MOSCOW (RIA Novosti correspondent Maria Belozertseva.) - An Iraq Donors' Conference is to be held in the second half of July in Amman (Jordan).
The main subject for discussion is how the mechanisms for providing Iraq with financial aid can be improved. The bulk of the funds promised to the Iraqis at the previous donors' conferences have not reached them. Another question for the conference is how the funds allocated to Iraq have been distributed and spent.
The U.S. Congress recently began an investigation into the financial machinations surrounding the Iraq Development Fund. The creation of the Fund was approved in May 2003 by UN Security Council Resolution No. 1483, which entrusted the management of the Fund to the Coalition Provisional Authority of Iraq (CPA) headed by Paul Bremer. The money remaining from the Oil for Food program, as well as profits from Iraqi oil exports in 2003 and 2004, were transferred to the Fund.
The U.S. congressmen responsible for auditing America's financial activities in Iraq are mooting the figure of $12 billion. They say that this is the amount that was converted into cash and distributed by the transitional administration in the virtual absence of controls. On just one day, June 29, 2004, about $2.4 billion disappeared. It is not known what happened to $8.8 billion that was allegedly distributed by the occupational authorities between various Iraqi ministries. In any case, there is no paper trail. Yet the UN Security Council resolution obliged the authorities to use the Fund money in a transparent way (and surely that would have been an obvious requirement anyway).
It was due to fears that the money from this fund as well as other charities would just vanish into thin air that Russia refused to join Iraq's donors. Moscow prefers to develop bilateral cooperation with the Iraqi authorities, whether the issue is humanitarian aid or direct investment in specific industrial projects. This allows Russia to monitor the allocated funds and guarantees that Russian money will not be used to pay for the services of companies from some third countries. Meanwhile, other countries contributing large sums to the donor funds have in effect been paying companies that were selected by the occupational authorities.
U.S. congressmen are also investigating how this was allowed to happen.
The Democrats have published the results of an auditing inspection of the major Pentagon contracts awarded to Kellog, Brown & Root (KBR) for the rebuilding of the infrastructure of the Iraqi oil and gas sector ($2.5 billion) and for supplying the American contingent in Iraq ($8.6 billion). KBR is a subsidiary of the well-known American company Halliburton (which has close ties to U.S. Vice President Richard Cheney). The inspection results show that the contractors cheated the Pentagon out of $1.5 billion by using various financial scams and forging documents. KBR doubled the figures in the accounts for foodstuffs, motor gasoline and lubricants. The company received about $170 million from the Iraq Development Fund. KBR is now faced with serious problems: contract payments have been suspended and an official investigation has been launched.
Senators-Democrats also discovered that the tender procedures used to award the contracts for the reconstruction of Iraq grossly violated departmental instructions. The trail leads to the secretariat of Donald H. Rumsfeld, the US Secretary of Defense, who kept this issue under special control and did not allow department specialists responsible for financial discipline access to the tender documents.
It is not yet known what else the Senators could uncover. However, KBR's contracts in Iraq are long-term (five years or more) and the terms and conditions of the contracts cannot be changed post factum.
Of course, on the face of it, the situation in Iraq has changed, and it is no longer a place where billions of dollars can disappear without a trace in one day. The occupational authorities handed over power to the Iraqis a year ago. The Iraqis can now manage their resources themselves. However, in a situation when either transitional or provisional government holds the reins of power, there is no guarantee that financial resources will be used for specific projects, rather than find their way to the bank accounts of numerous officials. Besides, the mechanism for providing donor aid remains unchanged, which means that the transparency of the allocation of funds continues to be a pressing problem.
The current situation in Iraq is such that any industrial facility or component of infrastructure, which the Iraqi authorities have worked so hard to rebuild, could be a target for terrorists. Who could guarantee that terrorists would not be able to get their hands on the uncontrolled financial resources that are flowing into Iraq?
