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GAO: Iraq should spend more of its own money on defense

By Karen DeYoung

Iraq has a budget surplus of more than $50 billion and should spend more of its own money on defense equipment and training that is currently being funded by the United States, according to a new report by the Government Accountability Office.

Congress should "consider Iraq's available financial resources" when it weighs a pending $2 billion administration request for the Iraqi forces in fiscal year 2011 as well as future budget requests, the report said.

Some of the surplus funds from Iraq's 2009 budget are already committed in outstanding advances, and the GAO recognized the need to maintain cash on hand to allow for fluctuations in the oil market that supplies 90 percent of Iraq's revenue. But it said that "weaknesses in accounting" made it difficult to determine the exact amount and purpose of those committments. Even the most expansive version of the advances leaves an available surplus of $11.8 billion, according to the GAO.

In a response to the report, the Defense Department objected to its conclusions, noting that Iraqi defense expenditures had steadily increased and that the report overestimated Iraq's fiscal stability. "We believe the overall GAO message--that Iraq currently has significant cash reserves that would allow them to pay more of their security costs now and in 2011--is inaccurate and not supported by the financial data," Colin Kahl, deputy assistant secretary for the Middle East, said in a letter to the GAO.

Although spending by Iraq's security ministries has steadily increased since 2005, the report said that the Defense and Interior ministries left between $2.5 billion and $5.2 million in budgeted funds unspent during that period. It also found that the Iraq had not provided promised funding for additional funding for an Iraqi version of the Commanders Emergency Response Program, or CERP, as agreed with the United States.

Under the U.S. CERP program, U.S. field commanders were authorized to distribute funds for development and other projects they deemed important to the war effort. From fiscal years 2004 through Sept., 2009, the United States obligated more than $3.6 billion to the program. Iraq agreed to take over the program, changing its name to I-CERP, and distribute money through its own field commanders.

"However, as of Sept. 1, 2009," the report said, U.S. Forces in Iraq "had obligated $229 million of the $270 million in funding provided by Iraq for I-CERP, and Iraq had not provided any additional resources to support the program.

By Karen DeYoung  | September 13, 2010; 2:57 PM ET
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