- The Washington Times - Tuesday, April 15, 2008

The Iraqi government is pumping $350 million into three of the war-torn nation’s most embattled areas in an effort to stem violence by producing jobs and reinvigorating social programs, as U.S. lawmakers are pushing for the oil-rich country to pick up its reconstruction tab.

Iraqi Ambassador to the United States Samir Sumaida’ie told The Washington Times that the emergency aid is for “hot spots, troubled areas,” such as Mosul and Basra, where people are joining the insurgency for economic reasons — a point made by many analysts.

“It’s very important to get people working and to wean them away from violence,” said Mr. Sumaida’ie. “This is consistent with government policy of linking economic development with improvement in security.”

One senior U.S. military official based in Baghdad said Iraq will distribute up to $1 billion of its own money in emergency aid in the coming months.

On Capitol Hill, Democrats, who have repeatedly lost standoffs with the White House over war funding and troop pullout plans, see an opportunity to gain bipartisan traction by challenging oil-rich Baghdad’s reliance on the United States to pay for reconstruction.

Sen. Ben Nelson, Nebraska Democrat, introduced a bill last week that would call for an end what he called the White House’s “blank-check policy” for Iraq.

“Over the past five years, American taxpayers have funded $45 billion in reconstruction in Iraq,” he said. “Now, with Iraq looking at record surpluses in government revenue, it is time for that nation to invest their own resources in building and rebuilding infrastructure.”

Mr. Nelson said the nonbinding resolution, which is co-sponsored by Republican Sen. Susan Collins of Maine, is a precursor to upcoming consideration of the administration’s $102 billion war request for 2008, to which he may offer an amendment requiring that reconstruction and other costs be provided to the Iraq government in the form of a loan.

In January, The Times first disclosed that increased Iraqi oil revenues stemming from high prices and improved security are piling up in the Federal Reserve Bank of New York rather than being spent on needed reconstruction projects.

Mr. Sumaida’ie would not detail the source of the money — specifically whether it was oil revenue — but said $100 million of the “urgently allocated” money will be given to the Shi’ite city of Basra, were Iraqi security forces were fighting factions of Shi’ite cleric Muqtada al-Sadr’s Mahdi Army.

Another $100 million will be given to Mosul, a mainly Kurdish city, where violence west of the city escalated yesterday when a suicide bomber and two car bombs killed up to 18 soldiers, many which were members of Iraq’s Kurdish Peshmerga security force, part of the Iraqi army.

The final $150 million is being sent to the Al Shula and Sadr City neighborhoods in Baghdad, two Mahdi Army militia strongholds where fighting has escalated over the recent weeks.

Gen. David H. Petraeus said Friday that the current situation in the region will mainly be handled by the Iraqi government, adding, “This is going to be, at the end of the day, an Iraqi-led solution.”

“It is a political, tribal and economic engagement as much as it is a military engagement,” Gen. Petraeus said.

The situation is also complicated by complex political and military questions that arose from the Basra offensive, which began on March 25.

In the southern oil hub, where Iraqi forces took charge of the fighting, a number of Iraqi soldiers deserted the military. Some viewed the prime minister’s move to quell the violence in the city with skepticism, while others contend that Iraqi security forces are showing promising signs that the Iraqi government is making progress.

On Sunday, more than 1,300 Iraqi policemen and soldiers were dismissed by Iraqi officials for abandoning their posts.

Sheik al-Sadr insisted yesterday that the Iraqi government give the jobs back to the soldiers, some of whom sympathized with the Madhi Army militias, according to Associated Press reports from the region.

“All the brothers in the army and police who gave up their arms to their brothers [Sadrists] were only obeying their grand religious leaders, and they were driven by their religious duties,” Sheik al-Sadr said. “I call upon all concerned authorities to reconsider their decision to dismiss those people from the army and the police. I demand they be reinstated and even rewarded for their loyalty and devotion to their religion.”

However tenuous the situation is, the Iraqi government is trying to mitigate further violence in the region with the aid initiative.

U.S. officials and outside analysts blamed the collapse of the country’s political and physical infrastructure for Baghdad’s failure to spend its oil revenue on projects considered vital to restoring stability in the country.

Out of $10 billion budgeted for capital projects in 2007, only 4.4 percent had been spent by August, according to official Iraqi figures reported earlier this year by the U.S. Government Accountability Office (GAO). The report cited unofficial figures that about 24 percent had been spent.

Meanwhile, some $6 billion to $7 billion from last year’s budget is “being rolled over” and invested in U.S. treasuries, said Yahia Said of the private watchdog group Revenue Watch Institute.

Provincial governments, which had little or no control of their finances under dictator Saddam Hussein, are struggling to spend the money that they have under new budget systems, said Joseph Saloom, an adviser to David Satterfield, the senior adviser to Secretary of State Condoleezza Rice and coordinator for Iraq.

That budget system includes strict bidding rules and a process of committee approvals designed to prevent corruption, Mr. Saloom said.

According to Mr. Said, the situation is slightly better on the local government level, partly because of U.S. forces who supply protection, logistics, resources and emergency funds.

“There is more [improvement] on the grass-roots level on the back of the surge,” he said, adding that orders go out from the ministers in Baghdad, but there is no structure or staff at the middle level to carry out the instructions.

Sharon Behn and S.A. Miller contributed to this report, which is based in part on wire services.

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