George W Bush undertook to bring prosperity to the Iraqi people. Yet while oil revenue is soaring, precious little seems to be reaching the streets of Baghdad.
One morning at the end of January this year, emergency workers in Baghdad converged on al-Rasheed Street, where a major fire had engulfed Iraq's Central Bank. No one had been killed in the still-smouldering ten-storey building, but the bank's records had gone up in smoke. Financial documents concerning billions of dollars had been turned to ash. As a comparison, it would be as if the records of the Bank of England had been accidentally incinerated.
The fire was no accident. "It's still being investigated, but it was arson," said Stuart Bowen, the American special inspector general for Iraq reconstruction, who examines how the United States spends its billions in Iraq. He has a thorough understanding of the failures of Iraq's reconstruction efforts.
Bowen, who spoke by phone from Baghdad, would not speculate as to the motive for the Central Bank fire, but other sources familiar with the case believe the torch job was intended to remove records of misconduct, theft or malfeasance. Photographs of the destruction show the twisted wreckage of a huge computer server.
Burning evidence is a time-honoured, if crude, way of covering tracks, but it is seldom so audacious in scope. The scale of corruption is equally audacious; it reaches staggering levels throughout the Iraqi government.
Consider: the leading former anti-corruption judge and his top investigator both fled the country in fear for their lives last August and are seeking political asylum in the US. The judge testified to the US Congress that "corruption in Iraqi today is rampant across the government, costing tens of billions of dollars".
The US secretary of state, Condoleezza Rice, has also called corruption in Iraq "pervasive".
"Follow the money!" advised the legendary source known as Deep Throat in All the President's Men, the book about the Watergate scandal in the White House. Wise advice in general for an investigative journalist, or anyone else, trying to understand motive and patterns. The trouble is, it is virtually impossible to follow the billions of dollars pouring into Iraq.
It has been five years since Paul Wolfowitz, then US deputy defence secretary, famously predicted to Congress that Iraq "could finance its own reconstruction, and relatively soon". Wolfowitz and his neocon colleagues had relied on the Iraqi politician Ahmad Chalabi for their information, and his predictions of oil wealth were alluring. Wolfowitz told the US Congress that "the oil revenues of Iraq could bring between $50bn and $100bn over the course of the next two or three years".
It was a wild overestimation. The real expectation for Iraq at that time was that it would sell about $12bn in oil for 2004 and an estimated $15bn in 2005. Nonetheless, in the long run, Wolfowitz may be proved right.
Bowen believes the Iraqi budget could exceed $50bn for 2008. Chiefly, he credits soaring oil prices. Costly oil, devastating to western econo mies, is giving Iraq's shaky government a windfall. "At $102 a barrel," Bowen says, "an extraordinary amount of revenue is going to be flowing into the government of Iraq's coffers."
But once it gets there, how will that $50bn be spent, and who will control it? Bowen, who has investigated American corruption in dealing with Iraqi counterparts, warns that "there are two pathways. One is to put the resources to beneficial use and that would require fighting corruption seriously."
The alternative, Bowen said, is grim. "Corruption could become worse because the opportunity to steal obviously expands with the growth in revenues." More money might simply mean more theft.
There is plenty of cause for concern in the various postwar government departments. In the defence ministry, procurement fraud allegedly topped $1bn in 2004. Investigators claim there have been large-scale diversions of medicines in the health ministry. In the oil ministry, high-level officials have been charged with stealing fuel.
Bribery and embezzlement
There is also concern about the ministry of finance, through which most of the $50bn oil revenue will ultimately be disbursed. Here, according to a draft US report on corruption in Iraq last year, "bribery and embezzlement are the most numerous bases for investigations".
The kidnapping of a British IT consultant, seized from the finance ministry last May, has also raised suspicions that some people may have been attempting to destroy evidence of corruption. A group of British contractors had just arrived on-site. A security team of well-trained veterans escorted Peter Moore, a computer expert contracted to a US company called BearingPoint, into the building. At this point, a platoon-strength posse of Iraqis, "dressed in police uniforms", according to press accounts, roared up in vehicles. They headed straight for their objective - the computer expert and his guards. Outgunned and apparently unclear whom they were dealing with, the British team put up no fight. The computer expert and his four-man detail were snatched away. It looked like an "arrest" but in reality it was a kidnapping.
For some time, US and UK forces launched noisy sweeps through Sadr City and other Shia districts. A source close to the case says the reason the kidnappers were "dressed in police uniforms" was that they were indeed police. It was a branch within the police loyal to the Sadr militia, explains the source.
Now, following the release of a hostage video at the end of last month, it is known that the men are being held by a group calling itself the Shia Islamic Resistance of Iraq. In the video, a man identified as Moore pleads for help. His captors are demanding the release of nine prisoners held by the British, and the Prime Minister, Gordon Brown, has become personally involved, appealing for the release of the British hostages.
However, both Iraqi and American investigators believe the kidnapping, like the Central Bank arson, was not initially an act of terrorism in the usual sense of the word but, more precisely, organised or business crime. The motive was to stop the consultant from installing a computer system which would introduce more accountability into the ministry's accounting systems.
It is hardly unusual in the 21st century to computerise records that deal with billions of dollars, and the project in hand was intended to centralise and automate Iraq's spending. The aim was to ensure accountability and financial transparency. Over the years, however, the Iraqis have objected to automation. As one American working with them explained, some feared that the system "would impose too much transparency".
Before the kidnapping, the project was near completion and due to go online. After the men were snatched, that all stopped. The "Iraq Financial Management Information System" was abandoned. The finance ministry still handles its paperwork the old-fashioned way.
Five years after the invasion, the Iraqi government has designated 2008 the "Year of Reconstruction and Anti-Corruption". By this summer, a windfall of oil money will be pouring into Baghdad. Whether the structures are in place for the beleaguered citizens of Iraq to enjoy the benefit is far less certain.
Aram Roston is the author of "The Man Who Pushed America to War: the Extraordinary Life, Adventures and Obsessions of Ahmad Chalabi", newly published by Nation Books (£15.99)
Clarification
On 13 March 2008 we published an article, "Follow the money", which made allegations about accounting procedures at the Trade Bank of Iraq. We now accept that there is no evidence to suggest that there has been any wrongdoing by the Trade Bank of Iraq or its chairman and we are happy to make that clear.
Killing figures
0 number of Commons votes on Iraq since invasion in 2003
1 number of Commons debates on the war between July 2004 and January 2008
£1bn annual cost of Iraq War to British taxpayer
$5bn cost of ten days' fighting in Iraq
50 percentage of trained Iraqi doctors who have left their country since war began
175 British soldiers killed in Iraq
3,980 US troops killed
7,987 Iraqi Security Force personnel killed
81,874 - 89,353 documented civilian deaths to 10 March
25,000 number of children forced out of their homes every month during 2007
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