Coalition Provisional Authority
Encyclopedia
The Coalition Provisional Authority (CPA) (Arabic
Arabic language
Arabic is a name applied to the descendants of the Classical Arabic language of the 6th century AD, used most prominently in the Quran, the Islamic Holy Book...

: سلطة الائتلاف المؤقتة) was established as a transitional government following the invasion of Iraq
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....

 by the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 and its allies, members of the Multi-National Force – Iraq which was formed to oust the government of Saddam Hussein
Saddam Hussein
Saddam Hussein Abd al-Majid al-Tikriti was the fifth President of Iraq, serving in this capacity from 16 July 1979 until 9 April 2003...

 in 2003. Citing United Nations Security Council
United Nations Security Council
The United Nations Security Council is one of the principal organs of the United Nations and is charged with the maintenance of international peace and security. Its powers, outlined in the United Nations Charter, include the establishment of peacekeeping operations, the establishment of...

 Resolution 1483 (2003), and the laws of war
Laws of war
The law of war is a body of law concerning acceptable justifications to engage in war and the limits to acceptable wartime conduct...

, the CPA vested itself with executive
Executive (government)
Executive branch of Government is the part of government that has sole authority and responsibility for the daily administration of the state bureaucracy. The division of power into separate branches of government is central to the idea of the separation of powers.In many countries, the term...

, legislative, and judicial authority over the Iraqi government from the period of the CPA's inception on April 21, 2003, until its dissolution on June 28, 2004.

History of the CPA

The Office for Reconstruction and Humanitarian Assistance (ORHA), was established on January 20, 2003 by the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 Government two months before the 2003 invasion of Iraq
2003 invasion of Iraq
The 2003 invasion of Iraq , was the start of the conflict known as the Iraq War, or Operation Iraqi Freedom, in which a combined force of troops from the United States, the United Kingdom, Australia and Poland invaded Iraq and toppled the regime of Saddam Hussein in 21 days of major combat operations...

. It was intended to act as a caretaker
Caretaker government
Caretaker government is a type of government that rules temporarily. A caretaker government is often set up following a war until stable democratic rule can be restored, or installed, in which case it is often referred to as a provisional government...

 administration in Iraq until the creation of a democratically
Democracy
Democracy is generally defined as a form of government in which all adult citizens have an equal say in the decisions that affect their lives. Ideally, this includes equal participation in the proposal, development and passage of legislation into law...

 elected
Election
An election is a formal decision-making process by which a population chooses an individual to hold public office. Elections have been the usual mechanism by which modern representative democracy operates since the 17th century. Elections may fill offices in the legislature, sometimes in the...

 civilian government
Civilian control of the military
Civilian control of the military is a doctrine in military and political science that places ultimate responsibility for a country's strategic decision-making in the hands of the civilian political leadership, rather than professional military officers. One author, paraphrasing Samuel P...

.

Retired United States Army
United States Army
The United States Army is the main branch of the United States Armed Forces responsible for land-based military operations. It is the largest and oldest established branch of the U.S. military, and is one of seven U.S. uniformed services...

 Lieutenant General
Lieutenant General
Lieutenant General is a military rank used in many countries. The rank traces its origins to the Middle Ages where the title of Lieutenant General was held by the second in command on the battlefield, who was normally subordinate to a Captain General....

 Jay Garner
Jay Garner
Jay Montgomery Garner is a retired United States Army lieutenant general who was appointed in 2003 as Director of the Office for Reconstruction and Humanitarian Assistance for Iraq following the 2003 invasion of Iraq but was soon replaced by Ambassador Paul Bremer and the ambassador's successor...

 was appointed as the Director of ORHA, along with three deputites, including British Major-General
Major-General (United Kingdom)
Major general is a senior rank in the British Army. Since 1996 the highest position within the Royal Marines is the Commandant General Royal Marines who holds the rank of major general...

 Tim Cross
Tim Cross
Major General Timothy Cross, CBE is a retired British Army officer and military logistics expert. He was commissioned in 1971 into the Royal Army Ordnance Corps and went on to serve in Germany, Northern Ireland and Cyprus, interspersed with staff duties and further education...

