, this could help to prepare the way for long term EU membership. Such a programme could cost around E5bn ($6bn) a year.

British Army on the Danube?

Emergency aid will cost around $2 - 3bn this year

The UK has committed itself to be one of Europe's largest contributors to Balkan reconstruction. It is due to provide more troops than any other Nato member to the planned post-settlement force in Kosovo.

It is also likely to make a major contribution to the European and World Bank aid efforts in the region.

Together these commitments could cost the UK as much as £1bn a year for the next decade, half of which would be the cost of maintaining a permanent military presence in the region.