The news that Iraq has a $79 billion budget surplus due to the rising cost of oil, and that most of it is in the Federal Reserve Bank in New York, is fascinating. At the same time, very little of that money is being spent on reconstruction and development, or even on maintenance for previously completed reconstruction projects. Part of the problem, of course, is the difficulty of disbursing massive sums for a developing nation. The story points out that you could take the money as a sign that Iraq is ready to be more independent and manage its own development, or the money's stagnation as a sign that the country really requires U.S. overlords to hand out bags of cash.
Here's the thing: That last argument is nonsense; the U.S. can barely disburse money effectively in Iraq. Since 2004 audits have unearthed billions of dollars in misplaced funds, not to mention corruption or maintenance problems or the shoddy work of contractors who are often overpaid anyways. Given all that, I'm ready to let Iraqi leaders try to do the job themselves -- and they might, as the Iraqi legislature could pass a $22 billion budget if negotiations over provincial elections proceed succesfully.
--Tim Fernholz
