Top > Business > 2006 > November > 2006-11-16

The money pit that is Iraq

When America liberated Iraq in April 2003, it was a shell of a country. Sanctions, the ongoing conflict and poverty had pushed the once glorious country into a state of despair. Roads and public buildings were in terrible condition. The USA quickly vowed to change all that.
Desperate to win the favor of the Iraqi population and full of zeal to create a new, better Iraq, money was poured into Baghdad, like water on crusty dry ground.

Now, almost 4 years later, Iraq is still a mess. Government services are still unable to provide for all its citizens, and the people of Iraq are worse off than ever. What happened in the meantime? And, most importantly, where did all the money go?During the first weeks after the war ended the Coalition Provisional Authority, CPA, handed over $8.8bn in cash to the Iraqi government. This money has literally vanished into air. There was no accounting system established at the time, and consequently no one knows where exactly it all went. Or, for that matter, whether it did any good. Under the pressure of postwar chaos, US authorities seem to have panicked into giving away money for free.

After this fiasco, all in total $58bn were spent on Iraq, of which $36bn came right out of Americas pocket. But again, where did it go? A special inspector for Iraqi reconstruction suspects that a lot of money went for the payment of salaries to ghost employees, to people that didn`t exist. But it seems that what really went wrong has a simple explanation: the people in charge were too pressured, and too focused on creating order and saving lives to bother with boring details like accounting. And so, for all their good intentions, there is little to show for them once the dust is settled.