GAO Reports Billion Dollar Iraq Budget Surplus

GAO Reports Billion Dollar Iraq Budget Surplus
WHERE IS THE MONEY GOING, AND HOW MUCH IS ENOUGH?

Ask any average American citizen if they know how much money the US has spent in Iraq since the George W. invasion and he will answer “Too much.”

The specific total amount has fluctuated wildly since the beginning of the Iraq War, all figures way above what was initially anticipated for this effort. What I find curious, is why are we sending all of OUR MONEY to Iraq for rebuilding efforts when it seems they have a major BUDGET SURPLUS?

This same question was posed to The Honorable Condoleezza Rice on August 8th by Henry A. Waxman, Chairman for the Committee on Oversight and Government Reform. In a letter presented to the Secretary of State, Waxman clearly outlined the amount of this budget surplus with sufficient supporting data, and questioned what the Bush Administration planned to do about the situation.

Based on the Government Accountability Office report, by the end of 2008 Iraq may amass a budget surplus between $67 and $79 BILLION as a result of windfall oil sale revenues.

This “windfall” roughly equals the same amount U.S. consumers have paid to purchase Iraqi oil since the war began. Data provided by the Energy Information Administration indicates the United States is the single largest purchaser of Iraqi oil. By the end of 2008, the EIA projects U.S. consumers will have spent between $70 and $74 BILLION to purchase Iraq oil.

This means U.S. consumers have been paying record gas prices at the pump to build up
Iraq's massive budget surplus. This money is in ADDITION to the more than $48 billion U.S. taxpayers have paid to fund the Iraqi reconstruction efforts.

So far this year, U.S. taxpayers have paid approximately $122 BILLION dollars to Iraq.

Of course, this does not include any other additional “executive signing statements” issued by Bush to authorize ADDITIONAL FUNDING for Iraq government contracts, the largest and most recent of which was awarded to KBR for $150 million. As reported by James Risen in the August 11th edition of the Washington Post, the United States this year will have spent $100 billion on contractors in Iraq since the invasion in 2003, a milestone that reflects the Bush administration’s unprecedented level of dependence on private firms for help in the war, according to a government report to be released Tuesday.
In his article, Risen indicated that the GAO’s report found that from 2003 to 2007, the government awarded contracts in Iraq worth about $85 billion, and that the administration was now awarding contracts at a rate of $15 billion to $20 billion a year. At that pace, contracting costs will surge past the $100 billion mark before the end of the year. Through 2007, spending on outside contractors accounted for 20 percent of the total costs of the war, the budget office found, according to the people with knowledge of the report.
Several outside experts on contracting said the report’s numbers seemed to provide the first official price tag on contracting in Iraq and raised troubling questions about the degree to which the war had been privatized.

These billions could have gone towards several immediate needs for the United States – like supporting our failing infrastructure (roads and bridges), providing funding for our education systems, funds to rebuild New Orleans from Katrina, and the list goes on….

What is even more sickening is the additional mass of wealth accumulating in Iraq, either from oil and customs revenue or from Japan lending a helping hand.

The Associated Press reported on August 10th that Iraq and China are set to sign agreements that will generate $1.2 Billion US for Iraq. According to their report, an initial agreement with China is expected to be signed at the end of August to develop the billion-barrel Ahdab oil field south of Baghdad, the ministry said in a statement.

“Iraq and China are keen to show their cooperation by finalizing an agreement on developing the Ahdab oil field,” it said.

The announcement came after a meeting between Iraqi Oil Minister Hussain al-Shahristani and China’s ambassador to Baghdad. No further details were released, but if the deal is signed it will be the first Saddam Hussein-era oil deal to be honored by the new Iraqi regime.

And according to the Iraq Customs Administration, customs revenue of more than 122 billion Iraqi dinars, or $102 million US, has been received during the past seven months, an Administration’s official media source said.

“The Administration’s revenues during the first half of this year totaled more than 101 billion Iraqi dinars, while proceeds from other customs outlets during July 2008 hit 21 billion Iraqi dinars,” the source, who asked not to have his name revealed, told Aswat al-Iraq – Voices of Iraq – (VOI). The Customs Administration, a government-owned institution, is affiliated to the finance ministry.
“The Administration’s revenues would maximize the state resources and enhance the federal government’s budget,” the source said.

Loosely translated, I believe that refers to the Iraq Government budget that is supposed to be deposited towards the reconstruction Development Fund for Iraq.

