Iraq's Financial Free Ride May End

WASHINGTON — Iraq's financial free ride may be over. After five years, Republicans and Democrats seem to have found common ground on at least one aspect of the war. From the fiercest foes of the war to the most steadfast Bush supporters, they are looking at Iraq's surging oil income and saying Baghdad should start picking up more of the tab, particularly for rebuilding hospitals, roads, power lines and the rest of the shattered country.

"I think the American people are growing weary not only of the war, but they are looking at why Baghdad can't pay more of these costs. And the answer is they can," said Sen. Ben Nelson of Nebraska.

Nelson, a Democrat, is drafting legislation with Republican Sen. Susan Collins of Maine and Democrat Evan Bayh of Indiana that would restrict future reconstruction dollars to loans instead of grants.

Their bill also would require that Baghdad pay for the fuel used by American troops and take over U.S. payments to predominantly Sunni fighters in the Awakening movement. Plans are to propose the legislation as part of a war bill to cover spending through September.

Likewise, Sen. Carl Levin, D-Mich., chairman of the Armed Services Committee, said he wants to add a provision to a defense policy bill that would force the Iraqi government to spend its own surplus in oil revenues to rebuild the country before U.S. dollars are spent.

These senators, well-known war skeptics, could find allies in lawmakers who support Bush's current Iraq policies. In hearings last week, Joseph Lieberman, I-Conn., asked Defense Secretary Robert Gates whether Baghdad should start paying some U.S. combat costs, and Lindsey Graham, R-S.C., raised the possibility that an anticipated Iraqi budget surplus this year could be used to help Afghanistan, whose $700 million in annual revenue represents a small fraction of Iraq's $46.8 billion budget.

Bush has suggested that Congress is preaching to the choir. Last week, he noted that Baghdad's latest budget would outspend the U.S. by more than 10 to one on Iraq reconstruction, with American funding for large-scale projects "approaching zero."

"Ultimately, we expect Iraq to shoulder the full burden of these costs," he said.

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But lawmakers are dubious. Considering that past predictions on Iraq have fallen short, the legislation would ensure Iraq assumes more of the financial burden, they say.

On the surface, it looks as though the U.S. has about split the costs of rebuilding efforts with the Iraqis: Congress has appropriated about $47.5 billion since 2003 while the Iraqis have budgeted $50.6 billion. International contributions have totaled $15.8 billion.

And, as Bush pointed out, Iraq's latest budget is on track to outspend the U.S. when it comes to rebuilding. Baghdad has devoted $13.4 billion in 2008 for capital expenses, more than a quarter of its $48.6 billion budget.

However, there is a key difference: Whereas the U.S. has spent most of the money it has approved, Iraq hasn't, according to the watchdog agency that audits reconstruction efforts. In 2006 and 2007, for example, Iraq spent only $2.9 billion of its designated $16.3 billion capital budget, which is used to invest in reconstruction projects.

Bush administration and military officials say the lack of spending isn't sinister.

"Part of it's a lack of expertise. Part of it is a lack of trained people. And part of it, in the past, has probably been politics," Gates told Congress last week. "We think they're making headway on all of those."

Levin said he doesn't buy it, including Bush's declaration that the U.S. is no longer in the business of major reconstruction. Congress received notice on April 3 that the Pentagon planned to transfer $590 million in its war budget to cover construction and infrastructure improvements for Iraq security forces.

"I just think it's totally unacceptable that we say they don't know how to cut a check," Levin said.

A primary cause for the unhappiness in Congress is the high price of oil as the U.S. heads into election season. While Americans are complaining of gasoline prices, officials predict Iraq is headed toward a major windfall because of the soaring price of oil and record-setting production levels.

For years after the 2003 invasion, a lack of infrastructure kept Iraq's oil production and exports down. But with rebuilding efforts bearing fruit, including U.S.-aided actions to prevent the illegal tapping of pipelines, production had recovered to an average of about 2.4 million barrels per day by late last year compared with 2 million a day earlier in the year and 1.3 million in early 2003.

Adding to Baghdad's projected surplus is Iraq's conservative estimate of the oil's worth. The country's 2008 budget of $46.8 billion was calculated based on $57 per barrel of oil, roughly half of today's market rate, according to a report by the special inspector general for Iraq reconstruction.

Stuart Bowen, who heads the IG office, predicted in a March hearing that Iraq's oil revenue could climb to as high as $60 billion this year, from early estimates of $35 billion.

The U.S. military isn't reaping those benefits. American troops in Iraq are buying fuel on the open market at $3.23 a gallon and spending some $153 million a month, according to a recent report by The Associated Press.

Collins says the Iraqis should cover those costs.

"It's really difficult for Americans who are struggling with the high cost of the energy to see us paying for fuel costs in a country that has the second-largest oil reserves" and a burgeoning budget surplus, she said.

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On the Net:

Special Inspector General report. http://www.sigir.mil/reports/quarterlyreports/Jan08/pdf/Section2_-_January_2

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Comments

[peterg76]

Morally, and legally, the US is on the hook for *all* the damage done during an illegal occupation. Any substitution of Iraq's own money is a war crime. But hey, maybe Iran could sell its oil in a real currency like euros and help out. That's sure to make everyone happy.

[timothe]

What happened to all of those people who said we went to war for the oil? Where did they go?

I, for one, agree with this legislation. We liberated their people and stuck around until they could rebuild their nation. Now, they can start to pay their own way.

[JacobSinger]

We did go to war for oil, you moron, but to secure it [as of yet we haven't stolen it, that I know of], not to suck it up out of the ground and run home with it.

And it is no surprise that you and all of your ilk support this legislation, as you are as cluelessly flaky and irresponsible as you are immoral and violent.

A decent nation would not invade another sovereign nation without provocation, so we get that question out the way from the get go; but any nation with at least a basic sense of what is right and moral would not destroy another country--unprovoked--and then expect them to pay for what we destroyed.

[maddogbitesback]

Why should Iraq pay for the destruction done by an invasion of their country which has destroyed homes, hospitals, places of worship and displaced millions to say nothing of the hundreds of thousands who are dead simply because some Marine decided to shoot them or a bomb fell near them. Let Haliburton or Exxon pay.

[jeg]

While I agree with the "we broke it, we fix it", the truth is that many of the more militant Iraqis view us as occupiers-- which is fair, since we invaded their country, overthrew their ruler, and haven't left yet. That's pretty much a classic definition of "occupation".

However, in order to allow Iraq to make the progress that would allow us to exit without the country instantly turning into Iran part deux, we need the Iraqis to be doing the building. They'll be happy to blow up anything the occupying army builds, but if it's built by the Iraqis themselves, they might actually care what happens to their infrastructure.

Granting I'm oversimplifying things terribly, but we need to get the Iraqi people invested in their own rebuilding, rather than invested in driving out the occupying forces (us).

Also in the "crazy enough to work" category, I think we need to admit we screwed up, and negotiate with Iran, offering them a carrot and stick approach to convince them that they'd rather be friends with us than Sadr. I think that would be more beneficial to us and the middle east in general, than threatening Iran on a daily basis.

Fortunately, I'm not involved in foreign policy. :)

[JacobSinger]

Even though we're in no financial position to throw money around [unless it's something BushCo mandates, and then we've got plenty], I think we should be on the hook for reparations to whatever government arrises after we've left, and to finance the rebuild of the country's infrastructure.