U.S. Suspends Funding to Iraqi Opposition Group
By ROBIN WRIGHT , Times Staff Writer
WASHINGTON -- Despite the growing drumbeat to expand the war on terrorism to Iraq, U.S. officials this week suspended key funding to the leading Iraqi group opposing President Saddam Hussein because it has failed to account for tens of millions of dollars in U.S. aid.
The Iraqi National Congress, based in London, was formally notified Thursday that a new audit of the group had revealed serious "financial management and internal control weaknesses" in its handling of the U.S. funds, according to the State Department.
Concerns about the Iraqi National Congress' use of U.S. aid underscore the difficulty the Bush administration faces as it debates what to do about Hussein's regime. Washington remains committed to ousting the Iraqi president, but problems with the Iraqi group have slowed and complicated the effort.
Besides questions about the use of aid managed by the State Department, the INC has also failed to use most of the $97 million allocated to it by Congress under the 1998 Iraqi Liberation Act in a dispute over tactics, U.S. officials say. The organization has refused since September, for example, to send members for training at the Pentagon, a cornerstone of the program. So far, the organization has used less than $5 million of the fund, the officials say.
The conflicts over money reflect a fundamental split between the United States and the opposition group in its effort to change the regime in Baghdad.
The Iraqi National Congress, led by Ahmad Chalabi, is pushing hard for the United States to foot the bill for operations inside Iraq. The United States instead believes the organization first must build a viable operation and attract a wider following both inside Iraq and in the region. So far, U.S. officials say, the group has failed to make significant progress on these fronts.
"They want us to support programs that take them into Iraq, and we don't want to do that yet," an administration official said. "The United States is not ready to take that step because of the consequences."
U.S. officials are concerned, for example, about what might happen even with a food aid program operated by the group inside Iraq. The danger, the officials say, is not only that Iraq might arrest INC operatives and put them on trial but that the group might use the program to provoke an Iraqi response-- perhaps force U.S. military intervention.
"We need a group like the INC was supposed to be-- an umbrella for the opposition with resources that people can turn to and use," the administration official said. "We would like to see their (media) operating out in the region building their case. We would like them to take advantage of a lot of training that's available. But they're not doing it. They're intent only on going back inside Iraq."
The organization has not made serious headway in ousting Hussein since its leadership was forced to flee in 1996, when the CIA-backed operation in northern Iraq collapsed because of fighting among its factions and pressure from Iraqi troops.
Critics of the opposition group within the administration express admiration for Chalabi's commitment to overthrowing Hussein. But they are concerned about his domination of the group-- to the exclusion of the six other members of the INC board, as well as its broader membership. Such differences over strategies led to an open split between the United States and the organization in September, when the previous State Department grant of $25 million expired.
When the group submitted a request for a new set of programs costing $25 million, it asked that $17 million of it be used on operations inside Iraq. The Bush administration rebuffed that request and approved only $8 million in new grant money.
The INC said it wanted all or nothing, according to U.S. officials.
To show ongoing interest, the U.S. still provided $800,000 a month to the Iraqi group-- until a recent report by the U.S. inspector general's office instructed the State Department to "withhold or at least restrict future funding to the INC" until
the group implements improved accounting methods.
Based on the new audit, the State Department cut funds for the INC's Office of Mobilization and Coordination, which was set up to support people in training at the Pentagon, U.S. officials said. But after the September split on funding, the INC hasn't sent any new trainees.
"We repeatedly asked the INC to send names and the Pentagon has left vacanciesin its program, but without trainees we can't continue to fund the office set up to support them," said a source familiar with the issue.
The State Department also cut funds for the INC's Information Collection program, which is largely a news organization. Questions have been raised about the program's high costs, especially since the audit found no time cards for employees or receipts for expenditures, among other things, U.S. officials say.
There are also growing questions about the use of U.S. funds by the INC's Liberty TV, which broadcasts a 45-minute program into Iraq.
In one incident that raised concerns, a Liberty TV executive claimed that he had a paid guard posted in front of a coffee and tea room because he was convinced someone was trying to poison them, according to U.S. officials.
The INC always accuses the State Department of withholding funds because it doesn't support the INC cause," said Henri Barkey, a former State Department policy planning staffer now at Lehigh University. "But unfortunately, it was actually the INC that came up short every time in terms of providing accurate accounting and proper documentation and not living up to deadlines."
Washington has paid for an accountant, lawyer and grant writer to help straighten out the INC financial problems. But deepening frustration with the group's shortcoming in handling U.S. funds finally led to the decision this week to withhold funding for many of the INC programs.
U.S. officials say there have been some improvements in the group's operation.INC officials liked to fly first class on overseas trips, preferably on British Airways. Under U.S. law, however, aid grantees must fly on American carriers, in coach seats. The INC has begun to comply with these kinds of basic rules, sources said.
U.S. officials say they are committed to restoring the full $25 million grant from the State Department if the INC will improve its management.This month, it will still receive $500,000 from the State Department.