Mon, Jul 26, 2004 - Page 9 News List

Who will be brought to account for Iraq's war?

By Paul Krugman  /  NY TIMES NEWS SERVICE , New York

Accountability is important. The nation will be ill-served if officials who didn't do all they could to prevent a terrorist attack, or led the nation into an unnecessary war, manage to shift the blame to someone else.

But those weren't the only big mistakes of the last few years. Will anyone be held accountable for the mishandling of postwar Iraq?

Last month we learned that the US, while it has spent vast sums on the war in Iraq, has so far provided almost no aid. Of US$18.4 billion in reconstruction funds approved by Congress, only US$400 million has been disbursed.

Almost all of the money spent by the Coalition Provisional Authority, which ran Iraq until late last month, came from Iraqi sources, mainly oil revenues. This revelation helps explain one puzzle: the sluggish pace of reconstruction.

But it creates another puzzle: given that the authority was spending Iraqi money, why wasn't it more careful in its accounting?

When a foreign power takes control of an oil-rich nation's resources, it inevitably faces suspicion about its motives. Fairly or not, the locals are all too ready to believe that the invaders came to steal their oil.

The way to deal with such suspicion is to let in as much sunlight as possible by appointing financial officials with strong reputations for independence, keeping meticulous books, and welcoming and cooperating with international audits.

What actually happened was just the opposite. Every important official with responsibility for Iraqi finances was a Bush administration loyalist. The occupying authority dragged its feet on an international audit, which didn't even begin until three months ago.

When KPMG auditors hired by an international advisory board finally got to work, they found that no effort had been made to keep an accurate record of oil sales, and that accounting for the US$20 billion Development Fund for Iraq consisted of "spreadsheets and pivot tables maintained by a single accountant."

The auditors also faced a lack of cooperation. They were denied access to Iraqi ministries, which were reputed to be the locus of epic corruption on the part of Iraqis with connections to the occupiers. They were also denied access to reports concerning what they delicately describe as "sole-source contracts."

Translation: they were stonewalled when they tried to find out what Halliburton did with US$1.4 billion.

By obstructing international auditors, by the way, the US wasn't just fueling suspicion about the misappropriation of Iraqi oil money -- it was also breaking its word. After former Iraqi president Saddam Hussein's fall, the UN gave the US the right to disburse Iraqi oil-for-food revenues, but only on the condition that this be accompanied by international auditing and oversight.

A digression: yes, oil-for-food is the UN-administered program from which Saddam undoubtedly siphoned off billions. But we expect the US to be held to a higher standard.

There are also allegations that Saddam's revenue diversion was aided by corrupt UN officials. I think we should wait and see what Paul Volcker, the genuinely independent head of the UN inquiry -- the sort of person the US occupation should have employed -- has to say. Meanwhile, it's worth noting that these accusations are entirely based on documents that are purported to be in the possession of none other than Ahmad Chalabi, who has himself been accused of corruption.

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