Iraq Outspends U.S. on Reconstruction

On August 6, 2008 the Government Accountability Office (GAO) issued a report on Iraq’s revenues and spending. The GAO said that with oil prices soaring Iraq could end up earning as much as $79.2 billion by the end of the year. The report said that with this extra money Iraq could take over more responsibility for its development. The problem was that Baghdad has been unable to spend much of its budget. This raised complaints from Democratic members of Congress who said that America should not be responsible for reconstruction now that Iraq is awash in money. In fact, since 2007 Iraq has been spending more on reconstruction than the United States.

There are two parts of Iraq’s spending. One is the operational budget, which basically keeps the government running by paying salaries and bills. The other is the capital budget that involves investing in Iraq’s infrastructure and reconstruction. Most of Iraq’s ministries have been good at spending their operational budgets, but have lagged on their capital ones. Still there has been progress, although it has been unsteady. In 2005 Iraq spent 23% of its capital budget, 19% in 2006, and 28% in 2007 according to the GAO. The Special Inspector General for Iraq Reconstruction (SIGIR) said that Iraq spent 22% of its capital budget in 2006 and 63% in 2007. Iraq’s overall budget has increased each year as well. That has led to increased spending on reconstruction, so that by 2007, Iraqi spending outpaced America’s. In that year the U.S. spent $9.33 billion on reconstruction, compared to $10.06 billion by Iraq. In the 2008/2009 budget year the U.S. is expected to spend $4.18 billion, and Iraq $13.06 billion. It’s important that Iraq take more responsibility for its own rebuilding. While the country is spending more that is more due to increased budgets than institutional development. Iraq’s government still suffers from inexperience, inefficiency, corruption, sectarianism, lack of security, lack of skills, and an extremely slow paper based bureaucracy. One of the America’s main focuses is now upon improving Iraq’s government to speed up these processes, but it will probably take a generation to be solved, and even then it is not guaranteed.

Facts And Figures On Iraqi Spending

GAO Numbers:

2005 $6,316 million appropriated, $1,432 million spent, 23%
2006 $8,312 million appropriated, $1,615 million spent, 19%
2007 $12,168 million appropriated, $3,435 million spent, 28%

Capital budget spending by Iraqi security and services ministries

• 2005 14%
• 2006 13%
• 2007 11%

Oil Ministry capital budget spending:

• 2005 $3,001 million appropriated, $111 million spent, 4%
• 2006 $3,106 million appropriated, $143 million spent, 5%
• 2007 $2,383 million appropriated, $800,000 spent 0.03%

Electricity Ministry capital budget spending:

• 2005 $297 million appropriated, $142 million spent, 46%
• 2006 $1,167 million appropriated, $268 million spent, 23%
• 2007 $1,389 million appropriated, $800,000 spent 0.06%

Water Ministry capital budget spending:

• 2005 $184 million appropriated, $120 million spent, 65%
• 2006 $200 million appropriated, $91 million spent, 46%
• 2007 $262 million appropriated, $109 million spent, 41%

Ministries of Defense and Interior capital budget spending:

• 2005 $138 million
• 2006 $296 million
• 2007 $176 million
• Jan. – April 2008 $12 million

SIGIR Numbers:

Budget spending by ministries from January-March 2008.

Note: Iraq did not pass its budget until February 2008, which accounts for the low spending amounts.

Agriculture 0.08% pcaital, 23% operations
Communications 0% capital, 19% operations
Defense 0% capital, 13% operations
Displacement and Migration 0% capital, 6% operations
Education 0% pcaital, 17% operations
Electricity 0% capital, 2% operation
Finance 0% capital, 17% operations
Foreign Affairs 0% capital, 3% operations
Health 1% capital, 11% operations
Human Rights 0% capital, 10% operations
Industry and Minerals 0% capital, 18% operations
Interior 0.3% capital, 18% operations
Justice 1% capital, 21% operations
Oil 0% capital, 2% operations
Planning and Development 0.2% capital, 2% operations
Transportation 0.5% capital, 8% operations
Water 2% capital, 36% operations

SOURCES

Associated Press, “Iraqi lawmaker defends country’s spending record,” 8/8/08

DeYoung, Karen, “Iraq Banks Billions in Surpluses, GAO Says,” Washington Post, 8/6/08

Glanz, James and Robertson, Campbell, “As Iraq Surplus Rises, Little Goes Into Rebuilding,” New York Times, 8/6/08

Hall, Kevin, “GAO: Iraq’s oil profits huge as U.S. bears reconstruction load,” McClatchy Newspapers, 8/5/08

Special Inspector General for Iraq Reconstruction, “Quarterly and Semiannual Report to the United States Congress,” 7/30/08

United States Government Accountability Office, “Iraqi Revenues, Expenditures, and Surplus,” August 2008
- “Progress Report: Some Gains Made, Updated Strategy Needed,” June 2008