, in 2003. Upon the dissolution of ORHA and the creation of the CPA, he then became the first chief executive of the CPA. Due to his past military experiences in Iraq during Operation Desert Storm in 1991 and his reconstruction efforts in northern Iraq during Operation Provide Comfort
Operation Provide Comfort
Operation Provide Comfort and Provide Comfort II were military operations by the United States and some of its Gulf War allies, starting in April 1991, to defend Kurds fleeing their homes in northern Iraq in the aftermath of the Persian Gulf War and deliver humanitarian aid to them.-Operation...

, Garner's credentials and close ties to the U.S. Secretary of Defense Donald Rumsfeld
Donald Rumsfeld
Donald Henry Rumsfeld is an American politician and businessman. Rumsfeld served as the 13th Secretary of Defense from 1975 to 1977 under President Gerald Ford, and as the 21st Secretary of Defense from 2001 to 2006 under President George W. Bush. He is both the youngest and the oldest person to...

 made him an obvious choice for the task. His term, however, lasted only from April 21, 2003, until he was replaced abruptly less than a month later by L. Paul Bremer
L. Paul Bremer
Lewis Paul "Jerry" Bremer III is an American diplomat. He is most notable for being the U.S. Administrator to Iraq charged with overseeing the country's occupation after the 2003 invasion. In his role as head of the Coalition Provisional Authority, he reported primarily to the U.S. Secretary of...

 on May 11, 2003.

Garner's swift dismissal from his post by U.S. authorities came as a surprise to many within the CPA. In an interview with the BBC
BBC
The British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...

 program Newsnight
Newsnight
Newsnight is a BBC Television current affairs programme noted for its in-depth analysis and often robust cross-examination of senior politicians. Jeremy Paxman has been its main presenter for over two decades....

, Garner publicly stated that his preference was to put the Iraqi people in charge as soon as possible and to do it with some form of elections. Privately, there was intense pressure from the U.S. Government to begin a process of removing members of the Arab Socialist Ba'ath Party
Arab Socialist Ba'ath Party – Iraq Region
The Arab Socialist Ba'ath Party – Iraq Region is a ba'athist regional organisation founded in 1951 by Fuad al-Rikabi...

 from their positions within the Iraqi government and military. Garner's
Jay Garner
Jay Montgomery Garner is a retired United States Army lieutenant general who was appointed in 2003 as Director of the Office for Reconstruction and Humanitarian Assistance for Iraq following the 2003 invasion of Iraq but was soon replaced by Ambassador Paul Bremer and the ambassador's successor...

 refusal to implement this "de-Ba'athification
De-Ba'athification
De-Ba'athification refers to a Coalition Provisional Authority policy outlined in CPA Order 1 which entered into force on 16 May 2003. The policy’s goal was to remove the Ba'ath Party's influence in the new Iraqi political system...

" of Iraqi society as a matter of public policy infuriated several senior members of the U.S. Government, and led directly to his dismissal.

Upon assuming his post in May 2003, L. Paul Bremer
L. Paul Bremer
Lewis Paul "Jerry" Bremer III is an American diplomat. He is most notable for being the U.S. Administrator to Iraq charged with overseeing the country's occupation after the 2003 invasion. In his role as head of the Coalition Provisional Authority, he reported primarily to the U.S. Secretary of...

 also assumed the title of U.S. Presidential Envoy and Administrator in Iraq. He was frequently called Ambassador
Ambassador
An ambassador is the highest ranking diplomat who represents a nation and is usually accredited to a foreign sovereign or government, or to an international organization....

 by numerous media organizations and the White House
White House
The White House is the official residence and principal workplace of the president of the United States. Located at 1600 Pennsylvania Avenue NW in Washington, D.C., the house was designed by Irish-born James Hoban, and built between 1792 and 1800 of white-painted Aquia sandstone in the Neoclassical...

 because it was the highest government rank he had achieved (Ambassador to Netherlands). However, Mr. Bremer was not Ambassador to Iraq, and there was no U.S. diplomatic mission
Diplomatic mission
A diplomatic mission is a group of people from one state or an international inter-governmental organisation present in another state to represent the sending state/organisation in the receiving state...

 present in Iraq at that time.

The CPA was created and funded as a division of the United States Department of Defense
United States Department of Defense
The United States Department of Defense is the U.S...

, and as Administrator, Bremer reported directly to the Secretary of Defense
United States Secretary of Defense
The Secretary of Defense is the head and chief executive officer of the Department of Defense of the United States of America. This position corresponds to what is generally known as a Defense Minister in other countries...

