Iraq Could Need Billions More in Aid

WASHINGTON – Iraq may need billions more in rebuilding aid from the United States and other sources because of uncertainty over its oil revenues and foreign debt, a study by the Congressional Budget Office (search) said Friday.

If Iraq receives significant relief from its international debt — $120 billion by some estimates — and its oil revenue grows, it may need no further help to reconstruct its shattered economy and public works facilities, the budget office said.

But if its debt remains staggeringly high and its oil production stays weak, Iraq may not have enough money for reconstruction, or even to cover its own government's day-to-day costs of operating, the report said.

"Lower oil exports or oil prices and higher levels of debt service could mean that Iraq would need billions in additional assistance in the years to come," said the budget office, which is Congress' nonpartisan fiscal analyst.

The report underscores that Iraq could be a continued burden for U.S. taxpayers at a time of record federal deficits. President Bush has faced growing criticism from Democrats and conservative Republicans over rising spending and deepening budget shortfalls, which hit $375 billion last year and could be near $500 billion this year.

Rep. John Spratt (search) of South Carolina, top Democrat on the House Budget Committee (search), said the report "raises concerns that there could well be a gap between reconstruction costs in Iraq and available resources, and that the American taxpayer may be asked to foot the difference."

Sean Spicer, spokesman for the budget committee's majority Republicans, said Bush had requested money for Iraq the administration believed sufficient, "and there are no indications that it is not enough."

The Iraqi government could generate up to $36 billion for reconstruction over the next four years, under the best of eight hypothetical scenarios for potential oil revenue and debt burden that the budget office used.

In the worst case, Iraqi could find itself facing $37 billion in deficits over that same period, forcing it to use outside aid just to run its government, the report said.

And that "may understate how difficult the situation would be, as international donors would be unlikely to provide aid just to support Iraq's operating budget," the study warned.

More than a dozen countries and international organizations have pledged about $36 billion so far for Iraq's reconstruction, including $18.4 billion in grants from the United States, the report said.

The United Nations (search) and the World Bank have estimated rebuilding costs will total about $55 billion from 2004 through 2007. That figure assumes Iraq would be restored to its condition before the 1991 Persian Gulf war.

Iraq's own budget assumes it will have $17 billion for reconstruction costs through 2007. That means it might need only $2 billion more in foreign aid — assuming its optimistic assumptions about oil revenue and debt come true.

Other reconstruction estimates have been for $100 billion or more.

The report did not factor in the costs needed to restore security in the country or the help that might come from private investment.

The budget office did not assess Iraq's needs and resources. It used data from the Coalition Provisional Authority, the U.S.-led agency administering the country, as well as the United Nations, the World Bank and the U.S. and Iraqi governments.