Conservatives demanding Kofi Annan's head on a barrel of Basran Light Crude are outraged by President Bush's apparent support for the embattled U.N. chief. Others, such as uber-blogger Glenn Reynolds speculates that the White House's seeming volte face indicates that W. either supports the U.N. chief or figures that a discredited Secretary General will prove ineffective in opposing U.S. interests. But there may be an additional element that affects Bush's calculations: the U.N. is turning the heat up on Uncle Sam's own oil scandal.
This week, the U.N.'s International Monetary Advisory Board (IAMB) released a report charging the U.S.-backed Coalition Provisional Authority (CPA) with mismanaging the Iraqi economy. The auditor's report accuses officials of, among other things, improperly "metering"--or measuring--oil production, losing track of oil resources, allowing smugglers to steal oil, "bartering" oil at below-market value rates, giving out non-competitive contracts and insufficiently controlling spending at Iraqi ministries. It is the latest in a series of reports from the IAMB and other organizations that have cast doubts on the CPA's stewardship of the Iraqi people's wealth.
The money in question belonged to the Development Fund of Iraq, some $20.6 billion comprised of oil proceeds, Oil-for-Food money and frozen assets of the former regime. While the IAMB concludes that all "known [emphasis original] oil proceeds, reported frozen assets and transfers from the Oil-for-Food Program have been properly and transparently accounted for," its reports raises two basic questions. how much more money could the CPA have drawn from Iraq's oil resources had it applied stricter metering, accounting and security measures; and what exactly did administrators spend $20.6 billion on?
December 10's Financial Times asserts that "hundreds of millions of dollars in Iraqi oil revenues may have been squandered," and notes that the CPA's inspector-general is "investigating 27 cases of alleged corruption by CPA officials." Numerous payouts involved non-competitive contracts, such as a $1.4 billion deal with Halliburton to rebuild Iraq's oil infrastructure. According to a report issued by the Open Society Institute financed by George Soros, "73 percent in dollar value of all contracts awarded using Iraqi funds" were not competitively bid.
As revealed in the FT's article, the CPA went on a spending spree two months before it handed sovereignty to the Iraqi interim government in June. For example, nearly $1.8 billion went to Kurdish authorities who are now apparently in talks--assisted by Washington lobbyists connected to the GOP--to send part of that money to Switzerland. An additional $1.8 billion went to various Iraqi ministries, while over $1 billion went to projects which were already funded by Congressional appropriations.
Ironically, those appropriations are one reason with the CPA opened the DFI checkbook. Legislators placed so many guards against waste or misuse on the $18.4 billion Congress earmarked for Iraq's reconstruction, that administrators in Baghdad frequently found themselves ensnared in red tape. Moreover, the FT notes, those taxpayer funds evidently fell under the control of the Pentagon, which "was reluctant to let them spend the money." Indeed, CPA officials I spoke to in Iraq constantly complained that they couldn't move Congressional funds "into the field" because of oversight rules, such as demanding multiple bidders for even low-level projects. "How can we find more than one Iraqi construction firm to repair a school or a hospital?" one told me. "It's like the Pentagon has a 10,000-mile screwdriver and is trying to fine-tune everything we do with the money," another said. In the end, it simply proved more expeditious for the CPA to use the less-scrutinized DFI account.
It's difficult to know what to think of this. On one hand, neither the IAMB or any other agency so far has charged any person or group with embezzlement or fraud. Then, too, the understaffed CPA was operating in a chaotic environment, in a country with no functioning banking system, where emergency situations often called for measures not in accordance with standard accounting practices. But we are talking about monies desperately need by the Iraqi people, whose current safety and future stability lie in our hands. It is a painful to think that millions, perhaps billions, of dollars vanished into accounting black holes when child malnutrition, unemployment, gas and electric shortages and sanitation and drainage problems afflict the country.
But there's another dimension to why the CPA felt compelled to raid DFI monies, rather than spend U.S. funds. Of the $18.4 billion appropriated by Congress, only around one-third has been earmarked for projects, with just over $1.2 billion spent. Senator Byrd could blow that much on West Virginia pork-barrel projects over the course of an afternoon; why is it so difficult in Iraq? In some ways, the delay is analogous to the controversy over unarmored Humvees: America, a country blessed with enormous wealth, seems unable to provide enough resources where they are needed most--the reconstruction of Iraq.
We should remember, too, that despite their tactical disadvantages, the paramilitary gunmen in Iraq lack no shortage of weapons, nor do they have the same oversight restrictions on the $500 million in "unaccounted funds" from Saddam's regime, the untold amounts flowing from Saudi sources through Syria, or the $2.6 billion Saddam is said to have shipped to Damascus. This doesn't excuse the CPA's spendthrift ways with Iraqi money, of course--just as the U.S. must abide by rules of combat, so too, it must observe rules of accounting. The irony, however, is frustrating: in fighting black-masked killers lurking in back alleyways, American forces must also contend with the green-eyeshade men sitting in highrise office towers.
Comments