Soaring oil prices will leave the Iraqi government with a cumulative budget surplus of as much as $79 billion by year’s end, according to an American federal oversight agency. But Iraq has spent only a minute fraction of that on reconstruction costs that are now largely borne by the United States.
The unspent windfall, which covers surpluses from oil sales from 2005 through 2008, appears likely to reinforce growing debate about the approximately $48 billion in U.S. taxpayer money devoted to rebuilding Iraq since the U.S.-led invasion.
In one comparison, the U.S. has spent $23.2 billion on security, oil, electricity and water since the invasion, the report said. But from 2005 through April 2008, Iraq has spent $3.9 billion on similar services.
The report from the Government Accountability Office estimates Iraqi oil revenue from 2005 through the end of this year will amount to at least $156 billion. And in an odd financial twist, a large amount of the surplus money is sitting in an American bank in New York — nearly $10 billion at the end of 2007, with more expected this year.
The report was requested by Sens. Carl Levin (D-Mich.) and John Warner (R-Va.), and on Tuesday they expressed strong dissatisfaction over the contrast between American spending on reconstruction and the weak record of spending by Iraq itself.
“The Iraqi government now has tens of billions of dollars at its disposal to fund large-scale reconstruction projects,” said a joint statement from the two senior senators. “It is inexcusable for U.S. taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves.”
From the war’s start in 2003, American officials assured taxpayers and the world that Iraq would use oil money to pay for reconstruction, but that has not happened.
Sinan al-Shabibi, governor of the Central Bank of Iraq, which the report said was holding $5.7 billion of the surplus at the end of 2007, said that while he could not speak for the government, problems with spending money often had to do with continuing security problems and a shortage of expertise in Iraqi ministries.
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“Yes there are problems, but that does not mean those problems are going to continue,” Shabibi said. “In all developing countries you put objectives and sometimes you don’t reach them.”
“But,” he said, referring to the government, “they are determined to spend this money on development. They see it as a priority.”