Saturday, August 09, 2008

Putting Iraq's Budget Surplus into Context

More than 2 million Iraqis have fled the country, while another 2.8 million people are internally displaced. To make matter worse, Iraqis are facing the worst drought in ten years. Millions live in hunger or fear of starvation.

Meanwhile here in the U.S., the lead Iraq story is the Iraqi government's budget surplus. A new GAO report projects that Iraq's cumulative budget surplus could reach as high as $79 billion by year's end. Pundits and politicians are asking: "They have the money so what's the problem?" The problem begins with decades of war, tyranny and sanctions that hampered Iraq's development. Then the U.S. toppled Iraq's government, allowed government ministries to be looted and destroyed, dismissed civil servants with any ties to Saddam's Baath Party, disbanded Iraq's military, created a security vacuum, which led many Iraqi professionals to flee the country.

Last Friday, a New York Times editorial declared: "Iraq now lacks the trained professionals to prepare and execute budgets and to solicit, award and oversee capital projects. The United States must redouble its efforts to help Iraq build this capacity, including bringing back skilled Iraqis who have fled the country."

Yes, Iraq's government can and must do better. But at the same time, as both the GAO report and New York Times point out, the U.S. is NOT off the hook. Until Iraq's government is fully functional, the U.S. has a moral and international obligation to address the unmet humanitarian needs of vulnerable Iraqis, and to work with the international community to provide technical capacity-building assistance to Iraq's government.

On a national, provincial, and municipal level, assistance is needed to build up:
  • Institutional Capacities - Policies, strategies and implementing tools are in place to ensure efficient coordination and management of aid.
  • Human Capacities - Skilled, trained personnel are in place to implement policies and strategies, and to maintain the government-donor interface.
  • Structural / Economic Capacities - Capacity of the recipient country’s economy to absorb additional aid with minimal distortion (“dutch disease”) etc.
Progress in building up Iraq's capacities would not only allow implementing agencies to spend down their budgets, it would have a profound impact on the security, health and welfare of Iraq's 27 million people. For more about Iraq's budget surplus and other ongoing challenges facing Iraqi officials, see Reports: 8/6/2008 below.

Photo caption: A man sows a crop on a dry field on the outskirts of Najaf, 100 miles south of Baghdad, Iraq, Wednesday, July 2, 2008. It's been a year of drought and sand storms across Iraq, a dry spell that has devastated the country's crucial wheat crop and created new worries about the safety of drinking water (AP Photo by Alaa Al-Marjani).


motown67 said...

It might take a generation to fix Iraq's bureaucracy and even then there's no guarantee it won't be more than your typical developing world level officials. Most countries with oil also never develop anyway because they make so much off of petroleum they never invest in much else.

motown67 said...

Also, since 2007, Iraq has outspent the U.S. on reconstruction, so it's not like they aren't spending some of their money. Fore more click on my name for a link to my blog about Iraq's budgetary and reconstruction spending.

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