WASHINGTON– Today’s increased price of oil is fueling Iraq’s ability to pay more for its reconstruction costs that up to now have been heavily funded by U.S. taxpayers, a senior U.S. official said at the White House yesterday.

Since Saddam Hussein was deposed by U.S. and coalition forces in 2003 “a lot of the heavy lifting” in terms of cost in restoring Iraq’s worn out infrastructure has been accomplished with American tax dollars, said U.S. Treasury Department employee Ged Smith, who is the U.S. Treasury attaché at the U.S. Embassy in Baghdad.

Smith, who has been posted in Baghdad since 2007, came to Washington for consultations. Iraq has experienced “a tremendous increase in their financial resources, based on the increase in the price of oil,” Smith said, after he attended a video teleconference from Iraq in the Roosevelt Room with President Bush and other senior civilian and military officials.

“There’s a lot of impatience that Iraq has not been able to increase its spending levels as much as people would like,” Smith said. Yet, now that Iraq has billions of dollars of its own resources, he said, it’s “really an opportunity to have Iraq spend the money to move itself forward.”

The price of oil shot up to nearly $150 a barrel this summer. The worldwide economic crisis has pushed oil prices down to around $70 a barrel recently, but that’s still a much-higher price per barrel compared to historical levels.

“We’re undergoing a transition … it is gathering steam,” Smith said of the Iraqi central government’s maturing process, to include its growing treasury.

Vastly improved security seen across Iraq today, Smith said, has aided the mission of U.S. and coalition-staffed provincial reconstruction teams to assist Iraqi officials in setting up governance and economics systems – looking to repair or replacement of vital infrastructure such as roads and schools, and providing key municipal needs such as water, electricity, and sewage treatment.

Security gains in Iraq are encouraging, but Iraq remains “a fragile state,” in part, because it is incumbent upon the fledgling Iraqi government to provide myriad much-needed services to the populace, Army Gen. Raymond T. Odierno, commander of Multinational Force Iraq, said during an Oct. 13 interview on Fox News Channel.

Iraqi government officials “have to make sure that they’re able to deliver services to the people of Iraq,” said Odierno, the top U.S. military officer in Iraq.

If the Iraqi government doesn’t provide those essential services, then, “the population could look elsewhere,” Odierno said, meaning that insurgents could attempt to fill the void.

Odierno is correct, said Thomas F. Burke Jr., a retired Army Special Forces officer and U.S. State Department employee who’d served as an embedded PRT leader in Baghdad province. A key component of the PRTs’ mission, Burke said, is to assist Iraqi officials in providing those services, and to provide instruction on how to budget for, track and manage them.

When the Iraqi people see their government taking responsibility for providing essential services for them, Burke said, then Iraqis will “feel more aligned with the central government.”

And, as Iraqis continue moving forward in managing their internal affairs, “they’ll have better ownership of their projects, if they are using their own money,” Smith said.

Staffed by specialists from the State Department, U.S. Agency for International Development, the U.S. military and other governmental and non-governmental agencies, PRTs assist Iraqi officials in setting up governance and economics systems; looking to the repair or replacement of vital infrastructure such as roads and schools, and providing key municipal needs such as water, electricity, and sewage treatment.

U.S. military units work alongside PRTs in Iraq and Afghanistan to provide security and other services. The PRT concept is an example of interoperability between U.S. agencies, which senior White House, State Department and Pentagon leaders view as an effective way to prosecute the war on global terrorism.

Iraq’s 18 provincial governments “really had no budget authority” before the first PRTs were established in Iraq in 2005, said U.S. State Department employee Jason P. Hyland, who until June 2008 had served as the PRT leader for Ninevah province in northern Iraq.

Since 2005, the PRTs have partnered with the U.S. Embassy in Baghdad and the Iraqi government, Hyland said, to steadily increase both the execution rates of the Iraqi budget and the amount of the budget.

“That’s really been a success story, because again, you’re working from regional bureaucrats who are not even used to having that kind of authority,” Nyland said. Iraqi government monies under Saddam, he said, were mostly used to benefit the late-dictator, his family and cronies.

This year’s combined capital budgets of Dohuk, Erbil and Sulaymaniyah provinces in the Kurdish region in northern Iraq amounts to about $1.5 billion, said U.S. State Department employee Jess L. Baily, who last year served in Erbil, Iraq, as the deputy team leader for the regional PRT.

“They’ve never had this level of resources to execute projects and do things,” Baily said. Officials in Dohuk province, he said, are now using their budget to renovate the municipal water system for the residents of the city of Dohuk.

“We’re not going to be there forever,” Smith said, “so, the Iraqis have to learn how to manage a budget process and manage their state resources.”

Up Next

Financial Crisis Has Military Implications, Vice Chairman Says

WASHINGTON– Today’s increased price of oil is fueling Iraq’s ability to pay more for…