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Congress wants Iraq to repay U.S. expenses

By BEN LANDO, UPI Energy Editor   |   April 24, 2008 at 11:10 PM
WASHINGTON, April 24 (UPI) -- Iraqis would be forced to pay for U.S. efforts in their country directly or via loans from the United States if any of at least five similar pieces of legislation introduced on Capitol Hill this month is approved.

This comes as Americans deal with -- and politicians respond to -- an unpopular and expensive war, a sinking economy and record gas prices.

"Whether or not you support the war strategy," said Rep. Ron Klein, D-Fla., "the Iraqi government needs to pay for its fair share after five years and $600 billion in American taxpayer expenses."

Klein's resolution would require U.S. funds for Iraq reconstruction and security forces training, as well as the cost of fuel for U.S. operations, to be repaid by Iraq as a loan.

"What this resolution does is put the burden on the Iraqi people to say, 'no more free lunches from the American public,'" Klein said. "It's not some benefactor from the outside who just keeps writing more and more checks every month."

All of the legislation has been referred to either the Senate Committee on Foreign Relations or the House Committee on Foreign Affairs. Two are similar to Klein's. Another would also restrict much of the State Department's Iraq assistance to "dollar for dollar" matches from Iraq.

And another would prevent U.S. military commitments under the longer-term security agreement Washington and Baghdad are currently negotiating unless Iraq agrees to reimburse all costs related to troop presence.

The U.S. auditor of Iraq reconstruction efforts said in a January report more Iraqi funds have been allocated for reconstruction than U.S. funds through 2007. While the United States was initially tasked with spending the Iraqi money -- a reconstruction effort criticized for being ill-planned and seeing few results -- responsibility shifted to the new Iraqi government, which has had a harder time, regularly spending only a small percentage of its multibillion-dollar capital budget.

Yahia Said, Middle East and North Africa director for the Revenue Watch Institute, an international watchdog on the flow of oil revenues, said he agrees with the legislators' premise to end U.S.-funded Iraq reconstruction projects.

"These guys are just kicking in an open door," said Said, who is regularly in Iraq. He supports the new Bush administration strategy that is dedicating its funding to building up the administrative and institutional capacity of the Iraqi government to spend reconstruction funds.

Iraq allocated $13.1 billion in its 2008 budget for capital projects, a 22-percent increase from 2007, according to the State Department. The U.S. capital budget for Iraq is $1.6 billion this year, a 38-percent decrease.

During a Washington visit earlier this month, Said met with bipartisan staff of the Senate Armed Services Committee about the flow of money to and from Iraq, as well as testified before the Senate Foreign Relations Committee.

The tactic of Congress to attack Iraq's spending is "not necessarily the right way to deal with the situation," he said. "It's a mess that the U.S. has created to a large extent."

Iraqi funds are returned to either the Central Bank of Iraq or, per U.N. mandate, to the Federal Reserve Bank of New York; unspent but accounted for.

A 2005 report by the U.S. Office of the Special Inspector General for Iraq Reconstruction found $8.8 billion in Iraqi funds the United States was to spend could not be accounted for. Many U.S.-funded projects in the power sector, for example, didn't take into consideration Iraq's frail power grid or inability to deliver needed fuel.

"The reconstruction effort in Iraq to date has produced mixed results," said Stuart Bowen, who heads the SIGIR office. "The success of the continuing relief and reconstruction effort in Iraq depends greatly on the Government of Iraq's capacity to employ its own resources in a coherent plan for continuing national recovery. Perhaps the most critical component to the success of this endeavor is Iraq's ability to execute its capital budgets."

The sponsors of the legislation UPI spoke to all said it would give the Iraqi government a needed push.

"Shouldering the cost of their own infrastructure reconstruction, security matters and other costs will amount to a financial transfer of responsibility and ultimately ownership of their own future," said Sen. Ben Nelson, D-Neb. His 2003 legislation requiring nearly $23 billion in reconstruction funds to be repaid was blocked by the Bush administration and Republican-controlled Congress.

"This is just our notice to these guys we're not going to carry the whole load anymore," said Rep. Dana Rohrabacher, R-Calif. He's proposed in the past requiring Iraq to repay all U.S. expenses since the invasion. "Morally I think they should, but that's a whole other debate."

Iraqi citizens, meanwhile, still live in daily danger and lack basic services and supplies, which their government has been unable to reverse. Iraqis still complain of little and irregular supplies of electricity and fuel; the State Department's Iraq Weekly Status Report regularly shows Iraqis getting only about half of what they need.

Despite conditions on the ground, Iraq has been able to slowly increase oil production and exports. Combined with rising oil prices, this has allowed Iraq to bring in $18.2 billion in oil sales this year as of April 13, according to the U.S. State Department -- almost half of total oil revenue for 2007 and more than half of the total for 2006.

Sen. Carl Levin, D-Mich., told reporters this week he's keen on legislation restricting funds. That would likely come during the markup of the 2009 National Defense Authorization Act beginning next week in the Armed Services Committee, which Levin chairs.

"It's one of the options under serious consideration by both the Senate and House," said a congressional aide familiar with discussions on President Bush's supplemental war funding request. "A signal must be sent to Iraqis that they should be held accountable."


LEGISLATION:

Future reconstruction and security forces training paid by U.S. government in form of a loan

-- Senate Resolution 506, Sponsor: Ben Nelson, D-Neb.

-- House Resolution 1108, Sponsor: Christopher Shays, R-Conn.

Future reconstruction and security forces training and U.S. fuel paid by U.S. government in form of a loan

-- House Resolution 1111, Sponsor: Ron Klein, D-Fla.

No U.S.-Iraq Status Of Forces Agreement or other bilateral deal unless Iraq agrees to pay for all costs of U.S. Armed Forces presence in Iraq.

-- House Resolution 1123, Sponsor: Dana Rohrabacher, R-Calif.

All State Department funds for Iraq programs must be matched dollar-for-dollar by Iraq, except programs for democracy and human rights; humanitarian demining; or refugees and internally displaced persons.

-- Senate Bill 2880, Sponsor: Sen. Judd Gregg, R-N.H.


Iraq reconstruction through Dec. 31, 2007:

Total: $113.95 billion

Contributions:

Iraq: $50.63 billion

U.S.: $47.49 billion

International support: $15.83

(source: Office of U.S. Special Inspector General for Iraq Reconstruction, January 2008 quarterly report)


"U.S. and Iraq reports show widely disparate rates for Iraqi government spending on capital projects. Accordingly, GAO cannot determine the extent to which the Iraqi government is spending its 2007 capital projects budget. In its September 2007 Iraqi benchmark assessment, the administration reported that Iraq's central government ministries had spent 24 percent of their 2007 capital projects budget, as of July 15, 2007. However, this report is not consistent with Iraq's official expenditure reports, which show that the central ministries had spent only 4.4 percent of their investment budget as of August 2007. The discrepancies between the official and unofficial data highlight uncertainties about the sources and use of Iraq's expenditure data. The government of Iraq faces many challenges that limit its ability to spend its capital project budget. Violence and sectarian strife delay capital budget execution by increasing the time and cost needed to implement contracts. Recent refugee flows and the de-Ba'athification process have contributed to the exodus of skilled labor from Iraq. In addition, U.S. and foreign officials also noted that weaknesses in Iraqi procurement, budgeting, and accounting procedures impede completion of capital projects."

(January 2008 U.S. Government Accountability Office report)

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(e-mail: blando@upi.com)

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