Even after spending $2.7 billion in U.S. reconstruction funds, Iraq's oil sector has failed to achieve any of the goals to boost production, according to a new report by the Government Accountability Office.
Indeed, the highest production levels were reached back in 2004 and have not been equaled since then. In addition, the State Department's oil data for Iraq may dramatically overstate the actual production levels by as much as $5.5 billion a year, because of inadequate metering, corruption, theft, and sabotage. Security remains the biggest of the challenges, but future investment will be difficult as well.
Nearly 80 percent of U.S. funds destined for the oil sector have already been spent and the rest of the international community has yet to offer any of its own financial support.
For its part, the Iraqi government has failed to spend more than 3 percent of the $3.5 billion it approved for oil reconstruction projects last year. On the political side, the Iraqi government's effort to pass laws to govern exploration and revenue distribution for the oil sector remain stalled and foreign investment will be minimal until that legislation is in place.