LONDON (AlertNet) - NGOs say Iraq's occupiers are not being clear about how they are spending money, fuelling suspicions that the war was about oil profit and creating resentments that could lead to greater insecurity.

They say the Coalition Provisional Authority (CPA) urgently needs to detail where oil revenues have gone, and foreign companies involved in Iraq's reconstruction have a responsibility to provide employment for local people and allay fears that they are wasting money for their own gain.

"Given the massive international concern about the conduct of the war, it’s a no-brainer for the allies to be seen to be mismanaging or even avoiding scrutiny of money that rightly belongs to the Iraqi people,” Simon Taylor, director of British-based advocacy group Global Witness, said in a statement.

“Transparency of Iraq’s oil money is a necessary first step towards accountable management of the country’s reconstruction.”

Christoph Wilcke, an adviser for Save the Children UK, told AlertNet: “I don’t think people are corrupt in the CPA, but it’s been quite difficult to find out where the money’s being spent.

"And if that’s so for an international NGO, then I believe it’s almost impossible for an Iraqi to find out – an Iraqi who will have four barriers of barbed wire to climb before he gets anywhere near the CPA.”

’MORE INFORMATION ON A BANK STATEMENT’

The suspicion that money could be used to fund the U.S. military or that the U.S.-led “regime change” was motivated by profit has raised hackles in the Middle East and among anti-war protesters around the world.

“Some people feel as if the international community has written a post-dated cheque to cancel all its debts,” Dominic Nutt of Christian Aid said.

Without transparency there was also a danger that money could even be siphoned off by armed extremists, said Svetlana Tsalik of Revenue Watch, which promotes transparency from oil revenues and is part of the Soros Foundation-funded Open Society Institute based in New York.

By Christian Aid’s calculations, $4 billion in oil revenues has not been accounted for by the CPA.

After pressure from NGOs, including Christian Aid, Global Witness and the Publish What You Pay campaign, the CPA released figures on its website www.cpa-iraq.org.

But Nutt said the spending categories were extremely vague. “You’d get more information on a bank statement,” he said.

Nutt said the money promised for Iraq amounted to $1,400 per person, compared to $45 per person in Afghanistan.

“One wonders whether that has to do with oil,” he said. “The money is good. But why so much more than Afghanistan, which is a zillion times more impoverished?”

MONEY DOWN THE DRAIN?

Tsalik said suspicions were emerging that U.S. companies contracted to help rebuild Iraq could be profiting exorbitantly from the war and deliberately wasting reconstruction money.

“The higher their costs, the higher the profit,” she said, citing the example of U.S.-based oilfield services firm Halliburton, which has been accused of paying well over the going rate for oil imports.

Halliburton, formerly run by U.S. Vice President Dick Cheney, has contracts to repair damage to Iraq's oil facilities. Two U.S. lawmakers this week charged it with paying $2.65 a gallon for gasoline imported into Iraq from Kuwait, compared with just 97 cents a gallon paid by Iraqi oil company SOMO.

The firm then sold oil to Iraqis for four to 15 cents per gallon, Democrats Henry Waxman of California and John Dingell of Michigan said in a letter to Condoleeza Rice, U.S. President George W. Bush’s national security adviser.

“The U.S. government is paying nearly three times more for gasoline from Kuwait than it should, and then is reselling this gasoline at a huge loss inside Iraq,” the lawmakers wrote.

Save the Children’s Wilcke said opposition parties in donor countries could apply pressure to make sure their taxpayers’ money was audited.

“There is no such structure for Iraqis,” he said.

Wilcke said Iraqis needed to decide how their revenues from oil would be distributed. He said he had serious reservations about applying an eastern European-style model that could lead to extra spending money for consumption but little long-term gain.

But at the end of the day it should be up to Iraqis to make this decision, Wilcke said.

MISTRUST MOUNTING

The lack of transparency is clearly fuelling mistrust, not only among NGOs, but more importantly, among Iraqis.

“Justice not only needs to be done. It needs to be seen to be done,” Nutt said, adding that the alternative was more violence and insecurity.

