U.S. Funds for Iraq Are Largely Unspent

BAGHDAD, July 3 -- The U.S. government has spent 2 percent of an $18.4 billion aid package that Congress approved in October last year after the Bush administration called for a quick infusion of cash into Iraq to finance reconstruction, according to figures released Friday by the White House.

The U.S.-led occupation authorities were much quicker to channel Iraq's own money, expending or earmarking nearly all of $20 billion in a special development fund fed by the country's oil sales, a congressional investigator said.

Only $366 million of the $18.4 billion U.S. aid package had been spent as of June 22, the White House budget office told Congress in a report that offers the first detailed accounting of the massive reconstruction package.

Thus far, according to the report, nothing from the package has been spent on construction, health care, sanitation and water projects. More money has been spent on administration than all projects related to education, human rights, democracy and governance.

Of $3.2 billion earmarked for security and law enforcement, a key U.S. goal in Iraq, only $194 million has been spent. Another central objective of the aid program was to reduce the 30 percent unemployment rate, but money has been spent to hire only about 15,000 Iraqis, despite U.S. promises that 250,000 jobs would be created by now, U.S. officials familiar with the aid program said.

U.S. officials involved in the reconstruction blame security concerns and bureaucratic infighting between the Pentagon, the State Department and the White House for delays in the allocation of funds. By the time the Pentagon's contracting office in Baghdad began awarding contracts, the risk of kidnapping and other attacks aimed at foreign workers was so dire that many projects never began. Several Western firms that won contracts have summarily withdrawn their employees from Iraq.

Fewer than 140 of the 2,300 reconstruction projects that were to be funded with the U.S. aid package are underway, the officials said.

Officials with the contracting office contend the amount of money actually spent does not reflect the full scope of work being performed. A more accurate figure, they said, is the amount of money allocated for reconstruction work. Just over $5.2 billion had been allocated as of June 22, according to the White House budget report.

"The money that is disbursed is typically not disbursed until the work is completed, so it doesn't give the best picture of what's going on," said John Proctor, a spokesman for the contracting office. "Some of our projects take months, or even years, to complete."

Proctor said actual spending had increased to $400 million since the figures were provided to the White House on June 22.

Spending patterns have been different with the Iraqi money. The Coalition Provisional Authority, the now-dissolved U.S.-led occupation administration, spent or locked in for future programs more than $19 billion from the $20 billion Development Fund for Iraq, which was established by the U.N. Security Council to manage Iraq's oil revenue, said Joseph A. Christoff, director of international affairs and trade at the General Accounting Office, the watchdog arm of Congress.

Christoff said in a telephone interview on Saturday that all but $900 million of the fund had been spent or allocated by the time the United States transferred political authority to an interim Iraqi government last Monday.

Some Iraqi officials have criticized the contrasting spending practices. The occupation authorities "came here and spent a lot of our money but very little of theirs," said a senior Iraqi official, who spoke on condition of anonymity on the ground that criticism could affect his relationship with the new U.S. Embassy here.

The official did not contest the CPA's decision to use the development fund money to pay the expenses of running Iraq's government during the occupation, but he condemned spending on what he called "less essential projects that should have been left up to the Iraqis to decide."