Development Fund for Iraq

On May 22, 2003, the United Nations Security Council unanimously adopted Resolution 1483, which ended sanctions and endorsed the creation of the Development Fund for Iraq, to be overseen by a board of accountants, including repesentatives from the United Nations, World Bank, and International Monetary Fund (IMF). It endorsed the transfer of over $1 billion (of Iraqi oil money) from the Oil-for-Food Program into the Development Fund. All proceeds from the sale of Iraqi oil and natural gas are also to be placed into the fund.

The fund, controlled by U.S. viceroy L. Paul Bremer III, has swelled to $7 billion, thanks to a $3.1 billion contribution from the U.S. Congress, and billions of dollars more in seized assets of the Iraqi government. And to whom have the occupying powers pledged these riches? The UN resolution states that the fund "shall be used in a transparent manner to meet the humanitarian needs of the Iraqi people." John Negroponte, the U.S. representative at the United Nations, told reporters after the vote that "the intent is to use Iraq's resources and to dispose and dispense Iraq's resources to the benefit of the people of Iraq." That paternalism towards Iraq's people is mighty white of Ambassador Negroponte.

According to the October 23, 2003, report by "Christian Aid" titled "Iraq: the missing billions",
 * "...billions of dollars of oil money that has already been transferred to the US-controlled Coalition Provisional Authority (CPA) has effectively disappeared into a financial black hole. For all the talk of freedom and democracy for the Iraqi people - before, during and after the war which toppled Saddam Hussein - there is no way of knowing how the vast majority of this money has been spent."
 * "This situation is in direct violation of the UN resolution (1483) that allowed Iraqi assets to be transferred to the CPA. Indeed, the body that is supposed to oversee how Iraq's assets are used (International Advisory and Monitoring Board) has not even been set up yet."

Note: there is good content in the report referenced above, including some detail of why the IAMB is not operational, which could beneficially be added to their article here.

Henry Waxman, senior Democrat on the House of Representatives' government reform committee, wrote to the Republican chairman of the reform committee on July 9, suggesting there was a serious case to answer. Subpoenas should be issued, he said, "to investigate potential mismanagement of the Development Fund for Iraq (DFI) by the United States". -- Published on Tuesday, July 20, 2004 by the Guardian/UK
 * In particular, Mr Waxman is curious about "the [Bush] administration's last-minute 'draw-down' of billions of dollars from the DFI for unspecified expenses" prior to last month's transfer of sovereignty. "For example, $1bn [about £550m] was withdrawn from the DFI during the last month of the CPA's existence for unspecified 'security' purposes."


 * He is concerned about apparent attempts by the then CPA chief, Paul Bremer, to mandate and direct the spending of a further $4.6bn in Iraqi oil funds after the handover.


 * He is also exercised by the results of a belated audit of the DFI's accounts that concluded they were "open to fraudulent acts" and lacked "transparency". In all, the CPA earmarked more than $6bn of Iraqi funds in the last two months of its existence.


 * He wants to know whether CPA officials obstructed the auditors, KPMG, who were employed by the UN-created International Advisory and Monitoring Board (IAMB).


 * And he also asks why the White House has "failed to comply with numerous IAMB requests [for information about] payments of approximately $1.5bn in DFI funds to Halliburton" - the Texas-based oil services company formerly headed by the vice-president, Dick Cheney.

Other Related SourceWatch Resources

 * Executive Order 13303
 * International Advisory and Monitoring Board
 * war profiteering

External Resources

 * Coalition Provisional Authority: "The Development Fund for Iraq." DFI Disbursements as of 29 December 2003.
 * U.S. Mission to the European Union: "U.S. to Create a Development Fund for Iraq at Iraq Central Bank," May 23, 2003.
 * Iraq Revenue Watch web site.
 * Steve Kretzmann and Jim Valette, "Operation Oily Immunity", AlterNet, July 24, 2003.
 * "$3 Billion Transferred to Development Fund for Iraq. The UN Controller has transferred US$3 billion to the Development Fund for Iraq. Transfers of $1 billion each were made on 28 May, 31 October and 18 November from the United Nations Iraq escrow account, at the request of the Security Council contained in paragraph 17 of resolution 1483 (2003) of 22 May 2003."

Notes for further incorporation
Meanwhile, the Bank's Board of Executive Directors approved the appointment of a Bank representative to serve on the International Advisory and Monitoring Board (IAMB) of the Development Fund for Iraq. The IAMB was established as part of UN Security Council Resolution 1483, approved last week, which lifts sanctions on the country, phases out the UN Oil-for-Food Program, and aims to meet the humanitarian and reconstruction needs of the Iraqi people. The IAMB is expected to appoint independent public accountants to audit the development fund established with future Iraqi oil revenues.