. Although troops from several of the coalition countries were present in Iraq at this time, the U.S. Central Command (USCENTCOM) was the primary military apparatus charged with providing direct combat support to the CPA to enforce its authority during the occupation of Iraq.

While many of Saddam Hussein's ornate palaces
Republican Palace
The Republican Palace is a palace in Baghdad, Iraq, constructed on the orders of King Faisal II. It was Saddam Hussein's preferred place to meet visiting heads of state. The United States spared the palace during its shock and awe raid during the 2003 invasion of Iraq, in the belief that it might...

 were looted in the days immediately following the invasion, most of the physical structures themselves survived, relatively intact. It is in these numerous palaces situated throughout the country that the CPA chose to set up office in order to govern. Several of these palaces were retained by the U.S. Government even after the transition of power back to the Iraqi people. The administration was centred in a district of Baghdad
Baghdad
Baghdad is the capital of Iraq, as well as the coterminous Baghdad Governorate. The population of Baghdad in 2011 is approximately 7,216,040...

, known as the Green Zone
Green Zone
The Green Zone is the most common name for the International Zone of Baghdad. It is a area of central Baghdad, Iraq, that was the governmental center of the Coalition Provisional Authority and remains the center of the international presence in the city...

, which eventually became a highly secure walled-off enclave.

The CPA was also responsible for administering the Development Fund for Iraq
Development Fund for Iraq
In May 2003, following the invasion of Iraq in March of that year, the Central Bank of Iraq-Development Fund for Iraq account was created at the U.S. Federal Reserve Bank of New York at the request of the Coalition Provisional Authority Administrator...

 during the year following the invasion. This fund superseded the earlier UN oil-for-food program, and provided funding for Iraq's wheat purchase program, the currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

 exchange program, the electricity and oil infrastructure programs, equipment for Iraq's security forces, Iraqi civil service
Civil service
The term civil service has two distinct meanings:* A branch of governmental service in which individuals are employed on the basis of professional merit as proven by competitive examinations....

 salaries, and the operations of the various government ministries.

The first act of the CPA under Paul Bremer was to issue order of de-Ba'athification
De-Ba'athification
De-Ba'athification refers to a Coalition Provisional Authority policy outlined in CPA Order 1 which entered into force on 16 May 2003. The policy’s goal was to remove the Ba'ath Party's influence in the new Iraqi political system...

 of Iraqi society. On May 23, CPA Order Number 2
Coalition Provisional Authority Order Number 2
Coalition Provisional Authority Order Number 2: Dissolution of Entities signed by CPA civil administrator L. Paul Bremer on May 23, 2003, disbanded the Iraqi military, security, and intelligence infrastructure of President Saddam Hussein...

 formally disbanded the Iraqi army On July 22, 2003, the CPA formed the Iraqi Governing Council
Iraqi Governing Council
The Iraqi Governing Council was the provisional government of Iraq from July 13, 2003 to June 1, 2004. It was established by and served under the United States-led Coalition Provisional Authority...

 and appointed its members. The Council membership consisted largely of Iraqi expatriates who had previously fled the country during the rule of Saddam Hussein and also with many outspoken dissidents who had been persecuted by the former regime
Regime
The word regime refers to a set of conditions, most often of a political nature.-Politics:...

.

Though still subordinate to the CPA, the Iraqi Governing Council had several key responsibilities of its own. Its duties included appointing representatives to the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...

, appointing interim ministers to Iraq's vacant cabinet positions, and drafting a temporary constitution
Constitution
A constitution is a set of fundamental principles or established precedents according to which a state or other organization is governed. These rules together make up, i.e. constitute, what the entity is...

 known as the Transitional Administrative Law (TAL), which would be used to govern Iraq until a permanent constitution could be written and approved by the general electorate
Electoral district
An electoral district is a distinct territorial subdivision for holding a separate election for one or more seats in a legislative body...

.

In the late afternoon of December 14, 2003, the CPA held a press conference at the Iraqi Forum convention center within Baghdad's Green Zone
Green Zone
The Green Zone is the most common name for the International Zone of Baghdad. It is a area of central Baghdad, Iraq, that was the governmental center of the Coalition Provisional Authority and remains the center of the international presence in the city...

 to announce that former President of Iraq
President of Iraq
The President of Iraq is the head of state of Iraq and "safeguards the commitment to the Constitution and the preservation of Iraq's independence, sovereignty, unity, the security of its territories in accordance with the provisions of the Constitution." The President is elected by the Council of...

