Levin, Warner Ask GAO to Review Iraqi Oil Revenues and Reconstruction Funding

Friday, March 7, 2008

WASHINGTON – Senate Armed Services Committee Chairman Carl Levin, D-Mich., and senior Committee Member John Warner, R-Va., today asked the Government Accountability Office (GAO) to review Iraqi oil revenues and determine how much money the Iraqi government has contributed to security and reconstruction efforts in the country. The senators voice concern that the Iraqi government has tremendous resources sitting in banks around the world while not doing nearly enough to improve the quality of life of Iraqi citizens.

The full text of Levin and Warner’s letter to the GAO follows:


The Honorable David M. Walker
Comptroller General of the United States
441 G. Street, NW
Washington, DC 20548

Dear Mr. Walker: Nearly five years ago, on March 27, 2003, then Deputy Secretary of Defense Paul Wolfowitz, in testimony before the Defense Subcommittee of the House Appropriations Committee, was asked whom he expected would pay for the rebuilding of Iraq. He answered that “there’s a lot of money to pay for this. It doesn’t have to be U.S. taxpayer money. And it starts with the assets of the Iraqi people …the oil revenues of that county could bring between 50 and 100 billion dollars over the course of the next two or three years…. We are dealing with a country that can really finance its own reconstruction and relatively soon.”

In fact, we believe that it has been overwhelmingly U.S. taxpayer money that has funded Iraq reconstruction over the last five years, despite Iraq earning billions of dollars in oil revenue over that time period that have ended up in non-Iraqi banks. At the same time, our conversations with both Iraqis and Americans during our frequent visits to Iraq, as well as official government and unofficial media reports, have convinced us that the Iraqi Government is not doing nearly enough to provide essential services and improve the quality of life of its citizens.

According to the U.S. Department of State’s Iraq Weekly Status Report for February 27, 2008, the Iraq Oil Ministry goal for 2008 is to produce 2.2 million barrels per day (MBPD). To date through the 24th of February, the 2008 weekly averages have ranged from a low of 2.1 MBPD to a high of 2.51 MBPD, missing that goal for one week only. Exports are over 1.9 MBPD, with revenues estimated at $41.0 billion in 2007 and $9.4 billion in 2008 year to date.

Extrapolating the $9.4 billion of oil revenues for the first two months of 2008 yields an estimate of $56.4 billion for all of 2008. And that figure will probably be low given the predictions for oil prices to continue to rise over the coming year. In essence, we believe that Iraq will accrue at least $100.0 billion in oil revenues in 2007 and 2008.

We request you look into this matter and provide answers to the following questions:

  • What are the estimated Iraqi oil revenues each year from 2003-2007?
  • How much has Iraq and the United States, respectively, spent annually during that time period on training, equipping and supporting Iraqi security forces, and on Iraq reconstruction, governance, and economic development?
  • What are the projections for oil revenue and spending for 2008?
  • What is the estimate of the total Iraqi oil revenue that has accumulated unspent from 2003-2007, and the expected estimate at the end of 2008?
  • How much money does the Iraqi Government have deposited, in which banks, and in what countries?
  • Why has the Iraqi Government not spent more of its oil revenue on reconstruction, economic development and providing essential services for the Iraqi people?

Your assistance in this matter would be appreciated.

Sincerely,

Carl Levin
Chairman

John Warner
Member