State Dept. Official Disputes Iraq Report
GAO Challenged Claims of Progress

By Walter Pincus
Washington Post Staff Writer
Thursday, January 17, 2008

Officials from the State Department and the Government Accountability Office disagreed yesterday over whether spending by Iraqi government ministries in 2007 accurately reflected claims of progress the Bush administration made last fall.

In a much-publicized September report on benchmarks in Iraq, the White House said that Iraqi ministries had spent about 24 percent of their capital budget through July 15, 2007, and that the government was making "satisfactory progress in allocating funds to ministries and provinces."

The Baghdad government's "budget execution is, indeed, a focal point as they continue to improve governance and move toward self-reliance," the administration said at a time when Congress was debating fiscal 2008 funding for Iraq.

In a report this week, however, the GAO found that of their $6.4 billion budget for capital projects, the ministries "had spent only 4.4 percent of their investment budget as of August 2007," citing official Ministry of Finance reports. State Department officials told the GAO that they had relied on "unofficial" Ministry of Finance data that were more current.

U.S. officials have touted Iraqi government spending as a sign of political progress. U.S. Ambassador Ryan C. Crocker said recently that "different parts [of Iraq] are moving at perhaps different paces. . . . The economic elements, the budget formulation and execution is going increasingly well."

A senior State Department official said yesterday that more recent data collected in Iraq will show that the ministries spent far more than 24 percent of their budgets. "We are predicting that when the final tallies are done in a month or two from 2007, we will have hit and may have exceeded 60 percent of the capital budget," he said.

Joseph Christoff, the GAO official responsible for the report, said yesterday that his figures were reported by U.S. Treasury officials working with Iraq's Ministry of Finance. His latest numbers, which cover spending through October, show only a slight increase -- up to 8 percent of the total 2007 budget. He said the State Department is considering not just money spent on capital projects but also money allocated to such projects but not yet spent. "It is not just comparing GAO's apples to State's oranges," Christoff said. "State is including also bananas, apples and oranges."

"The discrepancies . . . highlight uncertainties about the sources and use of Iraq's expenditure data," the GAO report concluded. It added that the "strikingly large" gap between the different assessments required the U.S. Treasury to work with the Iraqi ministry "to reconcile these differences."

The administration has long recognized the problems with Iraqi government budgeting and has instituted a variety of programs to remedy the situation. Nevertheless, according to the GAO report, U.S. and foreign officials working in Iraq have said that "weaknesses in Iraqi procurement, budgeting and accounting procedures impede completion of capital projects."

Spending by Iraq's Oil Ministry provides an example of the divergence between the administration's figures and the GAO's findings. According to the GAO, the Bush administration reported that Iraq's Oil Ministry had spent $500 million of its $2.4 billion capital budget by mid-July. However, the GAO found that spending on oil capital projects reached only $270,000, according to Ministry of Finance data.

The State Department official, who discussed the data on the condition of anonymity, said the focus was misplaced. "The real test is: Are we seeing the effects of these capital expenditures on the ground? And we are seeing it," he said. "Services are being delivered [and the] slow, downward spiral of worsening services has stopped and is starting to come back." Delivery of services, he said, is "our number one goal" in Iraq for 2008.

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