Back in 2003 as the invasion of Iraq was getting underway, Paul Wolfowitz famously told Congress that "We are dealing with a country that can really finance its own reconstruction and relatively soon."
Last month, nearly eight years after Wolfowitz’s flawed prediction, as tens of thousands of troops left Iraq, a House subcommittee stamped its approval on President Barack Obama’s controversial request for $2 billion in 2011 to arm and train Iraq’s military. It is unclear if the Senate will follow suit, but they have approved some funding. On top of the $2 billion, the proposed State Department budget allocates an additional $2.5 billion to step up its operations in Iraq.
All that money is being sent to Iraq based on a simple presumption, that Iraq’s government, run by Prime Minister Nouri al-Maliki, is bankrupt and running a massive deficit. The Iraqi government, a caretaker regime now, was created according to a constitution and timetable drawn up under US occupation and is now considered both fragile and corrupt.
But now comes word from independent US government auditors that the presumption may be false: Iraq’s government is not broke at all. Instead, Iraq’s rulers have been sitting on a vast pile of cash while begging for billions of dollars from the United States and the international community. A report by the General Accountability Office has found that the Maliki government, in spite of proclamations of poverty, hasn’t been spending what its budget allotted.
"GAO analysis of Iraqi government data showed that Iraq generated an estimated cumulative budget surplus of $52.1 billion through the end of 2009," the GAO report says. An estimated $40 billion was budgeted for "advances," but "available surplus funds" were measured at $11.5 billion. That is while the electrical grid remains unfixed, the water in the country is largely undrinkable, and the United States is still funding many Iraqi weapons purchases. It is a potentially devastating report, for Iraq and for the US efforts there. Some lawmakers on Capitol Hill have been pushing for Iraq to shoulder more of its own costs.
Exactly why a surplus exists is unclear, but it seems to have happened because Iraqi ministries have not spent the money that was intended to be used to fix the country. The GAO won’t discuss the report in advance of its release, though Stuart Bowen, the US Special Inspector General for Iraq Reconstruction, says the report doesn’t surprise him: "I haven’t seen the report but I do share GAO’s concern about Iraq’s past protestations regarding its projected budget deficits." Bowen, who has been policing US reconstruction effort since 2004, says if there is a surplus, which he believes there is, "that fact would militate against increasing US aid to the country."