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Dealing with Iraq’s Budget Surplus

The United States must begin transferring financial responsibilities to the Iraqi government immediately in order to give the Maliki government the incentive to take responsibility for the well-being of ordinary Iraqi people.

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While Iraq’s ability to generate revenue continues to grow, its capability and willingness to effectively and efficiently execute its budget is virtually non-existent. Iraqi budgets have been passed but only a fraction of Iraq’s revenue has been spent. After more than five years of having the American taxpayer bear the full cost of Iraq’s reconstruction and stabilization, it is time for the Iraqi government to take budgetary responsibility, especially since the Bush administration is forced to borrow money from abroad to pay these bills.

Iraq’s revenues and its budget surplus are large and growing. Transferring more of Iraq’s financial burden to the Iraqis is not only a fiscal necessity for the United States; it is also a way for the Maliki government to gain the trust of the Iraqi people. By assuming a greater role in Iraq’s reconstruction, providing essential services, and creating much-needed jobs, the government can provide an impetus for political reconciliation. Former Afghan Finance Minister Ashraf Ghani put it well when he recently said, “the budget is where social rights meet social obligations.” The United States must begin transferring financial responsibilities to the Iraqi government immediately in order to give the Maliki government the incentive to take responsibility for the well-being of ordinary Iraqi people.

But in doing so the United States must exercise strict oversight, offer guidance, share best practices, and provide honest criticism of shortcomings as the Iraqis take on more budgetary responsibility. Financial mismanagement, a lack of bureaucratic infrastructure, and widespread corruption all have the potential to derail initiatives to improve the lives of the Iraqi people. Similarly, transferring budgetary authority for security programs such as the “Sons of Iraq”—scheduled for October 1 of this year—to the Iraqi government without ensuring that the Maliki government does not carry out its policy of eliminating these Sunni militias could undermine recent security progress.

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