SUBCOMMITTEE ON INTERNATIONAL ORGANIZATIONS, HUMAN RIGHTS, AND
OVERSIGHT
BILL DELAHUNT, Massachusetts, Chairman
RUSS CARNAHAN, Missouri
DANA ROHRABACHER, California
DONALD M. PAYNE, New Jersey
RON PAUL, Texas
GREGORY W. MEEKS, New York
JEFF FLAKE, Arizona
VACANT
CLIFF STAMMERMAN, Subcommittee Staff Director
NATALIE COBURN, Subcommittee Professional Staff Member
PHAEDRA DUGAN, Republican Professional Staff Member
ELISA PERRY, Staff Associate
SUBCOMMITTEE ON THE MIDDLE EAST AND SOUTH ASIA
GARY L. ACKERMAN, New York, Chairman
HOWARD L. BERMAN, California
MIKE PENCE, Indiana
DAVID SCOTT, Georgia
STEVE CHABOT, Ohio
JIM COSTA, California
JO ANN DAVIS, Virginia
RON KLEIN, Florida
THADDEUS G. MCCOTTER, Michigan
BRAD SHERMAN, California
JOE WILSON, South Carolina
ROBERT WEXLER, Florida
J. GRESHAM BARRETT, South Carolina
ELIOT L. ENGEL, New York
JEFF FORTENBERRY, Nebraska
RUSS CARNAHAN, Missouri
BOB INGLIS, South Carolina
SHEILA JACKSON LEE, Texas
CONNIE MACK, Florida
DAVID ADAMS, Subcommittee Staff Director
HOWARD DIAMOND, Subcommittee Professional Staff Member
GREGORY MCCARTHY, Republican Professional Staff Member
DALIS BLUMENFELD, Staff Associate
(III)





least making an effort not to mention hundreds of billions of dol-
lars fighting an insurgency that the administration was unpre-
pared for. Furthermore, it forgave an additional $4 billion in Iraqi
debt to the United States that was incurred by the Reagan-Bush
administration which had loaned to Saddam Hussein during his
war of aggression against Iran.
Now we hear the President requesting the Congress to appro-
priate almost another $4 billion for Iraqi construction. I think it is
important to note that most other countries that have given assist-
ance to Iraq have insisted that their aid be provided in the form
of loans not grants but not the United States. All of our assistance
is being given as grants.
In fact, when Congress voted in 2003 to require that this assist-
ance be provided as a loan—and I should note that both Mr. Rohr-
abacher and Mr. Pence agreed with that proposal-President Bush
threatened to veto the bill. So the then-Republican congressional
leadership stripped it out, and now we have been asked to give —
not to loan—that additional $4 billion while our national debt, the
American national debt, is in excess of $8.8 trillion.
We are running enormous budget and trade deficits, and the
White House recently announced in submitting its budget to Con-
gress that they would be seeking $66 billion worth of cuts in Medi-
care. I for one am unable to comprehend the rationale for why the
administration insists on providing this assistance in the form of
grants instead of loans, particularly when I hear that the Iraqi
Government has almost $12 billion on hand.
Now I recognize that we have a moral obligation to the Iraqi peo-
ple to help repair the damage resulting from our invasion and occu-
pation, and the President said in January that the Iraqis will com-
mit $10 billion of their own money for reconstruction. But if the
Iraqis have the resources to finally fulfill Wolfowitz' prediction and
pay for their own reconstruction, why are they not using all of their
money, and why is the administration committing more American
tax dollars as grants to pay for what the Iraqis could pay for?
It is obvious that many here in the United States need our help.
This is what we hope to address during the course of today's hear-
ing, and with that I will now turn to my good friend and colleague
from California, the ranking member of the subcommittee, Mr.
Rohrabacher.
