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Iraq Posting Massive Surplus Thanks To U.S. Taxpayers

First Posted: 09/13/10 03:28 PM ET Updated: 05/25/11 06:40 PM ET

Iraq

Even as the United States has been borrowing trillions to pursue its wars in the Middle East, the government of Iraq has posted a tidy surplus, according to a new Government Accountability Office report.

The report makes a direct link between U.S. government spending -- including $642 billion on U.S. military operations there and $24 billion for training and equipping the Iraqi security forces -- and Iraq's cumulative surplus of $52.1 billion through the end of 2009.

For comparison purposes, Iraq's annual gross domestic product is $65.8 billion. Meanwhile, the U.S. national debt has soared from $6.4 trillion to $13.4 trillion since former president George W. Bush invaded Iraq and decided to borrow the money for wars and slash taxes.

The GAO report concludes with an understated recommendation that "Congress may wish to consider Iraq's available financial resources" when reviewing future funding requests to support the Iraqi security forces.

The report notes that the Obama administration is currently requesting $2 billion in additional U.S. funding in its fiscal year 2011 budget request to support the training and equipping of Iraq's military and police.

Discrepancies in Iraqi accounting led the GAO to report wide ranges in some areas. For instance, the report says that through the end of 2009 Iraq had between $15.3 billion and $32.2 billion in financial deposits held at the Central Bank of Iraq, the Development Fund for Iraq in New York, and state-owned banks in Iraq. That's quite a range.

Measuring the exact size of the Iraqi surplus is made even more difficult due to the "misappropriation of government funds and inaccurate reporting of expenditures," the scale of which is unknown but potentially staggering.

The report states that according to Iraqi government data, the country's security ministries increased their spending from 2005 through 2009 and set aside about $5.5 billion to buy U.S. weapons. "However, over this 5-year period, these ministries did not use between $2.5 billion and $5.2 billion of their budgeted funds that could have been used to address security needs," the report states.

Days after the invasion began, Bush-era deputy defense secretary Paul Wolfowitz famously told Congress that Iraq could "really finance its own reconstruction and relatively soon."

The GAO now reports: "Iraq's large oil reserves offer the government the potential to contribute to the country's current and future security and stabilization requirements. Oil revenues account for over 50 percent of the country's gross domestic product and about 90 percent of the government's revenues."

Meanwhile, Joseph E. Stiglitz, a Nobel Prize-winning professor at Columbia University, and Harvard public policy expert Linda J. Bilmes, estimate that the true cost of the Iraq war to American taxpayers is more than $3 trillion.

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