Is this any way to rebuild Iraq?, by Linda J. Bilmes and Joseph E. Stiglitz, Commentary, Financial Times: Across the Middle East, … the dizzying rise in oil prices has fueled a construction and employment boom. Yet in Iraq, one-quarter of the population remains jobless, and Baghdad gets only 11 hours of electricity a day. Four million Iraqis have been displaced from their homes and are urgently in need of resettlement. After five years of war, the country is still desperately in need of rebuilding.
It’s not that Iraq has failed to share in the oil windfall. … A new report by the U.S. Government Accountability Office shows that Iraqi oil revenues will reach up to $85 billion this year, resulting in a budget surplus of as much as $50 billion. But despite all the money that is pouring in, Iraq is not taking responsibility for its own reconstruction.
Instead, the U.S. military is footing the reconstruction bill. Over the last two years, while Iraq has earned nearly $100 billion in oil revenues (and spent just $2 billion on capital investments such as roads, water and electricity), U.S. taxpayers have plowed $48 billion into reconstruction activities in Iraq. About half of that has gone to the oil and electricity infrastructures. The U.S. has also helped to renovate 3,000 schools, train 30,000 teachers, distribute 8 million textbooks and rebuild irrigation infrastructure for 400,000 people, as well as fund projects to improve drinking water, bridges, roads, sewage treatment, airports and, of course, oil pipelines and refineries.
True, it was the United States that invaded Iraq, and none of the work we’ve done there since is adequate compensation for the … suffering that the Iraqi people have endured. But at a time when the U.S. economy is weak and our own bridges, roads and airports are in desperate need of repair, there is a real question of whether we can sustain subsidizing Iraq’s rebuilding on this scale.
Adding insult to injury is the fact that Iraqis pay a heavily subsidized $1.35 for a gallon of gas…, while the U.S. military — the largest single consumer of oil in the world — is stuck paying world prices of $3.23… Kuwait, by contrast, offers U.S. forces a steep discount…
This means that even as the U.S. is bankrolling Iraq’s reconstruction, it is … transferring to the Iraqis extra money, which, it turns out, is being squirreled away in unproductive international bank accounts. The oil windfall is yet another example of the ongoing financial fallout of the war, which is costing the U.S. more than $13 billion a month (not counting the future costs of caring for war veterans and replenishing military equipment).
It is time for the newly solvent Iraqi government to begin helping financially (as well as militarily) to get the country back on its feet. And it is time for the U.S. to … concentrate … on helping the Iraqi government rebuild its capacity to undertake such projects on its own. …
Whatever the specifics, it is important to move quickly. Elections are looming in Iraq and the U.S., and the two countries are trying to agree on America’s future role. Iraq’s future reconstruction program needs to be home grown — both for the sake of Iraq and for the U.S. taxpayers who need relief from the endless cost of this foolish war.
Originally published at Economist’s View and reproduced here with the author’s permission.
Since “the U.S. economy is weak and our own bridges, roads and airports are in desperate need of repair,” Linda Bilmes and Joseph Stiglitz want Iraq to pick up a greater share of the cost of its own reconstruction: