By OGJ editors
WASHINGTON, DC, Oct. 22 -- Days before an international donors' conference for Iraq is to be held in Madrid, a prominent human rights group said the US needs to do a better job informing the public about how oil revenue money is being spent.
The Open Society Institute (OSI), funded by billionaire philanthropist George Soros, Oct. 16 released a report that said Iraq's public finances fall short of international standards of accountability.
The group wants the US-led Coalition Provisional Authority to move forward with a United Nations-mandated watchdog group that is charged with conducting independent audits of how the oil money is collected and where it is spent.
Members of the International Advisory and Monitoring Board (IAMB) are supposed to include the UN, World Bank, Arab Fund for Economic and Social Development, and International Monetary Fund. But CPA continues to resist establishing the group.
Funding process criticized
Currently oil revenues go to the Development Fund for Iraq (DFI), which is controlled by a review board overseen by CPA. But CPA has delayed the establishment of the UN independent oversight body and won't disclose basic information about large purchase contracts and DFI expenditures, the report said.
Meanwhile, the review board "is often slow to publicize minutes from its biweekly meetings, and what minutes are produced lack essential information, such as the DFI's current balance.
"The Iraqi public, as well as members of the [UN] Security Council, which mandated the creation of the DFI, have been left in the dark about how the fund works," the report said.
The group further argued that the way DFI is run now fails to serve Iraqi interests. "Bidding processes for big reconstruction contracts take place behind closed doors, excluding Iraqi businesses that are unable to compete with multinational corporations," said Isam al Khafaji, director of OSI's Iraq Revenue Watch.
He said CPA's failure to disclose financial information threatens to jeopardize contributions from other donors. OSI maintains there is talk among international financiers about creating a separate Iraqi reconstruction fund for non-US donations, a move that the group warns would "only complicate matters for a future interim Iraqi administration."
US has different view
US officials meanwhile said they are optimistic about getting international commitments to help fund Iraq's reconstruction, which according to the latest UN estimate will be $36 billion over the next 4-5 years, not counting an expected $20 billion the US is anticipated to spend.
Deputy Sec. of State Richard Armitage, in an interview with the UK Sky News Oct. 20, predicted "good participation" in Iraqi reconstruction funding. Japan recently pledged $1.5 billion next year.
"Some leading nations have already stepped up to prove that they are on the side of the Iraqi people, Japan most notably," Armitage said. "Spain has stepped in for $300 million. The UK has been fantastic with I think a total of about $900 million over several years. So I think it will be a good demonstration of support for Iraq."
Nevetheless, he downplayed what could prove to be a limited amount of hard commitments from other countries to contribute substantial funding. He also said in the interview that the US's primary goal is to see a show of international support for the Iraqi people "rather than concentrating on a single [monetary] figure."
US officials also have told Congress they are working to improve oil revenue transparency.
Dave Oliver, CPA chief financial officer, told the House Armed Service Committee that every contract and expenditure that CPA Administrator L. Paul Bremer has approved is now available on the CPA's web site at www.cpa-iraq.org.
"I'm trying to make this as transparent as possible," said Oliver. "And it wasn't as good at the beginning because I got involved in just doing too much and not recognizing how important that was."
Changes sought
OSI's report calls on CPA to reverse these trends and offers a set of recommendations, including increased Iraqi involvement in DFI, establishment of the IAMB, and better public access to information.
"With the United States increasingly isolated from other donor countries, it must work to regain the confidence of the international community and the Iraqi people," said Al-Khafaji. "An important step in that direction is improving the management of Iraq's public finances. That would also be key to bringing about stability."
