Report: Effort to rebuild Iraq has been underfunded

A report released Monday by the nonpartisan Center for Strategic and Budgetary Assessments finds that the $2.2 billion requested by the Bush administration in the fiscal 2006 supplemental and fiscal 2007 budget for Iraq reconstruction would fall short of what is needed by at least $5 billion to $10 billion -- a figure that takes into account Iraqi resources and other international contributions.

Given the deficit concerns of the Bush administration and Congress, even the requested amount is drawing concerns, especially after lawmakers have approved $29 billion for Iraq reconstruction and security since the 2003 invasion ended.

If the United States is forced to shoulder the entire burden, required funding could reach $18 billion to $28 billion to meet the United Nations and World Bank estimate in 2003 of $55 billion over fiscal 2004-fiscal 2007 to restore Iraqi infrastructure to its pre-1991 Gulf War state and lay the groundwork for further development, the report said. It notes the U.S. effort has been augmented by other international donations of $14 billion.

While the United Nations and World Bank calculated that only $5 billion of the $55 billion estimate would be needed to train and equip Iraqi security forces, the United States has devoted as much as $11 billion to that pressing need, the report said. That has left far less -- $32 billion -- than the international organizations considered necessary for actual reconstruction.

Reconstruction costs could end up being about 20 percent higher due to delays and cost overruns resulting from heightened violence and security needs, the report warned. Dwarfed by military expenditures of $220 billion over the last three years, not counting this month's $65.3 billion fiscal 2006 supplemental request, lack of reconstruction aid could perhaps undercut the war effort, according to the report's author.

"Given the critical importance to the war effort of winning the 'hearts and minds' of the Iraqi people, and the generally strong support among Iraqis for reconstruction-related assistance, such a lopsided approach seems, at best, risky," wrote defense analyst Steven Kosiak.

But war spending could decline as the United States withdraws troops in future years, a change that could ease the budget crunch on foreign assistance funds. According to CBO figures released last week, if the number of forces in Iraq, Afghanistan and other overseas posts diminishes from 186,000 active-duty and reserve personnel in fiscal 2006 to 50,000 troops from fiscal 2010 through fiscal 2016, outlays for the war effort over the next 10 years would decrease $140 billion from $544 billion to $404 billion.

The decline in budget authority, or the amount Congress actually appropriates each fiscal year as opposed to what the government spends, is starker -- a $186 billion decrease, from $557 billion to $371 billion over fiscal 2007-fiscal 2016.