WASHINGTON — Rising production and skyrocketing prices could more than double the Iraqi government's expected bonanza in oil revenue this year, leading a top U.S. government auditor to call for an end to American funding of Iraqi reconstruction projects.
The Iraqi government had projected 2008 oil revenue of about $35 billion. But a U.S. report to be issued today by the special inspector general for Iraqi reconstruction will say that oil production in the second quarter of the year hit 2.43 million barrels per day, a post-invasion record.
"With oil now hovering around $125 per barrel -- about five times what it was five years ago -- and Iraq's oil production at record levels, SIGIR estimates that oil revenues for 2008 could exceed $70 billion," the report states.
The report by the independent audit agency provides potent backing to critics of the Bush administration in what has become a highly charged political issue. Democratic leaders in Congress are pushing the administration to pressure the Iraqi government to fund its own infrastructure projects through rising oil revenue.
In the most recent war funding bill, lawmakers inserted a requirement that all U.S. funding for projects not related to Iraqi security be matched on a dollar-for-dollar basis by Iraqi government spending.
In response, administration officials have urged patience, noting that Iraqi spending for reconstruction has risen sharply and that the American contribution would gradually diminish.
U.S. funding for Iraqi reconstruction has declined over the last four years. In 2008, the new report projects, the $4.2 billion appropriated by Congress for rebuilding will be less than a third of the $13.1 billion that Iraq itself is expected to spend.
But Stuart W. Bowen Jr., the special inspector general, said in an interview that he favored ending U.S. participation entirely, because the Iraqi oil windfall plus unspent funds from earlier budgets are more than adequate to meet the country's reconstruction needs.
Bowen said that Barham Salih, the deputy Iraqi prime minister in charge of reconstruction, earlier this month had insisted that Iraq did not need additional foreign funding for reconstruction.
"They certainly have the resources to invest in their infrastructure program," Bowen said. "I think we ought to just take them at their word on that and focus on helping Iraq carry out its own program funded by its own money."
