By Adam Entous
URL -
http://news.yahoo.com/news?tmpl=story2&cid=615&u=/nm/20030826/pl_nm/iraq_usa_funding_dc&printer=1
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WASHINGTON (Reuters) - U.S. authorities in Iraq have all but exhausted the seized assets they have used to pay Iraqi civil servants, and some administration and congressional officials said on Tuesday that extra money may be needed sooner than expected for U.S. efforts in the occupied state.
U.S. Treasury Department spokesman Tony Fratto said a cash shipment of $419 million would be made in the next week from a New York Federal Reserve account that once held $1.7 billion and this would "nearly exhaust the available vested funds."
One key U.S. lawmaker, after high-level meetings in Baghdad on the funding issue, said other ways would be found to pay Iraqi worker salaries and pensions, but a senior congressional aide called the situation "a mess."
Paul Bremer, the chief U.S. administrator in Iraq, was expected to discuss the issue during meetings in Washington, including one on Tuesday with U.S. national security adviser Condoleezza Rice, officials said.
President Bush has promised to give occupation authorities the resources they need to stabilize the country, but critics say he has yet to deliver and accused him of underestimating postwar costs.
To help stem mounting violence and alleviate the cash crunch, congressional sources say the White House was considering seeking $2 billion to $3 billion extra funds to for Iraq in the near term.
Sources said that money could be freed up before an October donors conference, though administration officials insisted no decisions have been made. The White House had not been expected to seek additional funding until November or later.
The White House is under mounting pressure from Republicans and Democrats in Congress to act and act fast. Major revenue sources, chief among them oil production and international aid, have yet to come through.
ASSETS NEARLY EXHAUSTED
"Yes, the seized assets are nearly exhausted, but there are some other sources of funds to pay salaries to Iraqis," said Rep. James Kolbe, an Arizona Republican who chairs the foreign aid subcommittee in the House of Representatives.
"It's a mess," said one senior congressional aide who asked not to be identified. "Seized assets are down to almost nothing. Oil money is a mirage in the near term."
And, according to a recent report to lawmakers, even the gold-colored bars, which were seized with much fanfare by U.S. forces, appear to be melted-down shell casings made mostly of copper. Disappointed American officials had believed they were bullion worth $600 million or more.
By quickly freeing up extra funding, the administration could tide over occupation authorities until Congress approves a much larger White House budget request expected later this year.
But it could be politically risky. For months, the administration has played down the cost of reconstruction, saying it should be covered in large part by increased oil production and financial contributions from U.S. allies. Neither has materialized.
White House budget officials suggested they had no plans at this time to ask Congress for extra money before the October donors conference. "There have been no determinations about size, scope, timing or process," said Trent Duffy, spokesman for the White House Office of Management and Budget.
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