Matt Renner: Playing Politics With Iraqi Oil Money

Washington, DC - Republicans and Democrats have been in an uproar over a new report that examines the amount of money the government of Iraq has been taking in and where they have been spending it. However, according to a leading Iraq economy scholar, the report is being misinterpreted and the political fall-out could be extremely harmful.

The Government Accountability Office (GAO) report (.pdf), released on Tuesday, shows that the government of Iraq has spent less money than the United States in reconstructing vital infrastructure despite a growing surplus in Iraq's treasury. Focusing on raw dollar figures, the report estimates that the government of Iraq has spent $3.9 billion since 2005 on security, oil, water and electricity projects.

Because of high oil prices, the government has been taking in more money than it's spending, accumulating billions of dollars during this same time period. Currently Iraq's budget surplus is estimated at $29 billion, with a possible surplus of an additional $50 billion in 2008.

In statements, senators from both parties compared the seemingly paltry Iraqi expenditures with the $23.2 billion spent by the US government in these specific reconstruction areas since the 2003 invasion.

"The Iraqi government now has tens of billions of dollars at its disposal to fund large-scale reconstruction projects. It is inexcusable for US taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves," Senator Carl Levin (D-Michigan) said. Levin is chairman of the Senate Armed Services Committee. "Despite Iraq earning billions of dollars in oil revenue in the past five years, US taxpayer money has been the overwhelming source of Iraq reconstruction funds," Senator John Warner (R-Virginia), ranking member on the committee, said.

Antonia Juhasz, a fellow with Oil Change International and author of the forthcoming book "The Tyranny of Oil," takes issue with many conclusions being drawn from the GAO report.

"Pinning the failure of reconstruction and the poor functioning of the Iraqi government on the Iraqi government is obscene," Juhasz told Truthout. Instead, she blames reconstruction failures on the Bush administration's Iraq policy, adding, "It is politically expedient and an obscene rewriting of history to say that the US should not be giving the Iraqis any more money for reconstruction because the Iraqis have plenty of money of their own."

Much of the money that was spent by US taxpayers on Iraq's initial reconstruction went directly into the pockets of private US corporations under the direction of L. Paul Bremer, former head of the Coalition Provisional Authority, which ruled Iraq in the months following the invasion. His decision to fire the roughly 120,000 Iraqi government workers and completely privatize the country's reconstruction has been blamed for much of the political chaos that has gripped the country since the invasion.

According to Juhasz, the amount of money spent by the US government on reconstruction does not accurately reflect the amount of actual work done. "The US gave the reconstruction money to US corporations. The corporations took the money and failed to do the reconstruction," Juhasz said.

Juhasz views the report very differently from those who are trying to make political hay out of the anger over the ongoing occupation of Iraq and extraordinary gas prices - in fact, there are bright spots contained in the GAO data that give Juhasz hope for Iraq's future.

The GAO report points out that Iraq has been increasing oil exports every year since the invasion and profiting greatly as a result.

"The Iraqis are essentially doing fine on their own running their oil industry. They are making money and increasing production and exports. Because oil is so expensive, Iraqis will have the money to invest and rebuild their oil infrastructure without investment from US oil companies," Juhasz said.

The need for oil infrastructure investment has been the main argument pushed by the Bush administration and some Democrats who favor passage of a law that would give foreign oil companies access to Iraq's oil for the first time since Iraq's oil industry was nationalized in 1973. Proponents of such a law argue that the companies would provide the infrastructure investment needed to increase productivity, without which Iraq's oil-based economy would sputter.

However, the proposed law has been held up in Iraq's parliament because it does not have popular support. Iraq's oil industry is a source of great national pride, and attempts to privatize it have met with fierce resistance. Iraqi and international activists have been working to educate foreign governments and the press about the state of oil politics in Iraq and the ongoing negotiation with foreign companies over Iraq's oil. According to Juhasz, these efforts have helped to slow down the rush to privatize the oil fields.

Matt Renner is an editor and Washington reporter for Truthout.

© Scoop Media