 Saddam Hussein
Saddam Hussein
Saddam Hussein Abd al-Majid al-Tikriti was the fifth President of Iraq, serving in this capacity from 16 July 1979 until 9 April 2003...

 had been taken into custody the previous night from a foxhole in a town near Saddam's home town of Tikrit
Tikrit
Tikrit is a town in Iraq, located 140 km northwest of Baghdad on the Tigris river . The town, with an estimated population in 2002 of about 260,000 is the administrative center of the Salah ad Din Governorate.-Ancient times:...

, Iraq. Present at the announcement was Lieutenant General Ricardo Sanchez
Ricardo Sanchez
Ricardo Sanchez is a retired United States Army Lieutenant General and a candidate for the Democratic Party nomination for the Senate election in 2012 for the seat of retiring Senator Kay Bailey Hutchison.-Early life and education:...

 of the U.S. Army, Administrator Bremer, members of the British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 and American intelligence agencies, several members of the Iraqi Governing Council, and a large room full of journalist
Journalist
A journalist collects and distributes news and other information. A journalist's work is referred to as journalism.A reporter is a type of journalist who researchs, writes, and reports on information to be presented in mass media, including print media , electronic media , and digital media A...

s representing news organizations from around the world.

In order to defeat possible insurgent planning, the CPA transferred power to the newly appointed Iraqi Interim Government
Iraqi Interim Government
The Iraqi Interim Government was created by the United States and its coalition allies as a caretaker government to govern Iraq until the Iraqi Transitional Government was installed following the Iraqi National Assembly election conducted on January 30, 2005...

 at 10:26 AM local time on June 28, 2004. The CPA thus disbanded, L. Paul Bremer left Iraq that same day.

The United States was hoping that Iraq could be reconstructed and democratized
Democratization
Democratization is the transition to a more democratic political regime. It may be the transition from an authoritarian regime to a full democracy, a transition from an authoritarian political system to a semi-democracy or transition from a semi-authoritarian political system to a democratic...

 in much the same way as Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

 and Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

 were after the Second World War, using them as "examples or even models of successful military occupations."

Structure of the CPA

The CPA was divided into four geographic regions. CPA North was headquartered in the northern Iraqi city of Arbil
Arbil
Arbil / Hewlêr is the fourth largest city in Iraq after Baghdad, Basra and Mosul...

, CPA Central was headquartered in Baghdad at Saddam's former Republican Palace
Republican Palace
The Republican Palace is a palace in Baghdad, Iraq, constructed on the orders of King Faisal II. It was Saddam Hussein's preferred place to meet visiting heads of state. The United States spared the palace during its shock and awe raid during the 2003 invasion of Iraq, in the belief that it might...

, CPA South Central was headquartered in the Iraqi city of Al Hillah near the ruins of Babylon
Babylon
Babylon was an Akkadian city-state of ancient Mesopotamia, the remains of which are found in present-day Al Hillah, Babil Province, Iraq, about 85 kilometers south of Baghdad...

 and CPA South was headquartered in the southern Iraqi city of Basra
Basra
Basra is the capital of Basra Governorate, in southern Iraq near Kuwait and Iran. It had an estimated population of two million as of 2009...

. Each region operated semi-autonomously, and all four had the same common goals for reconstruction of the country. Throughout the existence of the CPA, the security situation and levels of civil unrest throughout the country varied by region, and these variances were reflected in the different levels of program
successes within the CPA divisions.

Role of the International Advisory and Monitoring Board (IAMB)

United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...

 resolution
United Nations resolution
A United Nations resolution is a formal text adopted by a United Nations body. Although any UN body can issue resolutions, in practice most resolutions are issued by the Security Council or the General Assembly.-Legal status:...

 1483 transferred the authority to authorize expenditures from Iraq's oil revenue from the United Nations to the Coalition Provisional Authority—under certain conditions, including:
  • The expenditures were made in an open, transparent manner.
  • The expenditures were subject to the supervision of a blue ribbon panel of international financial experts, the IAMB.
  • Spending decisions were to be made with meaningful Iraqi input.


The International Advisory and Monitoring Board consisted of senior financial experts from the United Nations, the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...

, the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

 and the Arab Fund for Social and Economic Development.

The IAMB had serious concerns over the CPA's lack of transparency and lack of adequate financial controls, which were never resolved. The IAMB still exists and is playing a role in the investigations into the CPA's Financial management.