Mr. ROHRABACHER. Thank you very much, Mr. Chairman. So
Secretary Wolfowitz was wildly off the mark, and now he is at a
job where being wildly off the mark will not hurt anybody I guess
except the entire world economy seeing that he is the chairman of
the Bank, the World Bank, is he not? Let me note that I remember
very well that vote that we had right off the bat as to whether or
not the reconstruction money that would be poured into Iraq after
the military operations, whether that would be a loan, and I be-
lieve if my memory serves me correctly, we were using future oil
revenues as a collateral for that loan, which would then be repaid
by a 10 percent tax or something like that on their oil revenue
until the loan was paid back.
Mr. Chairman, I do not think that we should just point fingers
at Republicans. We just had a supplemental come through, now
that your party is in control of the House and the process, that w


what, $4 billion, $5 billion in that was for reconstruction. Why did
we not make sure that all future money, including that money, for
reconstruction is in the form of a loan using their oil revenues as.
collateral? And if you think that is a good idea, I would be very
happy to cosponsor a piece of legislation that we could coauthor,
and anyone on this panel would like to join us in saying that any
future reconstruction money—or in fact any other money we give
to Iraq-will be based on loan and will be based on a pay back out
of 10 percent of oil revenue for as number of years as is necessary
to repay the loan.
That makes all the sense in the world to me, and now that you
guys are in power, let us go. Let us do it. So just an idea I thought
I would bring up seeing that I have the floor now.
Let us say this. There has never been a war in American history,
there has never been actually an effort in American history made
by the United States Government that was not filled with corrup-
tion and with waste and with at least a 25 percent factor of wasted
money, and that is not an excuse for wasting the taxpayer's money.
That is a realization that goals—you know goals are what are sig.
nificant. Is the goal that people are trying to achieve is it worth-
while, realizing that in trying to achieve that goal that there is
going to be a waste of money and a waste of lives?
In World War II, it was beyond imagination, and it was hidden
from the American people. The lives that were lost unnecessarily
and the profiteering that went on during the war are just beyond
belief in many cases. Same with Vietnam War. Same with World
War I. In the Spanish-American War, more people died of bad meat
that was sold to the government in tin cans than died at enemy
hands.
During the American Revolution and during the Civil War of
course, they are the same thing, during the American Revolution,
Washington's army was so plagued by the political end of the sup-
ply chain that his army was starving at Valley Forge, and if it was
not for—and I forget the fellow's name now—Gary Ackerman will
have to tell me because he knows. That little Jewish guy that fi-
nanced Washington's army, Gary? Was Hymie Solomon his name
I think? Right.
And so an individual had to step up. Our system was so bad that
an individual had to step up, and I understand that man was never
repaid and actually died in poverty. I remember I spent a brief
time in Vietnam, in 1967, doing some political work there in the
summer of 1967, and I remember how overwhelmed I was at the
level of corruption that was going on, and I came back, and had
a discussion with my father who had been in the marines, and he
told me that if you think it is bad in Vietnam, you should have
seen what it was like in Korea.
And well what we have to do is decide whether or not the goals
we have in mind-do our very best to come to grips with the fact
that in a free society there are profit seekers who take advantage
of wartime crises, and I might add national emergencies as well.
We have to do our very best to cut them off, and to make sure the
money is being spent wisely but realizing that this is part of what
the price is going to be paid to attain those goals.


And whether or not the Korean War—where there was all sorts
of profiteering going on and corruption—was it good that we stood
firm in Korea so that Korea today is a bastian of democracy? And
what kind of world would it have been had we lost? Would Japan
have been neutralized? Would the Cold War be over? Would all of
Korea be run by some maniac trying to produce a nuclear weapon
that is hostile to the United States?
Well those are the issues that are at hand. The corruption is
something we have to work on to try to perfect but it does not itself
negate the purpose of the mission, and I hope that as we discuss
this that we are looking not at this as an attempt to undermine
our mission in Iraq but instead to try to get the best use of tax dol-
lars, to make sure that the scarce money that we have got is not
being wasted by people who are being corrupt, and let me add the
decision that we both backed about trying to make this a loan to
begin with, that was opposed by the administration.
