Iraq transparency

Nov. 10, 2003
Within 6 months, a new international auditing panel will issue the first of what will likely be several reports detailing how the US will spend Iraq's petrodollars.

Within 6 months, a new international auditing panel will issue the first of what will likely be several reports detailing how the US will spend Iraq's petrodollars.

The United Nations, the World Bank, the International Monetary Fund, and the Arab Fund for Social and Economic Development Oct. 24 announced the formation of the International Advisory and Monitoring Board (IAMB). Representatives from those four international institutions will make up IAMB; as many as five Iraqi nationals also may join as nonvoting "observers."

Shining light

The first meeting of IAMB has not yet been scheduled but there is pressure from human rights groups to get things started quickly.

Last month an Open Society Institute (OSI) report found Iraq's public finances fell short of international accountability standards (OGJ Online, Oct. 22, 2003). Meanwhile, UK-based group Christian Aid (CA) alleged the US's Coalition Provisional Authority (CPA) could not account for as much as $5 billion in past oil revenue. US officials said they handled money judicially and also pledged to cooperate with the new board and to meet at least quarterly in Baghdad.

OSI Nov. 3 welcomed IAMB's presence, but cautioned "the challenge now is to make sure the IAMB gets the information it needs in a timely manner to conduct effective fiscal auditing. Also key will be giving Iraqis voting membership on the IAMB."

Similarly, CA said it also welcomed the news that IAMB "has finally been established. However, we are still waiting to see how it will work in practice."

UN role

Last May, IAMB represented a compromise between the US and the UN over who would control reconstruction money. The UN agreed to eventually terminate its oil-for-aid (OFA) program provided it would still have a role in managing oil revenue streams. Why it took 5 months for the board to get off the ground remains in dispute. US officials say negotiations over the fine print took several months; UN sources say the US stalled the process.

The UN will end its OFA program Nov. 21; CPA will then assume authority over remaining contracts and control a $3.1 billion escrow account.

IAMB, like the UN's OFA program, is meant to be temporary, and will dissolve once there is an UN-endorsed, independent Iraq government.

Until that time, IAMB accountants will audit the flow of oil money in and out of the country and verify petroleum exports are marketed "consistent with prevailing international market best practices." The board also will monitor the Iraqi Central Bank account where oil revenues will go as well as disbursements made by the US's Development Fund for Iraq. Additionally the board may conduct unspecified "special audits," and may examine past contracts made before international oversight existed.

Yet ultimately the only real authority IAMB may wield is with the public. That's because its findings are essentially nonbinding—the US may choose to accept or ignore the board's recommendations if CPA finds it inconsistent with its own regulations.