The CPA's Program Review Board

The Program Review Board
Coalition Provisional Authority Program Review Board
The Coalition Provisional Authority Program Review Board was composed of the senior personnel of the Coalition Provisional Authority, charged with the responsibility to review and make recommendations about the awarding of contracts to the administrator of the authority, Paul Bremer.The board...

 (PRB) was an eleven member board that consisted of ten staff members from the CPA and one member of the Iraqi Governing Council. The chair of the Board was also the CPA's Senior Advisor to the Iraqi Ministry of Finance.

It was the Board's responsibility to review and make recommendations to the CPA Administrator on which contracts should be awarded. In order to ensure transparency, all of the key discussions regarding the pros and cons of the programs under consideration were to be made public. The CPA Administrator was only supposed to make decisions on the awarding of contracts after receiving a recommendation from this committee.

The Notes on Internal Control from KPMG
KPMG
KPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....

's audit of DFI expenditures was particularly critical of PRB record keeping failing to fulfill the CPA's transparency obligation. In particular:
  • Meetings were held where attendance was not recorded.
  • Meetings were held, where decisions were made, where quorum had not been met.
  • The Program Review Board never recorded the motions to approve expenditures, who seconded motions, or which members were for or against those motions.
  • In the 43 meetings held in 2003 the single Iraqi member of the board only attended two meetings.
  • The minutes failed to contain sufficient detail for readers to understand why programs were approved.
  • Program decisions that had been tabled, were later approved informally, outside the meetings, with no recording of the reasoning behind the decision.
  • The chair of the Board refused to sign off certifying the accuracy of the Board's bookkeeping.

Privatization of Iraq's economy

Prior to US occupation, Iraq had a centrally planned economy. Among other things, it prohibited foreign ownership of Iraqi businesses, ran most large industries as state-owned enterprises, and imposed large tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....

s to keep out foreign goods. After the U.S. military came in and took over Iraq, the CPA quickly began issuing many binding orders privatizing Iraq's economy and opening it up to foreign investment. CPA Order 39, entitled "Foreign Investment", provided that "A foreign investor shall be entitled to make foreign investments in Iraq on terms no less favorable than those applicable to an Iraqi investor," and that "[t]he amount of foreign participation in newly formed or existing business entities in Iraq shall not be limited...." Additionally, the foreign investor "shall be authorized to... transfer abroad without delay all funds associated with its foreign investment, including shares or profits and dividends...."

By this order, critics assert that the CPA drastically altered Iraq's economy, allowing virtually unlimited and unrestricted foreign investment and placing no limitations on the expatriation of profit. However, these policies were in accord with current international standards on foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...

 to which most of the developed world adheres. The order concluded, "Where an international agreement
Treaty
A treaty is an express agreement under international law entered into by actors in international law, namely sovereign states and international organizations. A treaty may also be known as an agreement, protocol, covenant, convention or exchange of letters, among other terms...

 to which Iraq is a party provides for more favorable terms with respect to foreign investors undertaking investment activities in Iraq, the more favorable terms under the international agreement shall apply." According to critics, this order was designed to create as favorable an environment for foreign investors as possible, thereby allowing American and multinational corporations to dominate Iraq's economy. Critics further contend that the controversial policies are fundamentally anti-democratic in that it is not for the United States or any other country or coalition of countries to determine what trade laws Iraqis must live by, and that such rules can only be legitimate if passed initially by an elected Iraqi government free of foreign occupation and domination. Others argue that the rules merely bring Iraq's economic law into conformity with modern norms of international trade, that the CPA should not be under any obligation to run Iraq as a totalitarian state simply because that's what its laws were like before the occupation, and that the previous government and its laws were not democratically legitimate since Saddam Hussein's government was not elected either.

CPA Order 17 granted all foreign contractors operating in Iraq immunity from "Iraqi legal process
Legal process
Legal process , are the proceedings in any civil lawsuit or criminal prosecution and, particularly, describes the formal notice or writ used by a court to exercise jurisdiction over a person or property...

," effectively granting immunity from any kind of suit, civil or criminal, for actions the contractors engaged in within Iraq. CPA Order 49 provided a tax cut for corporations operating within Iraq. It reduced the rate from a maximum of 40% to a maximum of 15% on income. Corporations working with the CPA were exempted from owing any tax. CPA Order 12, amended by Order 54, suspended all tariffs, thus removing the advantage that domestic Iraqi producers had over foreign producers. However, a 5% "reconstruction levy" on all imported goods was later reimposed to help finance Iraqi-initiated reconstruction projects.