And if I might remind people here that this probably was not the
official reason that was given but what when I dug into this and
asked why are we not making this loan payable back with all this
oil money they are going to have? You know what the answer was
that I got from the muckity mucks on the top? It was, well the Ger-
man and the French banks are very upset that if we make this a
loan that the Iraqis, that they are going to just renege on all the
loans that Saddam Hussein took when he was in power, and that
would really destabilize the international financial situation.
So, Mr. Chairman, we did that in order to placate German and
French banks. It is about time we watch out for the American tax-
payer. What we have to do when we talk about economic decisions
it should be based on what is good for the American people but is
also consistent with having a successful mission in Iraq. Ending
that conflict in a successful way is what is vitally important now,
and I will have to say that anything we do today should not be
hampering the achievement of that goal. In fact, by focusing on the
best use of the money, we should be enhancing the ability to use
this money to reach our goals in Iraq. Thank you very much, Mr.
Chairman.
Mr. DELAHUNT. Thank you, Mr. Rohrabacher. Now I turn to my
colleague from New York, the chairman of the Subcommittee on
the Middle East and South Asia, Mr. Ackerman.
Mr. ACKERMAN. Thank you, Chairman Delahunt. I am not sure
that you exercise oversight over the administration that you want.
You have to exercise oversight over the administration that you
have, and I do not know that we should be spending a lot of time
investigating the Spanish-American War and rotten meat, and just
glossing over what we have to deal with, and what we can make
a difference about, and that is the war that we find ourselves in
right now.
Indeed, 4 years ago when Deputy Defense Secretary Wolfowitz
famously told the House Appropriations Committee that Iraq could
pay for its own reconstruction, and that the United States' tax-
payers would not be on the hook, 4 years to the day former Sec-
retary Wolfowitz noted we are dealing with a country that can real-
ly finance its own reconstruction and relatively soon.


we could have saved the American taxpayers a third of what we
have provided so far.
In the end, the United States faces the same problem on recon-
struction that we face on the security situation. If we continue to
do things for them, the Iraqis will not do things for themselves. If
we do not intervene, however, very little gets done at all. How we
square this particular circle is important because motivating Iraqis
to utilize their own resources would allow us to end our involve-
ment in Iraq that much more quickly.
The President has said that America's commitment to Iraq is not
open-ended, although his own commitment might be, but America's
commitment to the war is certainly not unlimited. The House has
responded to the American people by adding benchmarks to the re-
cently passed supplemental which will make American expecta-
tions on security clear to Iraqis. I think a similar sort of clarity
should be applied to reconstruction funding otherwise we are just
teaching the Iraqis how to enjoy other people's money. I thank you,
and look forward to hearing from our witnesses.
[The prepared statement of Mr. Ackerman follows:]
PREPAREDGRESS FROM THE SOUTH ASIA
PREPARED STATEMENT OF THE HONORABLE GARY L. ACKERMAN, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW YORK, AND CHAIRMAN, SUBCOMMITTEE ON
THE MIDDLE EAST AND SOUTH ASIA
Thank you, Chairman Delahunt. 4 years ago, then Deputy Defense Secretary Paul
Wolfowitz famously told the House Appropriations Committee that Iraq could pay
for its own reconstruction and that the United States taxpayer would not be on the
hook. 4 years to the day, former Secretary Wolfowitz noted that, “We are dealing
with a country that can really finance its own reconstruction, and relatively soon.”
4 years and $21 Billion in U.S. assistance later, relatively soon seems more like
relatively never. The government of Iraq is apparently either unable or unwilling
to assume the burden of its own reconstruction. And just last week the House
passed the President's supplemental request that contained a portion of the addi-
tional $3.7 Billion for reconstruction that the President is seeking. So while the
President asks the American taxpayer Or, more accurately, since this is unbudgeted
emergency spending, the future American taxpayer, to pony up yet again for Iraq,
the Iraqi government finished last year with $12 Billion available but unspent for
reconstruction. That's right, $12 Billion sitting in the bank. The government of Iraq
has used only 20% of $6 Billion actually budgeted for overall reconstruction projects
and only 10% of $3.5 Billion slated specifically for improvement of Iraq's oil infra-
structure. For next year, the Iraqi government expects to spend $2.4 Billion on oil
infrastructure. That's sounds like a lot of money but it actually represents a 33%
decrease from the amount available in 2006. Given that oil exports produce 94% of
Iraq's revenue this is not exactly the trend line in the oil sector that we'd like to
see.
