Fuelling suspicion: The coalition and Iraq's oil billions


THE US-controlled coalition in Baghdad is about to hand over power to an Iraqi government without having properly accounted for what it has done with some $20 billion of Iraq's own money, says a new report published by Christian Aid.
An interim, critical, audit of the Coalition's handling of Iraqi revenues is only being delivered this week - the same week in which the CPA will cease to exist.

Christian Aid believes this situation is in flagrant breach of the UN Security Council resolution that gave control of Iraq's oil revenues and other Iraqi funds to the Coalition Provisional Authority (CPA).

'For the entire year that the CPA has been in power in Iraq, it has been impossible to tell with any accuracy what the CPA has been doing with Iraq's money,'said Helen Collinson, head of policy at Christian Aid.

Resolution 1483 of May 2003 said that Iraq's oil revenues should be paid into the Development Fund for Iraq (DFI), that this money should be spent in the interests of the Iraqi people, and be independently audited. But it took until April 2004 to appoint an auditor - leaving only a matter of weeks to go through the books.

Early reports of the audit indicate strong criticisms of the CPA's handling of Iraq's money. But the CPA is not going to be around to be held accountable.

In the run-up to the handover, nearly $2 billion of Iraq's money has been hastily allocated. The new Iraqi government will be committed to these spending decisions.

The lack of anything more than basic information about the CPA's spending of Iraq's funds is in stark contrast to the information on the US$18.4 billion of US taxpayers' money that is also being spent in Iraq. No less than four separate audits of the US funds are underway.

All this sets a very bad precedent for the incoming Iraqi government. 'Too many oil-rich countries go down the road of unaccountable government, riches for the few, and poverty for the many. Iraq can avoid this route, but only by ensuring transparency,'said Ms Collinson.

Iraq's oil represents huge potential wealth. With half of the population still unemployed, the Iraqi people need to be able to see that the oil revenues are being spent to alleviate poverty and to improve their lives.

In October 2003 Christian Aid revealed that an astonishing $4 billion of Iraq's oil revenues and other funds were unaccounted for. That report, Iraq: The Missing Billions, called for much greater clarity and for a thorough audit - which even at that time was months overdue.

Since then, the CPA has provided more information about what it is doing with Iraq's oil revenues. But it is still woefully inadequate. We still do not know exactly how Iraq's money has been earned, which companies have won the contracts that it has been spent on, or whether this spending was in the interests of the Iraqi people.

A senior UN diplomat told Christian Aid: 'We only have the total amounts and movements in and out of the DFI. We have absolutely no knowledge of what purposes they are for, and if these are consistent with the security council resolution.'

Iraqi construction companies charge about a tenth of what their US counterparts do. It was only in April 2004 - almost a year after the CPA took control of Iraq's oil revenues and started awarding contracts - that it belatedly began to reserve any contract from the DFI worth less than US $500,000 for Iraqi companies.

'What has the coalition got to hide by not making such information available for Iraq's own money? Is it putting the cash to the best use for the people of Iraq? Or is it still rewarding US companies with lucrative contracts?'said Ms Collinson.

Experts agree that it is almost impossible to work out what Iraq is earning from oil. Two different CPA documents give different figures for the oil revenue in the year to the end of May. One says $10 billion. The other says $11.5 billion. Christian Aid attempted its own calculation of Iraq's oil revenue using publicly available figures and came up with $13 billion.

Assessing Iraq's oil revenue is made so difficult because Iraq's oil production is still not being metered, as is standard industry practice. The CPA appears to have failed to prioritise a task that should form the bedrock of transparency over oil revenues.

Christian Aid is calling on the CPA to provide enough information so that Iraqis can see how their oil revenue has been earned and exactly how it is being spent - and for the UK government to use its influence as part of the CPA to make sure that this happens. We are also calling on the new Iraqi government, and the elected governments that will follow it, to be fully transparent about oil revenues and how they are spent.

For more information or a full copy of the report:

Fuelling suspicion: the coalition and Iraq's oil billions please contact:

Dominic Nutt on +44 (0)20 7523 2427 or 07720 467680

Anthea Lawson on +44 (0)20 7523 2418 or 07971 834 578

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