CPA Order 57 provided for the appointment of "Inspectors General" to operate within each Iraqi government ministry, for the purposes of rooting out corruption. These Inspectors General were to be "appointed to a 5-year term by the Administrator [Paul Bremer]," and were given sweeping powers "to conduct investigations, audits, evaluations, inspections, and other reviews...."
Critics contend this is a mechanism for ensuring continuing American influence in Iraqi governance even after the transfer of all sovereignty
Sovereignty
Sovereignty is the quality of having supreme, independent authority over a geographic area, such as a territory. It can be found in a power to rule and make law that rests on a political fact for which no purely legal explanation can be provided...

 to the country.

Critics of the CPA argue that these policies were not only rather blatant attempts to shape Iraq's economy in the interests of American (and other) investors and against the interests of Iraqis themselves, but also that they were illegal under international law
International law
Public international law concerns the structure and conduct of sovereign states; analogous entities, such as the Holy See; and intergovernmental organizations. To a lesser degree, international law also may affect multinational corporations and individuals, an impact increasingly evolving beyond...

, because an occupying power is prohibited from rewriting the laws of the occupied country.

Others reply that the privatization of Iraq's economy is necessary to help it rebuild after years of state mismanagement and centrally planned economics, and that market economics does not conflict with the interests of Iraqis or provide undue advantage to American or foreign investors versus Iraqi investors. In addition, if the changes to Iraq's economic laws were illegal, than so would be the Transitional Administrative Law, which serves as Iraq's constitution under the Transitional Government
Iraqi Transitional Government
The Iraqi Transitional Government was the government of Iraq from May 3rd, 2005, when it replaced the Iraqi Interim Government, until May 20th, 2006, when it was replaced by the first permanent government....

.

Criticism of financial management

In May 2003 the CPA took over the responsibility for administering the Development Fund for Iraq
Development Fund for Iraq
In May 2003, following the invasion of Iraq in March of that year, the Central Bank of Iraq-Development Fund for Iraq account was created at the U.S. Federal Reserve Bank of New York at the request of the Coalition Provisional Authority Administrator...

 (DFI). Established from the earlier UN oil-for-food program, the CPA was authorized to manage the DFI, which took in approximately $20 billion in the year after the invasion. The CPA also administered $18.4 billion that the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....

 allocated for Iraqi reconstruction in November 2003, known as the Iraq Relief and Reconstruction Fund
Iraq Relief and Reconstruction Fund
The Iraq Relief and Reconstruction Fund was established by the US Congress on November 6, 2003. It allocated $18.4 billion to rebuild Iraq's infrastructure, damaged from years of neglect, sanctions, and war....

 (IRRF).
By June 2004, the CPA had spent, or allocated, $19.1 billion of the DFI funds—while spending only $400 million from the IRRF. Critics suggest that Bremer selectively spent from the DFI because it was more free from accounting oversight by the Government Accountability Office
Government Accountability Office
The Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.-History:...

 (GAO).

This balance between DFI and IRRF expenditures might be justifiable by the argument that the IRRF was not intended to finance the Iraqi government ministries or the Public Distribution System (state food rations from the Oil-for-food program), which the DFI was intended to cover. The $18.4 billion dollars authorized by the U.S. congress was intended to finance large reconstruction projects such as power and sewage plants, not to provide the day-to-day operating expenses of the Iraqi government. Expenditure on the IRRF projects could be seen as delayed by the projects being in their planning and early site preparation stages and it could be said that it is not surprising that little money had been disbursed at that point, or that so much of the Development Fund for Iraq
Development Fund for Iraq
In May 2003, following the invasion of Iraq in March of that year, the Central Bank of Iraq-Development Fund for Iraq account was created at the U.S. Federal Reserve Bank of New York at the request of the Coalition Provisional Authority Administrator...

 had been expended as that fund was the primary source of revenue the Iraqi government had. However, by reviewing reports from Special Inspector General for Iraq Reconstruction (SIGIR) and other reviews and audits, it becomes clear that DFI funds were expended on projects that clearly would have been appropriate for management under IRRF. What has been troubling to auditors and inspectors general is that large amounts of DFI funding is as yet unaccounted for and was expended in reconstruction projects that failed to provided a return on investment for the Iraqi people. By funding projects under DFI the CPA avoided legal requirements to comply with US Federal Acquisition Regulations (USFARS) as required for the administration of IRRF and other US taxpayer provided funding. It is also pertinent that expenditures under IRRF were also not administered strictly according to USFARS thereby causing severe waste, fraud and abuse as documented by SIGIR and other auditing agencies.