Nutt said many former Iraqi soldiers were unemployed and frustrated, and had the perception that the United States was not acting fairly.

“Perception is everything in this case,” he said.

He said U.S. soldiers were not endearing themselves to Iraqis with their big guns, sunglasses and barbed wire, and popular anger could translate into extremist violence.

“People think, ‘They’ve got our oil,’” he said, adding that oil was part of Iraqi national identity. “Oil is a goading factor. It’s what everyone talks about in Iraq.”

He described the situation as a chicken and egg scenario.

“As security becomes more tenuous, reconstruction slows down, NGOs pull out,” he said. “Then people see less improvement, so frustration builds up.”

U.S. CONTRACTORS IN SPOTLIGHT

Since well before the U.S.-led campaign to oust Saddam Hussein’s government, critics have expressed mistrust of the involvement of large U.S. companies as contractors in the reconstruction process.

“I’m not against U.S. companies being involved in Iraq,” Wilcke said. “It’s not an issue of national pride – Germany companies, U.K. companies, Egyptian companies could all be involved.

“But the companies that go there with aid money should adhere to a developmental agenda. That means things of added value.”

Tsalik said there needed to be greater transparency over who was bidding for contracts and what efforts were being made to give contracts to Iraqis.

“If there is an Iraqi company that can do the job, then there is no need for a foreign company,” he said.

Wilcke said that if foreign companies provided expertise or goods that were unavailable locally, they still had a duty to employ as many Iraqis as possible, as well as providing training and transferring knowledge to the local workforce.

Tsalik said Iraq’s unemployment stood at between 65 and 75 percent, not helped by the disbanding of a 400,000-strong army.

She said many contractors were bringing labour from South Asia instead of employing Iraqis, who they perceived as a security threat.

Security is a theme also preying on humanitarian workers’ minds.

The United Nations, victim of a devastating suicide bombing in August, is pulling its remaining foreign staff out to Cyprus to assess security following another wave of similar attacks on October 27 that targeted the International Committee of the Red Cross.

Other agencies are following suit.

“Following the Madrid conference there had been hopes of some kind of return of a greater U.N. presence,” Brendan Paddy of Save the Children UK told AlertNet on the day of the attack.

“It's difficult to see how that could happen following today's attacks, and how they could be effective if they were to return,"

But Nutt said most accounting and auditing could be done externally. “You don’t have to put your neck on the line,” he said.

SECURITY DETERIORATING

Paddy said the bomb attack on the ICRC represented a deterioration of the security situation in Baghdad and other parts of the country that NGOs would have to consider carefully in deciding how they moved forward.

"International organisations are faced with a very difficult choice,” he said. “The needs in Iraq are undoubtedly great. The opportunity to assist the Iraqi people is there, particularly with the money flowing from the Iraq conference, but we are faced with a situation where we cannot necessarily work either safely or effectively in many parts of the country -- particularly Baghdad.”

Nutt said: “Without security, my colleagues and I are not going to want to go.”

He said he was forced to shelter from crossfire during a visit to Iraq in June. It would be even worse if you knew someone was trying to get you, he said.

“They’re trying to destabilize the country. We don’t want to be part of that. But if we’re not part of it, they’ve won,” Nutt said.

Wilcke noted that more than 70 NGOs were still working in Iraq.

“The security situation is restricting their movements, but they’re still there,” he said. But he added that western NGOs would not have a long-term presence in Iraq.

“After a couple of years, I don’t think there’ll be a big need,” he said.

He said some people would probably continue to work on issues such as livelihoods and disability, but the process would move well past the rehabilitation stage.

Wilcke said Save the Children had called for a small amount of money to be set aside for funding an independent Iraqi civil society.

“This doesn’t need to be very big – a few million dollars – so that Iraqi NGOs can establish themselves independently of either the CPA or the Iraqi government and do what NGOs do – either improve the quality of services, through advocacy, or simply establish a voice for religious freedoms, women’s rights, whatever they want.

“We don’t even have a parliament and an opposition right now, so a bit of independence would be something that donors could fund,” Wilcke said.

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