Funding Needs for Iraq

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March 1, 2007

President Bush is asking Congress for a Supplemental spending bill with $100 billion for the occupation of Iraq.  

NETWORK is part of a coalition of peace and development organizations seeking support for funds for effective economic development programs for Iraqis.

Why Economic Development is Important

• In his January 23 testimony before Senate Armed Services Committee, Gen. David Petraeus said: "Some of the members of this committee have observed that there is no military solution to the problems of Iraq. They are correct. Ultimate success in Iraq will be determined by actions in the Iraqi political and economic arenas.”

• According to a recent classified study conducted by the U.S. Defense Department’s Joint Warfare Analysis Center, improving the quality of life of Iraqi citizens reduces the level of violence in Baghdad. Citing military sources, the New York Times reported in January, 2007: “…the study found that a 2% increase in job satisfaction among Iraqis in Baghdad correlated to a 30% decline in attacks on allied forces and a 17% decrease in civilian deaths from sectarian violence.”

Summary of Request for the Supplemental Spending Bill:

The 2007 Supplemental currently includes Administration requests for $2.027 billion for some form of Economic Support (see note) and $15 million for refugee services. This amount should be augmented to include $590 million additional funds to be directly used for development and humanitarian services:

• $100 million for Community Action Programs (CAP) and the Marla Ruzicka Iraqi War Victims Fund (Marla Fund)
• $290 million for UNHCR and the humanitarian needs of refugees and displaced persons.
• $100 million for restarting 143 Iraqi state owned enterprises.
• $100 million for the support of civil societies and peace building.

Details:

• Restore full funding of the Community Action Program (CAP) and the Marla Ruzicka Iraqi War Victims Fund (Marla Fund) and support expanded operations. Ensure the Marla Fund has adequate geographic coverage in all areas and provinces affected by the conflict. 
  
  
• What these program are:
  
  
• CAPs are small development programs that bring together all sectors of Iraqi society and are run by Iraqis for Iraqis. They are currently making a difference in many sectors of Iraq. U.S. based Non-Governmental Organizations (NGOs) provide training and support for Iraqis learning new skills and working within their community. These community action programs and peacebuilding efforts have assisted in providing stability in neighborhoods in diverse parts of the country. The U.S. Special Inspector General for Iraq Reconstruction (SIGIR) noted the 98% effectiveness of these programs. Multiplying these successful programs can create a significant step forward.
  
  
• The Marla Fund is administered by CAP and provide monetary assistance to innocent victims of United States Military Conflict. Widows receive small loans and business training; children and orphans receive assistance; bombed homes are restored.
  
  
• Current funding in FY ’07: Currently the FY ’07 Continuing Resolution contains $50 million for these programs.
  
  
• What is needed: In order to continue functioning at existing levels and provide for realistic expansion, these programs need an additional $100 million in the Supplemental until expended.

• Provide funding to the United Nations High Commissioner for Refugees (UNHCR) and other humanitarian groups including aid to host countries as recommended by the Iraq Study Group Report (Recommendation 66).
  
  
• The current situation: Currently there are an estimate 3.8 million Iraqis who have been driven from their homes. Approximately 2 million are in neighboring countries (primarily Jordan and Syria) and 1.8 million are internally displaced in Iraq.
  
  
• The UNHCR needs $160 million to cover their costs of handling the Iraqi refugee and displaced persons crisis.
  
  
• Needs of NGO Refugee Organizations have been identified by them to be $200 million to care for both the internally displaced and those who are in neighboring countries.
  
  
• The Administration’s Supplemental Request included $15 million which the Administration announced as going to UNHCR.
  
  
• What is needed: There needs to be an additional $290 million for FY ’07 to begin to meet the humanitarian crisis.

• Reactivate the 143 state owned enterprises and provide employment to 150,000 Iraqis.
  
  
• What the situation is: Before the invasion, the Iraqi economy was highly centralized and the State owned 193 enterprises. After the fall of the government, the U.S. Administration under Paul Bremmer made the determination that these enterprises should be sold to private businesses. There were no business interested in buying the businesses and so they have remained closed. Under Secretary of Defense Paul A. Brinkley has identified 143 of these enterprises that can be rather quickly restarted with the infusion of capital. The Iraqi government is not functioning well enough to allocate this money to these enterprises. Because of this it is in the interest of the U.S. to provide the needed money in order to employ quickly 150,000 Iraqis in long term employment.
  
  
• What is needed: The supplemental should include $100 million allocated for the start up of 143 Iraqi owned enterprises

• $100 million to support Iraqi civil society, conflict resolution and peacebuilding strategies, and the advancement of human rights and rule of law
  
  
• Since the invasion in 2003, many NGOs and U.S. governmental organizations have worked to train Iraqis in conflict resolution and peacebuilding skills. Among these organizations are the United States Institute of Peace, Iraq Foundation. Through identification and training of leaders to manage neighborhood conflict and run governmental ministries, these organizations have worked to build the peace.
  
  
• The 2007 Continuing Resolution cuts funds to these organizations by about 40% below prior year levels. Many of the organizations are either running out of money or have significantly scaled back the training of Iraqis in conflict resolution.
  
  
• At least $10 million of this funding should be granted on a competitive basis, in order to encourage the participation of more U.S. and international NGOs in efforts to provide technical assistance, training, oversight and support for Iraqi NGOs and organizations.

Effective oversight mechanisms must ensure appropriate performance of funded programs.  The office of the Special Inspector General for Iraq Reconstruction (SIGIR) can be given this task.

• SIGIR was created to provide oversight for the $18.4 billion in Reconstruction funding that was approved by Congress in 1004-05. Since that time SIGIR has provided invaluable assistance through program and financial audits. They make quarterly reports to Congress and have generated program improvements, fraud prevention and the recovery of inappropriately expended federal funds.
  
  
• SIGIR needs additional statutory authority in order to oversee the expenditure of funds outside of the original mandate. This extension should be given for all federal dollars spend on reconstruction, development and peacebuilding.

Note: The Administration is requesting $854 million for “creating jobs, strengthening local government capacity and improving local economies primarily through the Provincial Reconstruction Teams (PRT);” $100 million for emergency needs in agriculture and financial markets; and $400 million for a Quick Response Fund (QRF) modeled on the Commander’s Emergency Response Program (CERP) but to be used by PRT. The ’07 Defense Department Budget has $500 million for CERP. (back to summary)

Contacts:

Simone Campbell, SSS, Executive Director, NETWORK, a National Catholic Social Justice Lobby, 202-347-9797 ext. 227; scampbell@networklobby.org

Erik K. Gustafson, Executive Director, Education for Peace in Iraq Center (EPIC)
202-543-6176 (office); 202-294-3764 (mobile); egustafson@epic-usa.org