Audits of the CPA's expenditures of Iraqi funds

When authority to manage the revenue from Iraq's oil on behalf of the Iraqi people through United Nations resolution
United Nations resolution
A United Nations resolution is a formal text adopted by a United Nations body. Although any UN body can issue resolutions, in practice most resolutions are issued by the Security Council or the General Assembly.-Legal status:...

, that authority was transferred under certain conditions.
  • The funds were to be managed in an open, transparent fashion.
  • The CPA was to submit to oversight from the International Advisory and Monitoring Board
    International Advisory and Monitoring Board
    The International Advisory and Monitoring Board was appointed to oversee the Coalition Provisional Authority's disbursements from the humanitarian Development Fund for Iraq. When the CPA was authorized to manage the DFI by United Nations resolution 1483....

    , a blue ribbon panel of senior international banking experts.


The IAMB tried to insist on certain financial controls, with limited success.

With input from the IAMB accounting firm KPMG
KPMG
KPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....

 was appointed to audit the CPA's expenditures from the DFI.

On June 20, 2005 the staff of the Committee on Government Reform prepared a report for Congressman Henry Waxman
Henry Waxman
Henry Arnold Waxman is the U.S. Representative for , serving in Congress since 1975. He is a member of the Democratic Party. He is considered to be one of the most influential liberal members of Congress...

 on the CPA's expenditures from the DFI that raised additional causes for concern.
Further criticism was leveled at the CPA when it was revealed that $12bn. of cash had been delivered by C-130 planes
C-130 Hercules
The Lockheed C-130 Hercules is a four-engine turboprop military transport aircraft designed and built originally by Lockheed, now Lockheed Martin. Capable of using unprepared runways for takeoffs and landings, the C-130 was originally designed as a troop, medical evacuation, and cargo transport...

, on shrinkwrapped pallet
Pallet
A pallet , sometimes called a skid, is a flat transport structure that supports goods in a stable fashion while being lifted by a forklift, pallet jack, front loader or other jacking device. A pallet is the structural foundation of a unit load which allows handling and storage efficiencies...

s of $100 bills. The cash deliveries were described in a memo prepared for the United States House Committee on Oversight and Government Reform, which concluded that "Many of the funds appear to have been lost to corruption and waste.... Some of the funds could have enriched both criminals and insurgents...." Henry Waxman
Henry Waxman
Henry Arnold Waxman is the U.S. Representative for , serving in Congress since 1975. He is a member of the Democratic Party. He is considered to be one of the most influential liberal members of Congress...

, the chair of the House committee commented, "Who in their right mind would send 363 tons of cash into a war zone?" A single flight to Iraq on December 12, 2003 which contained $1.5 billion in cash is said to be the largest single Federal Reserve payout in US history according to Henry Waxman.

In 2011 a new American audit found that almost all of the missing $6.6 billion had been transferred to the Central Bank of Iraq
Central Bank of Iraq
-History:The Central Bank of Iraq was established as Iraq's central bank by Central Bank of Iraq Law 2004 with authorised capital of 100 billion dinars. The current Governor of the Central Bank of Iraq is Sinan Al Shabibi.-Architecture:...

. Special Inspector General for Iraq Reconstruction
Special Inspector General for Iraq Reconstruction
The Office of the Special Inspector General for Iraq Reconstruction was created in October 2004 as the successor to the Coalition Provisional Authority Office of Inspector General . SIGIR is an independent government agency created by the Congress to provide oversight of the use – and potential...

 Stuart Bowen
Stuart Bowen
Stuart W. Bowen, Jr. , is an American lawyer who serves as the Special Inspector General for Iraq Reconstruction , a position he has held since October 2004. He previously served as the Inspector General for the Coalition Provisional Authority , a position to which he was appointed in January 2004....

 said that "Any doubts about how the money was handled after it left U.S. control is an Iraqi -- not U.S. government -- question".