Based on the data recorded in this article, that brings the Iraq coffer total to approximately $128.3 billion dollars.

In terms of reconstruction efforts, it was reported by the Voices of Iraq July 30th that the Basra Construction Support Committee said they have signed 124 contracts with companies, noting that 30 other contracts are on the way. Basra’s construction committee has signed 124 contracts with local companies that have been chosen to implement projects in 11 sectors: health, municipalities, education, universities, communications, water, electricity, sewage, water resources, sports, and youth,” the committee’s secretary, Tareq al-Mousawi, told Aswat al-Iraq - Voices of Iraq - (VOI).
Headed by the minister of state for parliamentary affairs, Safaa al-Din al-Safi, the committee was set up in synchronization with the commencement of Operation Saulat al-Fursan (Knights’ Assault) in late March and was given $100 million in donation from Prime Minister Nouri al-Maliki.

To add further insult to U.S. taxpayers, the Associated Press reported on July 30th that Iraq has more money than they can handle.

"They don’t need more money," said Stuart Bowen, special inspector general for Iraq reconstruction. "But they are having a difficult time, apparently, spending the money that they have."

Bowen is releasing his quarterly report to Congress on efforts to rebuild Iraq’s shattered nation — a program now expected to spend $117.79 billion.
Aided by money from a postwar record in oil production, Baghdad itself is now set to spend an amount almost equal to the U.S. share, the report says. That is, as of the end of the quarter on June 30 the U.S. has appropriated $50.46 billion, the Iraqis are contributing $50.33 billion and international donors have pledged $17 billion.
Bowen said that on a number of fronts, Iraq made progress in the last quarter toward standing on its own — a key to bringing home U.S. troops.

"They obviously have made enormous economic progress by virtue of improving their oil sector and they’ve made significant security progress," Bowen said in an interview.
"However on the governance and political front, there are still hurdles," he said, naming the need to pass an oil law and hold provincial elections. And they are still having trouble executing their budgets at the national level and particularly in the provinces.

"For progress to really occur across Iraq, they're going to have to remedy that," Bowen said.

There was no figure available for how much of the allocated Iraqi money had been spent. Of the $17 billion pledged internationally, only $2.5 billion had been disbursed. And at of the end of the quarter, the U.S. had spent $33.28 billion of the more than $50 billion Congress appropriated, Bowen said.

As of June 30, the United States had spent $1.86 billion on rebuilding the oil industry, and nearly $4.62 billion in the power generation sector.

According to July 26th reports, Japan intends to provide simplified loans to Iraq aimed to contribute into reconstruction of the infrastructure as well as the economic development.
The ambassador in charged of Japanese aid in the reconstruction of Iraq (Wakawa Katarw) announced in a statement in the Seventh Conference of Donors, held recently in Baghdad said that Japan will provide simplified loans to contribute into reconstruction of the infrastructure and development of Iraqi Economy.

Katarw explained that grants provided by Japan for Iraq, amounting to one billion and 700 million dollars, pointing out that most of the amounts distributed among the many reconstruction projects such as power station in Samawah, and the reconstruction of 13 general hospitals in different parts of Iraq, along with ambulances, Noting that the Japanese government is going to follow the distribution of the remaining amounts of the loans with the Iraqi counterpart for the inclusion of new projects, particularly in central and western areas.

On July 23th, the Iraqi Ministry of Planning and Development Cooperation announced a 40.6 percent increase in Iraq’s exports in 2007 in comparison to the previous year.
“Iraq’s total exports in 2007 totaled $41,268 million, compared to $29,361 in 2006,” according to a ministerial statement received by Aswat al-Iraq - Voices of Iraq - (VOI), quoting an official source from the ministry’s Central Agency for Statistics and Information Technology.

It seems as if Iraq is the primary benefactor here in the U.S. war on terrorism with this sovereign state, and Bush wants to keep on giving them money. What is wrong with this picture?

Chairman Waxman set a tight timetable for a response from Ms. Rice – September 5th, 2008. We will all be waiting with bated breath to hear her response.

"They don't need more money," said Stuart Bowen, special inspector general for Iraq reconstruction. "But they are having a difficult time, apparently, spending the money that they have."

It is just another kick in the face to U.S. citizens to consider Bowen’s statement. Perhaps we should send the Bush Administration to Iraq – they can show Iraq how to break a budget surplus. They’ve been doing for the past eight years.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future