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Interview: Minister Says Iraq Has No Budget Surplus, Worries over Reconstruction

Council on Foreign Relations

Interviewee: Bayan Jabr Solagh, Minister of Finance of the Republic of Iraq
Interviewer: Greg Bruno, Staff Writer, CFR.org

October 10, 2008

The notion that Iraq is sitting on billions of dollars in windfall oil profits as the United States spends $10 billion monthly on operations there has led to complaints recently from both Democratic and Republican lawmakers. An August report (PDF) by the U.S. Government Accountability Office put Iraq's surplus as high as $79 billion through 2008. Analysts note that such estimates are notoriously difficult to confirm, and that Iraqi and U.S. accounting standards differ markedly.

Iraq's finance minister, Bayan Jabr Solagh, denies that Iraq is holding back any huge surplus of money that could offset U.S. spending. "The surplus or the excess in money that people talk about is money that was not spent [at the time of the GAO report]," the finance minister told CFR.org in an interview. "We are spending it now through the budget process." Solagh also expressed concern more broadly about investment in Iraq and the impact of a continuation of the global financial crisis.

Americans are looking for an answer on the question of Iraqi surplus money. The figure of $79 billion, as reported in an August 2008 U.S. General Accountability Office report, was cited by Senator Obama in his debate with Senator McCain on Tuesday. Why is the U.S. spending so much in Iraq while there is such a huge Iraqi surplus?

This number is not accurate at all. We have at the DFI fund [Development Fund for Iraq] an amount that is not exceeding $22 billion. And this amount is allocated for the supplemental budget for 2008. In this regard there is no surplus. The surplus is only at the Central Bank of Iraq, and it is needed for supporting the Iraqi currency, and it does not exceed $30 billion. It is not surplus; it is the federal reserve.

Read the rest of this article on the cfr.org website.

Copyright 2008 by the Council on Foreign Relations. This material is republished on GlobalSecurity.org with specific permission from the cfr.org. Reprint and republication queries for this article should be directed to cfr.org.