“I’ve seen the figures from the U.S. Government Accounting Office. Something like 30 percent of the U.S. reconstruction budget goes to security. I’d say that another 30 percent goes to layering. That is, they use subcontractors—which are necessary given the procurement policies—whose costs may be too high for Iraq. So I’d say that 60 percent, maybe even 70 percent, of reconstruction aid goes into nonproductive expenditures.
The U.S. taxpayer is paying $20 billion to support Iraq and we are getting something like $6 or $7 billion in actual hard assets. There is also the issue of the ongoing management of these projects and the operations and maintenance. This frequently costs quite a lot; it can sometimes cost as much as 20 percent of the capital cost. On the Iraqi side, I think the cost effectiveness ratio is much better. [As of late 2005], our investment budget [was] the equivalent of something like $6 billion, and the grant assistance program and loans [were] about the same. So the effect of foreign assistance is very high in terms of reconstruction. I believe that is going to go back down drastically by 2007, because by then, the United States will have committed all of its funds and dispersed them. Therefore, we will have to either rely on international aid agencies or bilateral aid. And it won’t be on that scale that it is now.”
Ali Allawi is the Iraqi minister of finance in January 2006
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