By contrast, the United States has invested $2 Billion in Iraq's oil infrastructure,
an important investment, I'm sure, but for reconstruction to be successful, we can't
want it to succeed more than do the Iraqis.
While I think Congress should review our reconstruction priorities in Iraq and we
should encourage the Iraqi's to shoulder much more of this burden, I can't escape
the deep irony here of criticizing the Iraqi's for how they spend their money. After
all, the American-led Coalition Provisional Authority proved equally if not more in-
capable of spending Iraqi money effectively. In the view of many, myself included,
the CPA lost $8.8 Billion of Iraqi money. Mr. Bowen, I think put it a bit more chari-
tably by criticizing the CPA for "lax fiscal controls.” Either way it's clear that no
one is really sure where that money went. Maybe it financed genuinely valuable re-
construction projects, maybe the CPA burned it to generate electricity, maybe the
CPA was just handing out bundles of cash. Had the CPA used this money effec-
tively, maybe we could have saved the American taxpayers a third of what we've
provided so far.
In the end, the United States faces the same problem on reconstruction that we
face on the security situation: if we continue to do things for them, the Iraqis won't
do things for themselves. If we don't intervene, however, very little gets done at all.


17
struction Fund, over $21 billion, the Iraq Security Forces Fund,
over $10 billion, Commanders Emergency Response Program, over
$2 billion now have been much better accounted for, and let me
point out that corruption within the United States program has
been a relatively minor element.
The most significant corruption cases that we found we have ag-
gressively pursued and put people in prison but they arose most-
ly—at least the ones we have resolved during CPA. We have 28
cases ongoing right now at DOJ, and they largely involve post CPA
but they are still in development.
But as to waste, that is a different story, and that is where we
have tried to provide oversight and audits that have addressed
some of the waste issues, and specifically we provided an audit in
this last quarterly that addressed capacity development and under-
scored the need for a more coherent oversight of capacity develop-
ment. Developing a baseline, better coordination, developing a de-
tailed plan for capacity development, and coordinating with donors
were just some of the recommendations we have made.
But progress is advancing in that, and most importantly on
budget execution. As Chairman Delahunt and Chairman Ackerman
pointed out, the Iraqis left billions of dollars in the bank at the end
of last year unspent on reconstruction, and that is an untenable po-
sition. That money must move forward, and pursuant to the work
of Ambassador Carney and the Embassy with the Government of
Iraq and the recent agreements, as Ambassador Satterfield just
pointed out, that money is starting to move. Ten percent is out, and
there is a goal to spend 50 percent of it by mid year. The Iraqis
understand the issue, the capacity question remains though.
Corruption, the second point I identified, is something that my
office has been focused on since inception. We served as a support
entity for the Iraqi inspector general system. There are 29 of them,
something brand new in Iraq. The Commissioner on Public Integ-
rity, someone I see every visit, that is their FBI director, and the
Board of Supreme Audit has been there for a long time, and I meet
with him each trip, and let me say that the CPI Commissioner and
the President of the Board of Supreme Audit represent to me peo-
ple who are serious about trying to attack this significant corrup-
tion problem.
The CPI Commissioners has 2,000 cases involving over $8 billion
in allegations of fraud, and the BSA President has again empha-
sized to me his view that corruption afflicts every ministry, and is
inhibiting progress.
