Iraq: who pays the price?

I don't imagine you see much reason to celebrate the current level of oil prices around the world. I don't hear you cheering delightedly every time you fill up the car, or every time you have to pay your electricity bill.

If you were living in Iraq, on the other hand, where, let's face it, they still don't have much to celebrate, high oil prices should be excellent news. You'd be sitting on the world's third largest oil reserves, pumping it out as fast as you can, with billions of dollars rolling in to the government coffers.

So: lots of cash available to rebuild the country's decaying infrastructure. Develop a functioning electricity grid again; get clean water gushing out of taps in Baghdad and Basra; repair roads and bridges. Except ... it's not happening. Or where it is happening, it's by no means enough, and more often than not, it's being paid for by American tax-payers, not Iraqi oil revenues.

Here's what the US Government Accountability Office reported this week: "From 2005 through 2007, the Iraqi government generated an estimated $96 billion in cumulative revenues, of which crude oil export sales accounted for about $90.2 billion, or 94 percent ... Projected 2008 oil revenues could be more than twice the average annual amount Iraq generated from 2005 through 2007 ...

"From 2005 through 2007, the Iraqi government spent an estimated $67 billion on operating and investment activities. Ninety percent was spent on operating expenses, such as salaries and goods and services, and the remaining 10 percent on investments, such as structures and vehicles. The Iraqi government spent only 1 percent of total expenditures to maintain Iraq- and U.S.-funded investments such as buildings, water and electricity installations, and weapons."

Meanwhile, according to the GAO, the U.S. has appropriated $48 billion for Iraqi reconstruction and stabilisation projects since 2003, with about 70 per cent of those funds having been spent.

Now, you could argue, I suppose, that since it was the US that led the invasion of Iraq in 2003, it's only fair that the US should pay to rebuild it. (Remember US secretary of state Colin Powell's Pottery Barn rule? "If you break it, you fix it.")

But that's not how it looks to the two senior US senators - Democrat Carl Levin and Republican John Warner - who asked for the GAO report. This is what they said: "The Iraqi government now has tens of billions of dollars at its disposal to fund large-scale reconstruction projects. It is inexcusable for U.S. taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves. We should not be paying for Iraqi projects, while Iraqi oil revenues continue to pile up in the bank."

I spoke to the man who wrote the GAO report, Joseph Christoff, on the programme on Wednesday. (It's still available via Listen Again on the website.) And he accepted that Iraq does have problems spending huge sums of money on vast infrastructure projects - that it's just as important to spend cash wisely as it is to spend it quickly.

Still, I somehow doubt that the US Congress is going to be voting again to authorise billions of dollars in reconstruction aid to Iraq ... with a new administration and a new Congress in place next January, I'd hazard a guess that the Iraqis will soon be spending rather more of those oil revenues than they have been up till now.

Which may, or may not, make you feel just a bit better next time you fill up the tank.

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