Dems: Force Iraqis to use oil cash for rebuilding

updated 6:09 a.m. ET April 9, 2008

WASHINGTON - Democrats plan to push legislation this spring that would force the Iraqi government to spend its own surplus in oil revenues to rebuild the country, sparing U.S. dollars.

The legislation follows a recommendation by Gen. David Petraeus, the top U.S. commander in Iraq, that the Bush administration halt troop withdrawals in July. Petraeus on Wednesday was wrapping up two days of congressional testimony in which he has said security gains in the war zone are too fragile to promise further drawdowns.

Sen. Carl Levin, chairman of the Senate Armed Services Committee, said pausing troop reductions would signal to the Iraqis that the United States was committed to the war indefinitely.

"Rather, we need to put continuous and increasing pressure on the Iraqis to settle their political differences, to pay for their own reconstruction with their oil windfalls, and to take the lead in conducting military operations," said Levin, D-Mich.

Iraq has about $30 billion in surplus funds stored in U.S. banks, according to Levin.

Iraq is looking at a potential boon in oil revenue this year, possibly as much as $100 billion in 2007 and 2008. Meanwhile, the U.S. military is having to buy its fuel on the open market, paying on average $3.23 a gallon and spending some $153 million a month in Iraq on fuel alone.

While Iraq pays for fuel for its own troops, it has relied heavily on U.S. dollars to provide people with basic services, including more than $45 billion for reconstruction.

Challenge to Bush policies
Lacking the votes to order troops home by a certain date, Democrats see fencing off reconstruction money as an alternative to challenging the Bush administration's Iraq policies. And several Republicans have signaled their concerns about burgeoning Iraqi oil revenues at a time when the war is growing increasingly costly.

"Isn't it time for the Iraqis to start bearing more of those expenses, particularly in light of the windfall in revenues due to the high price of oil?" said Sen. Susan Collins, R-Maine.

Ryan Crocker, the U.S. ambassador to Iraq, agreed but said it would take time.

"I think what we've got to focus on in the period ahead is this kind of transitioning," Crocker said. "And it'll be, like everything else in Iraq, a complex process."

Levin said he expects the legislation to be proposed as part of this year's war spending bill or the 2009 defense authorization bill.

'Consolidation and evaluation'
In his testimony on Tuesday, Petraeus said he recommended to President Bush that the U.S. complete, by the end of July, the withdrawal of the 20,000 extra troops. Beyond that, the general proposed a 45-day period of "consolidation and evaluation," to be followed by an indefinite period of assessment before he would recommend any further pullouts.

Bush is expected to embrace Petraeus' plan, which reflects a conservative approach that leaves open the possibility that roughly 140,000 U.S. troops could remain in Iraq when the president leaves office next year.

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