US:RISING PRODUCTION and skyrocketing prices will more than double the Iraqi government's expected windfall from oil revenues this year, leading a top US government auditor to call for an end to American funding of Iraqi reconstruction projects.
The Iraqi government had projected 2008 oil revenues of about $35 billion (€22.5 billion). But a US report to be issued on Wednesday by the Special Inspector General for Iraq Reconstruction (Sigir) will say oil production in the second quarter hit 2.43 million barrels per day, a post-invasion record.
"With oil now hovering around $125 per barrel - about five times what it was five years ago - and Iraq's oil production at record levels, Sigir estimates that oil revenues for 2008 could exceed $70 billion," the report states.
The report by the independent audit agency provides potent backing to critics of the Bush administration in what has become a highly charged political issue. Democratic leaders in Congress are pushing the administration to pressure the Iraqi government to fund its own infrastructure projects through rising oil revenues.
In the most recent war-funding Bill, lawmakers inserted a requirement that all US funding for projects not related to Iraqi security be matched on a dollar-for-dollar basis by Iraqi government spending. In response, administration officials have urged patience, noting that Iraqi spending for reconstruction has risen sharply and that the American contribution would diminish gradually.
US funding for Iraqi reconstruction has declined over the past four years. In 2008, the new report projects, the $4.2 billion allocated by Congress for rebuilding will be less than one-third of the $13.1 billion that Iraq itself is expected to spend.
But Stuart W Bowen jnr, the special inspector general, said he favours ending US participation entirely, because the Iraqi oil windfall plus unspent funds from earlier budgets are more than adequate to meet the country's reconstruction needs.
Mr Bowen said that Barham Saleh, the deputy Iraqi prime minister in charge of reconstruction, earlier this month insisted that Iraq does not need additional foreign funding for reconstruction.
"They certainly have the resources to invest in their infrastructure programme," Mr Bowen said. "I think we ought to just take them at their word on that and focus on helping Iraq carry out its own programme funded by its own money." According to the Sigir report, cumulative Iraqi funding for reconstruction caught up with total US spending within the past three months. Each government has allocated more than $50 billion since 2003.
The audit emphasised, however, the Iraqi government continues to struggle to spend the money it is accumulating. Because of government inexperience and bureaucratic bottlenecks, the Iraqi government had spent only 2.7 per cent of its capital budget by March 2008, the latest figures available.