On the security front, as Ranking Member Pence just noted, I re-
turned with a new sense about progress on the Baghdad security
plan, a sense that is different from what happened during Oper-
ation Forward Together last summer, and that sense is that the in-
creasing pressure in neighborhoods that were not reached before is
having a positive affect, and thus I am cautiously optimistic, and
that cautious optimism is underscored by a drop in attacks in
Baghdad.
The point being that it will provide Prime Minister Maliki and
the Government of Iraq, which operates primarily in the green
zone and lives there, breathing room, some space to concertize their
leadership, so they can begin to move forward on budget execution,


27
what we think is a much more useful, much more realizable goal
of building from the bottom up private enterprise.
Mr. ROHRABACHER. Well we will be looking at the actual num-
bers, and I hope that those numbers do reflect that commitment
because creating a situation where hundreds of thousands of indi-
viduals can be out and involved in the economy is probably worth
much more than one huge mega project.
Mr. SATTERFIELD. We agree, and we have shifted the projects
away from the big multinational design build firms, which had
about 95 percent of those projects in CPA times to 80 percent going
with smaller Iraqi firms, and that is a process that will continue.
Mr. ROHRABACHER. Thank you.
Mr. DELAHUNT. Mr. Ackerman.
Mr. ACKERMAN. I think I just figured it out. We are not making
great progress in Iraq because everybody is sitting around there
reading their copy of the Economist. A couple of points. There
seems to be $8.8 billion missing on our wat. Eight point eight bil-
lion dollars if you boil it down to $20 bills 400 million $20 bills.
I bet you if you stacked that up it is bigger han a nuclear weapon.
I bet you, and we cannot seem to find it.
And Mr. Satterfield, you mentioned with regards to a whole host
of reasons why all that money is sitting in a bank that has gone
unspent for reconstruction saying it is because the Iraqis do not
know how to do that. I think that is the soft prejudice of low expec-
tations. I mean some of those guys figured out how to steal 400
million bills. That is pretty resourceful.
I think if they got $8 million or $12 million or whatever it is sit-
ting in those bank accounts we ought to just grant amnesty to who-
ever figured out who stole that $8.8 billion because evidently those
unsophisticated people who cannot figure out how to get a thing
done have stole 400 million pieces of paper. It kind of runs circles
around all of our guys in being able to hide it. That is pretty re-
sourceful to me. Just grant them amnesty. Give them 10 percent
of the $12 billion that are left, and let them run things. These are
guys who know how to get things done.:
And I just cannot believe some of the things that we are hearing.
Iraqis are very resourceful people. We are just not giving them a
chance and insisting upon the fact that they develop those re-
sources and those abilities. I mean I do not know how the first
thing happened with all that money missing on our watch, and I
do not know why we just give them a pass and say they do not
know how to do things. They know how to do things pretty good
it seems to me.
It is a lot of sophistication to steal $8.8 billion and put it in
places or a place that nobody can find it with all of our resources
and expertise, and I know, Mr. Bowen, you are doing a great job,
and we appreciate it, and I think we have to take a look at where
all of these resources—whether they were stolen from us or stolen
from the Iraqis or stolen by the Iraqis or stolen by the contractors
or stolen by our people—I have no idea, and I do not know if any-
body else has any idea but maybe you can address that, Mr.
Satterfield.
Mr. BOWEN. First of all, with respect to the audit of January 30,
2005, that addressed how the CPA managed the budgeting process


34
Mr. SATTERFIELD. Mr. Chairman, we began from the bottom up
redesigning both our mission, civil-military in Iraq, how the URF
project its remaining funds were to be distributed and how we
worked with the Iraqis in the late summer of 2005. It was a funda-
mental realignment of mission, of goals, benchmarks, monitoring
mechanisms to begin to get a better handle on exactly the issues
which all of the members here and your colleagues in the Senate
and the House have referred to.
Over the course of 2006 with a new Iraqi Government in place,
the first government under the new Constitution with an elected
council of representatives, we began to realize by the spring of 2006
the magnitude of the budget execution problem, and so we re-
sponded. We responded by putting in place mechanisms which
began to work in mid and late summer of last year to train in spe-
cific key ministries, and then across all budget executing ministries
how you got the kinds of execution skills that would be necessary.
