Last updated on: 1/23/2009 5:27:00 AM PST
Will the revenue from Iraqi oil production pay for reconstruction?
Donald Rumsfeld, US Secretary of Defense at the time of the quote, on Oct. 2, 2003, stated in a Pentagon news conference:
"The bulk of the funds for Iraq's reconstruction will come from Iraqis -- from oil revenues, recovered assets, international trade, direct foreign investment -- as well as some contributions we've already received and hope to receive from the international community."
Oct. 2, 2003 - Donald Rumsfeld
The Congressional Budget Office stated in its Jan. 2004 report "Paying for Iraq's Reconstruction":
"One major policy question is how much of Iraq's reconstruction funding should be provided by the country itself. Budgets drawn up by Iraqi planners envision spending about 72 percent of revenues on the government's day-to-day operating expenses, 23 percent on reconstruction, and about 6 percent on foreign obligations. Overall, the amount that the Iraqi government can contribute to reconstruction will depend on how much revenue it receives from oil exports and how much debt and other foreign obligations it must pay."
Jan. 2004 - Paying for Iraq's Reconstruction (1.2 MB)
Congressional Budget Office (CBO)
Stephen Moore, MA, President of Club for Growth, and Tom Feeney, JD (R-FL), wrote in a Sep. 26, 2003 National Review article titled "War & Peace":
"In the run-up to the war in Iraq, administration officials had consistently argued that Iraq's oil revenues would pay for the costs of reconstruction. That financing plan, which draws from the assets of Iraq to pay for their own economic rehabilitation, seems no less sensible today than it was six months ago. Iraq is not a poor country — at least not for long. It is a resource-rich country, with the highest levels of oil reserves of any nation in the world other than Saudi Arabia. With an estimated 100 billion barrels of known reserves, and probably much more than that is technologically recoverable from these rich desert fields, the discounted present value of the oilfields could easily approach $1 trillion."
Sep. 26, 2003 - Stephen Moore, MA
Tom Feeney, JD
Paul Wolfowitz, PhD, former US Deputy Secretary of Defense, stated in a June 9, 2004 article "The Road Map For A Sovereign Iraq," published in the Wall Street Journal:
"Already, through a combination of oil revenues and existing assets, nearly $20 billion of Iraqi funds have gone into the Development Fund for Iraq to finance government operations and reconstruction projects. An additional $8 billion of oil revenues are projected to go into the fund by the end of this year."
June 9, 2004 - Paul Wolfowitz, PhD
Joseph Biden, JD, US Senator (D-DE) at the time of the quote, said the following in a Nov. 21, 2005 speech to the Council on Foreign Relations:
"We were told before the war, oil would pay for reconstruction. Two-and-a-half years after Saddam's statue fell, Iraq still is not exporting what it did before the war. They are 700,000 barrels per day below target. That is roughly $15 billion in lost revenues a year."
Nov. 21, 2005 - Joe Biden, Jr, JD
An Institute of International Finance report was referenced in a Oct. 2, 2003 Reuters article titled "Iraq to Remain Poor 'For Years to Come'":
"The report said that assuming an oil price of $25 a barrel... in 2004 and oil exports reaching no more than 2.5 million barrels per day by the end of next year, export revenues would be $10 billion.
'Given that it could take up to $15 billion to cover recurrent public expenditure in 2004, this would leave the governmnet with a financing gap of around $5 billion.
If reconstruction costs are added, the public financing gap in 2004 is set to be far larger, perhaps as much as $15 billion,' the report said."
Oct. 2, 2003 - Reuters
Institute of International Finance (IIF)
Jim Krane, MA, Persian Gulf Correspondent for the Associated Press, wrote in an Apr. 28, 2006 article "Iraq Oil Output Lowest Since Invasion":
"Contrary to optimistic expectations, Iraq's oil production has slipped further and further since the U.S.-led invasion, to an average of 2 million barrels a day. It has never regained even the reduced production levels that prevailed in the 1990s, when Iraq was under tough U.N. sanctions...
Iraq's sputtering oil sector has defied optimists led by Vice President Dick Cheney and former Deputy Defense Secretary Paul Wolfowitz, who hoped booming exports from Iraq could pay for its reconstruction and help satisfy world demand."
Apr. 28, 2006 - Jim Krane, MA
Ilene R. Prusher, MA, Staff Writer of The Christian Science Monitor, stated in a Sep. 3, 2003 article "Latest Iraq Threat: Cash Crunch":
"The reconstruction of Iraq, Bush administration officials predicted before the war, will pay for itself.
But hopes of using Iraq's own oil and resources to fund the rebuilding were contingent on an ideal of postwar peace and security. Instead, a serious budget crunch, combined with a vicious circle of violence, sabotage and economic instability is slowing reconstruction plans.
And, significantly, oil revenues aren't flowing as expected. A coalition official says that war damage and sabotage are staunching the flow, to an estimated $2.3 billion in the period from May through December 2003, down from an earlier estimate of $3.4 billion.
One of the Bush administration's hopes for rebuilding Iraq was that by revamping the oil ministry and using seized Baathist funds and other assets, a free Iraq would fuel its own renaissance. But oil revenues, have been disappointing, in large part due to looting attacks on oil pipelines and facilities by groups trying to derail U.S. efforts here."
Sep. 3, 2003 - Ilene R. Prusher, MA