|MADRID - October 23 - A staggering US$4 billion in oil revenues and other Iraqi funds earmarked for the reconstruction of the country has disappeared into opaque bank accounts administered by the Coalition Provisional Authority (CPA), the US-controlled body that rules Iraq. By the end of the year, if nothing changes in the way this cash is accounted for, that figure will double.
The financial black hole, uncovered by a Christian Aid investigation, is revealed as delegates gather for the donors' conference in Madrid. Before pledging money from their own countries' coffers to boost the reconstruction efforts, as requested by the US and UK governments, these delegates should first demand: 'What has happened to the missing billions?'
It is expected that a separate fund, managed by the UN and the World Bank, will be announced at the conference for donors' money, to allay fears of how this cash will be spent. But this should not stop donors from pushing for accountability of the original, massive reconstruction fund - most of it Iraqi oil money.
In particular the British government, which has promised financial transparency in dealings with Iraqi oil funds, should use its influence to ensure that the missing money is accounted for. Christian Aid is calling on Prime Minister Tony Blair to deliver on his promises.
The fact that no independent body knows where this cash has gone is in direct violation of the UN resolution that released much of it for the rebuilding of Iraq's shattered infrastructure. The agency that is supposed to oversee these funds has not even been set up yet.
Christian Aid is calling for the full and immediate disclosure of how this money has been spent, and for urgent moves to establish a proper means of regulation. For the future, the British government should seek to ensure that a proportion of all Iraqi oil revenues are earmarked for the country's development - as a binding condition on future oil exploitation.
'This is Iraqi money. The people of Iraq must know where it is going and it should be used for the benefit of all the country's people - particularly the poorest,' said Roger Riddell, Christian Aid's international director.
The current situation goes to the heart of claims and counter-claims about how Iraqi oil revenue should be used. It can only fuel the serious suspicion in Iraq that a disproportionate amount of cash is being creamed off for the benefit of US companies - money that should be spent on alleviating the chronic unemployment and other serious problems faced by Iraqis, including the poorest and most vulnerable.
Independent observers agree that, despite the huge amounts of money allocated to repair a country shattered by decades of war and sanctions, not nearly enough has been done and not nearly fast enough in the six months since the US announced an end to hostilities. There are still power cuts, fuel shortages, and a lack of medicine and equipment in hospitals. Clean drinking water is not available in many areas and raw sewage can be seen on the streets of many towns, including Basra - which is controlled by British forces.
The fact that billions of dollars of Iraq's own money cannot now be accounted for can only add to a burning sense of injustice.
'We have absolutely no idea how the money [from Iraqi oil revenues] has been spent,' one senior European diplomat to the UN told Christian Aid. 'I wish I knew, but we just don't know. We have absolutely no idea.'
The missing billions are a combination of pre- and post-war oil revenues now controlled by the CPA, plus seized Iraqi government assets and funds vested overseas. Conservative estimates put the total at US$5 billion, of which less than US$1 billion can be accounted for. Estimated oil revenues between now and the end of the year are expected to total a further US$4 billion.
This money is distinct from the reconstruction funds promised by the US and UK governments, and from any cash that is raised from other governments at the Madrid conference. This is Iraqi money that should be spent for the benefit of all Iraq's people, not sat on in secret by an unelected foreign administration.
'The situation is little short of scandalous,' said Roger Riddell. 'The British government must use its position of second in command of the CPA to demand full disclosure of this money and its proper allocation in the future.'
The dangers of such a situation persisting in the future were highlighted in the Christian Aid report Fuelling Poverty - Oil, War and Corruption, published in May. Compared with countries of similar size, the report found that oil-producing developing countries are characterised by greater degrees of:
Poverty (for the great majority of the population)
Dictatorial, authoritarian or unrepresentative government
War and/or civil strife
'A properly constituted, democratic government must be established for all the people of Iraq as soon as possible,' said Roger Riddell. 'Otherwise, once again, oil could prove a curse rather than a blessing.'