[lit-ideas] Re: Oil Prices

  • From: "Julie Krueger" <juliereneb@xxxxxxxxx>
  • To: lit-ideas@xxxxxxxxxxxxx
  • Date: Thu, 1 May 2008 23:32:13 -0500

*<<WASHINGTON (CNN)* -- Iraq's government is expected to reap a $70 billion
windfall from soaring oil prices, about double the previous projections, the
U.S. military's reconstruction watchdog reported Wednesday.

Although Iraq's oil production remains below its pre-war peak of 2.5 million
barrels per day, the price per barrel has more than doubled since the
U.S.-led invasion in 2003, said Stuart Bowen, the special inspector-general
for Iraq reconstruction, in his quarterly report to Congress.

The issue has become a sore spot for some U.S. lawmakers as the war enters
its sixth year, with both Republicans and Democrats raising complaints that
U.S. taxpayers are footing the bill for reconstruction work in the now-flush

Congress has approved about $47 billion in reconstruction funding since the
invasion. About $30 million of that has been spent, the inspector-general's
report found, and the country's U.S.-backed government was paying about half
the cost of reconstruction projects by the end of 2007, the report states.

But further progress will depend on Iraq's ability to spend what it has
budgeted and to keep a lid on a pervasive culture of corruption, which
Bowen's office has described as a "second insurgency." Iraqi officials have
said they plan to issue a supplemental budget to manage the additional
money, according to Wednesday's report.

"This supplemental budget presents an extraordinary opportunity for
Iraq<http://topics.cnn.com/topics/Iraq>to expand its infrastructure
investment, but it also heightens concerns
about corruption," the report states.

And even when projects have been completed, other problems have prevented
them from being fully effective: A $277 million U.S.-funded water-treatment
plant in the southern city of Nasiriya, about 200 miles south of Baghdad,
was running at about 20 percent capacity because it lacked a reliable power
source and trained employees, Wednesday's report stated.

A report this week found that 112 contracts were canceled due to poor
performance or delays, and others were scaled back after problems emerged,
effectively breaking the deal "without the need to terminate for convenience
or default." Scaling back those projects is "an appropriate process," the
report found, "but does mask problem projects to the extent they occur."

The reports were released as crude oil futures neared $120 a barrel, driving
higher gas prices <http://topics.cnn.com/topics/Gas_Prices> among an
American public already unhappy with the war.

Defense Secretary Robert Gates told the Senate Armed Services Committee that
he heard lawmakers "loud and clear" during hearings this month and would cut
$171 million that had been slated to build police stations in Iraq.

"We will seek full funding from the government of Iraq for this purpose," he
wrote in a letter released Tuesday by the committee's chairman, Michigan
Democrat Carl Levin.

Iraq has spent about $50 billion on reconstruction projects, with
international aid adding another $16 billion to the total, Bowen's office
reported. Though the amount Gates trimmed Tuesday is a small fraction of
what U.S. taxpayers have committed, Levin called it an "important first

"It's a significant message to the Iraqis that there is a lot of pressure
from the American people, from the Congress, to stop spending a lot of money
in Iraq for things the Iraqis can pay," he said.

When President Bush launched the invasion of
Iraq<http://topics.cnn.com/topics/Iraq_War>in 2003, administration
officials told Congress that Iraq could finance its
own reconstruction with oil revenues.

CNN's Lisa Desjardins and Ted Barrett contributed to this report.>>

Julie Krueger

On Thu, May 1, 2008 at 7:50 PM, Phil Enns <phil.enns@xxxxxxxxxxx> wrote:

> "Enjoying the Shodden Freud"
> "Dank and Shane!"
> "Ouch! Gezike-net!"
> That is quite enough.  Time to move on.
> Trying to maintain a bit of ordnung around here,
> Phil Enns
> Yogyakarta, Indonesia
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