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KEEPING SECRETS: AMERICA AND IRAQ'S PUBLIC
FINANCES
A New Report from the Open Society Institute
October 2003
 Read
the full report 
NEW YORK, October 14-Iraq's public finances fall short of
international standards of accountability, says a report released
today by the Iraq Revenue Watch project of the Open Society
Institute.
Keeping Secrets: America and Iraq's Public Finances,
released on the eve of an international donors' conference
for Iraq in Madrid, calls for greater transparency in the
management of the Development Fund for Iraq (DFI), the central
repository for Iraqi revenues. The Coalition Provisional Authority
(CPA) has delayed the establishment of a crucial oversight
body and refused to disclose basic information about large
purchase contracts and DFI expenditures, the report says.
The Iraqi public, as well as members of the United Nations
Security Council, which mandated the creation of the DFI,
have been left in the dark about how the Fund works.
Further, the DFI fails to serve Iraqi interests. "Bidding
processes for big reconstruction contracts take place behind
closed doors, excluding Iraqi businesses that are unable to
compete with multinational corporations," said Isam al
Khafaji, director of Iraq Revenue Watch.
Oversight of the DFI is also inadequate, the report contends.
The UN-mandated International Advisory and Monitoring Board,
which is supposed to report back to the Security Council and
ensure that DFI funds are properly used, has yet to be established.
Instead, a separate CPA-created entity, the Program Review
Board, votes on expenditures and has just one Iraqi member
with voting privileges. This Board is often slow to publicize
minutes from its biweekly meetings, and what minutes are produced
lack essential information, such as the DFI's current balance.
The Coalition Provisional Authority's failure to disclose
financial information threatens to jeopardize contributions
from other donors. There is now talk among international actors
about creating a separate Iraqi reconstruction fund for non-U.S.
donations, a move that would only complicate matters for a
future interim Iraqi administration.
The report calls on the Coalition Provisional Authority to
reverse these trends and offers a set of recommendations,
including increased Iraqi involvement in the DFI, the establishment
of the International Advisory and Monitoring Board, and better
public access to information.
"With the United States increasingly isolated from other
donor countries, it must work to regain the confidence of
the international community and the Iraqi people," said
al Khafaji.
"An important step in that direction is improving the
management of Iraq's public finances. That would also be key
to bringing about stability."
Read
the full report
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