Corruption: the 'second insurgency' costing $4bn a year

Corruption: the 'second insurgency' costing $4bn a year

One third of rebuilding contracts under criminal investigation

Julian Borger in Washington, David Pallister
Saturday December 2, 2006
The Guardian

The Iraqi government is in danger of being brought down by the wholesale smuggling of the nation's oil and other forms of corruption that together represent a "second insurgency", according to a senior US official. Stuart Bowen, who has been in charge of auditing Iraq's faltering reconstruction since 2004, said corruption had reached such levels that it threatened the survival of the state.

"There is a huge smuggling problem. It is the No 1 issue," Mr Bowen told the Guardian. The pipelines that are meant to take the oil north have been blown up, so the only way to export it is by road. "That leaves it vulnerable to smuggling," he said, as truckers sell their cargoes on the black market.

Mr Bowen, the Special Inspector General for Iraq Reconstruction (Sigir), cites Iraqi figures showing that the "virtual pandemic" of corruption costs the country $4bn (£2.02bn) a year, and some of that money goes straight to the Iraqi government's enemies. A US government report has concluded that oil smuggling abetted by corrupt Iraqi officials is netting insurgents $100m a year, helping to make them financially self-sustaining.

Snip...

The Bush administration's strategy in Iraq hinges on the survival of the government run by Nuri al-Maliki, despite US reservations about the prime minister's readiness or ability to confront extremists in his own Shia community.

But Mr Bowen's office has found that the insurgents and militias have also been abetted by US incompetence. A recent audit by his inspectors found that more than 14,000 guns paid for out of US reconstruction funds for Iraqi government use could not be accounted for. Many could be in the hands of insurgents or sectarian death squads, but it will be almost impossible to prove because when the US military handed out the guns it noted the serial numbers of only about 10,000 out of a total of 370,000 US-funded weapons, contrary to defence department regulations.

more...