Reconstruction

Although the CPA awarded contracts for essential reconstruction to American firms, some critics claim those firms did relatively little work. Bechtel, for instance, was awarded the contract to repair the Iraqi sewage
Sewage
Sewage is water-carried waste, in solution or suspension, that is intended to be removed from a community. Also known as wastewater, it is more than 99% water and is characterized by volume or rate of flow, physical condition, chemical constituents and the bacteriological organisms that it contains...

 and drinking water plants. Yet today many Iraqis remain without safe drinking water or adequate supplies of electricity. Coalition military forces were too heavily tasked to provide requisite security for all contractors in Iraq. Contract funds therefore had to be partially shifted from reconstruction activities to meet security requirements that had not been envisioned when the contracts were initially let. Moreover, progress in reconstruction frequently faced setbacks due to insurgency activities designed to disrupt rebuilding of the infrastructure. This insurgent activity significantly slowed reconstruction and required adjustment of project goals due to funds consumed by providing necessary security in excess of that originally planned.

According to USAID, as of October 2003, peak electrical generation had reached pre-war levels of 4,500 MW, and they were then collaborating with Bechtel as well as the Iraqi Interior Ministry and others on some 2,000 MW of projected capacity. The CPA set a goal of 6,000 MW generation capacity for the summer of 2004, which has never been reached. Peak generation capacity of 5,365 MW was achieved in August 2004, six weeks after the transfer of sovereignty. Current generation stands at approximately 5,000 MW. Contracting work involving Bechtel projects is ongoing Weekly updates and financial summaries are provided by USAID's Iraq homepage as currently as is possible.

Administrators of the CPA

  • Jay Montgomery Garner (April 2003 - May 6, 2003)
    (as Director of the Office for Reconstruction and Humanitarian Assistance
  • L. Paul Bremer III (May 6, 2003 - June 28, 2004)
    • Sir Jeremy Greenstock
      Jeremy Greenstock
      Sir Jeremy Q. Greenstock, GCMG is a retired British diplomat, active from 1969-2004.-Life and career:Greenstock was born in Harrow on the Hill, north-west London, the son of Ruth Margaret and John Wilfred Greenstock. He was educated at the Harrow School and Worcester College, University of...

       (May 6, 2003 - June 28, 2004), Deputy Administrator

See also

  • United Nations Security Council Resolution 1483
    United Nations Security Council Resolution 1483
    United Nations Security Council Resolution 1483, adopted on May 22, 2003, after recalling all previous resolutions on the situation between Iraq and Kuwait, the Council lifted trade sanctions against Iraq and terminated the Oil-for-Food Programme.The resolution was drafted by the United States and...

  • Iraq Relief and Reconstruction Fund
    Iraq Relief and Reconstruction Fund
    The Iraq Relief and Reconstruction Fund was established by the US Congress on November 6, 2003. It allocated $18.4 billion to rebuild Iraq's infrastructure, damaged from years of neglect, sanctions, and war....

  • Reconstruction of Iraq
    Reconstruction of Iraq
    Investment in post-2003 Iraq refers to international efforts to rebuild the infrastructure of Iraq since the Iraq War in 2003.Along with the economic reform of Iraq, international projects have been implemented to repair and upgrade Iraqi water and sewage treatment plants, electricity production,...

  • Provisional Government
    Provisional government
    A provisional government is an emergency or interim government set up when a political void has been created by the collapse of a very large government. The early provisional governments were created to prepare for the return of royal rule...

  • Development Fund for Iraq
    Development Fund for Iraq
    In May 2003, following the invasion of Iraq in March of that year, the Central Bank of Iraq-Development Fund for Iraq account was created at the U.S. Federal Reserve Bank of New York at the request of the Coalition Provisional Authority Administrator...

  • Coalition Provisional Authority Program Review Board
    Coalition Provisional Authority Program Review Board
    The Coalition Provisional Authority Program Review Board was composed of the senior personnel of the Coalition Provisional Authority, charged with the responsibility to review and make recommendations about the awarding of contracts to the administrator of the authority, Paul Bremer.The board...

  • International Advisory and Monitoring Board
    International Advisory and Monitoring Board
    The International Advisory and Monitoring Board was appointed to oversee the Coalition Provisional Authority's disbursements from the humanitarian Development Fund for Iraq. When the CPA was authorized to manage the DFI by United Nations resolution 1483....

  • KPMG audit of the Development Fund for Iraq
  • Overseas Expansion of the United States

External links

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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