That work continues. It did not just start. It began in the spring
st year but its implementation—what the military call the. out-
comes from all of this—are going to be seen over the course of this
year.
Mr. DELAHUNT. I yield to the gentleman, and I am grateful for
his patience, from Georgia, Mr. Scott.
Mr. SCOTT. Thank you very much, Mr. Chairman and certainly
welcome, Ambassador and Mr. Bowen. You know I think that this
hearing personifies just why this invasion into Iraq will go down
in history as the absolute worst blunder in foreign policy in the his-
tory of this country. Just think of it, and it is wrapped in a char-
acteristic of extreme arrogance. First, invading a country that did
not attack our country, making the assumption and trying to jus-
tify it on lies, miscalculations, and I am not saying anything in any
partisan way here.
The truth is out. The truth is out. When certain intelligence did
not fit what our Commander In Chief wanted, he discounted it and
went someplace else, even from our own legitimacy. Three different
CIA directors coming with different information that did not give
the answer. Somewhere now we are paying that price for this mis-
calculation, for this deceit.
Now, the reason I say that is that I learned a long time ago
growing up as a kid that the way you get out of a problem and a
mess is understanding how you got into it, and that is the fallacy
here. This affect in Iraq is based upon imperialism, colonialism. We
can go in here and build the kind of government, the kind of struc-
ture that we want. There is not a single Iraqi that came to this
country that said, come over here, invade us, destroy this regime,
and establish a democracy. Nowhere was that.
The reason we went into Iraq was for supposedly weapons of
mass destruction, and some supposed connection to al-Qaeda which
does not exist. We found all that out. Even in the President's early
acknowledgement mission accomplished 2 years ago. In fact, on
hindsight he was right. The mission was to go find weapons of
mass destruction. Once that was done, the mission was accom-
plished. Now we have gotten into this mess but I wanted to lay
that course out so we could examine this within truth and a proper
perspective.


56
Mr. PAYNE. As you may recall, in the recent Katrina situation,
the administration was making the region, the state and the col-
lege students put up their share on a number of items that we said
that we cannot wave it. I mean these are Americans. These are
New Orleans. People in Louisiana, and was fought by the adminis-
tration that this money cannot be given as a grant. This is going
to be a loan. The city is going to be responsible for repaying it back,
and that is I guess only in America.
Mr. DELAHUNT. I thank you for the point. I think it is well taken.
I am sure there are ways to be creative here but I have to assure
you, Ambassador, that there will be resistance, and I believe it will
be bipartisan. We cannot afford to entertain budgets on the domes-
tic side that cut Medicare by $66 billion over 5 years and focus all
of our treasure, both in terms of our blood and our financial re-
sources in Iraq. That is something that the American people will
no longer accept in my judgment. I always have one out there.
Ambassador, I am going to have to respond to my good friend
from California. It is very, very clear that in the Iranian-Iraq war
from 1980 to 1988—and I invite you to comment if you so choose
that we, the United States, delivered dual use technology to Sad-
dam Hussein. That we delivered ingredients that were later used
in terms of the development of chemical weapons, and in the course
of the attack in Halabja that after that attack was made known to
members of the U.S. Congress they pursued and recommended to
the then administration to seek a United Nations resolution con-
demning Saddam Hussein, and that was blocked at the United Na-
tions.
Our record is one of not having clean hands, and that is a lesson
that we should learn as we proceed in terms of our foreign policy
objectives.
Mr. SATTERFIELD. Congressman, I was not involved in Iraq af-
fairs at that time. My focus was elsewhere but we certainly can
clarify the points you made for the record.
Mr. ACKERMAN. If there are no other questions, let me thank the
panel on behalf of all of us, and Bill, why do you not rap the gavel?
Mr. DELAHUNT. This hearing is now adjourned.
[Whereupon, at 5:33 p.m., the subcommittees were adjourned.]