Hearing of the Senate Committee on Appropriations

HEADLINE: HEARING OF THE SENATE COMMITTEE ON APPROPRIATIONS
 
SUBJECT: WARTIME SUPPLEMENTAL
 
CHAIRED BY: SENATOR TED STEVENS (R-AK)
 
LOCATION: ROOM SH-216, HART SENATE OFFICE BUILDING, WASHINGTON, D.C.

WITNESSES: L. PAUL BREMER, PRESIDENTIAL ENVOY TO IRAQ
 
BODY:
Senator Murray?

SEN. PATTY MURRAY (D-WA): Thank you, Mr. Chairman, and thank you, Ambassador, for being here today. And I apologize for being late. I will keep my questions short, Mr. Chairman.

I just flew in, and I have to say that many of my constituents at home in Washington state had a little bit of sticker shock over $87 billion. It's a lot of money at a time when our economy here is struggling. And I heard that comment over and over to me in the past week since we heard that figure. I'm sure you've heard it, as well. And I think part of it is that no one was expecting the price tag to be that high, and now you've come forward, and I think we're all trying to work our way through it to see what it is. I think a general sense in my state, at least, that we understand that Iraq needs to rebuild their economy and their infrastructure and their government, but what our responsibility is, getting other countries to help, is critically important.

But one of the things that I heard over and over again was, "Weren't the oil revenues from Iraq supposed to finance much of this reconstruction?," and "What happened?" I know there's a story behind that. I'd like to hear a little bit about that from you; what happened. But also, specifically, I see in your proposal that you have 1.2 billion (dollars) to invest in the infrastructure -- in your testimony. Is that investment alone enough to get the Iraqi oil revenues to cover any reconstruction costs beyond what you have presented to us in this proposal? Or are we going to be seeing that that's not enough and we're going to have to look again at future proposals?

MR. BREMER: Thank you, Congresswoman. The problem with the oil revenues is basically two-fold: Number one, that the previous regime, as was the case throughout the economy, did not invest in infrastructure. The oil industry, as I said in my testimony, was basically starved of investment for a period of almost 20 years. The Iraqi oil engineers, who are very competent, labored heroically and were able to get production at various times up to the maximum, which is about 3 million barrels a day. And our objective is to try to get the industry back to that level. But with the damage that was done by under-investment in infrastructure, and with the repeated damage that is done now by political sabotage, and if you add into that the looting that took place in the immediate postwar period, we are in a situation where it is going to take this billion -- $1.2 billion to assure that the Iraqis get back to that 3 million barrels that they had prewar.

And what that means in terms of revenues is that next year, they will still not generate a surplus in revenues. It will cost them as much to run the government as they can get from revenues. In 2005, assuming we can get the oil production up to 3 million barrels a day, they should be generating excess cash for capital investments on the order of $4 (billion) to $5 billion a year.

SEN. MURRAY: You do believe that the 1.2 billion (dollars) is enough to get that reconstruction to where we are seeing that?

MR. BREMER: Yes. Yes. In fact, in general, the answer to your question about, you know, are we coming back for more, is that what we've done here is put together the amount that we believe represents what's urgently needed now to get -- to address Iraq's immediate needs. And we don't anticipate coming back with another major supplemental like this this year. This is our best --

SEN. MURRAY: This is your best --

MR. BREMER: Now, well, we hope that in other years, the whole -- any needs for Iraq are handled in a more normal way through the regular budgetary process.

But I answered, I think, a question from another senator before, Senator, this is -- you know, this is the best estimate that I can give you on what is needed. I do not believe we will need major additional amounts of money.

SEN. MURRAY: And do you think the oil production that we'll be able to generate is enough revenue to eliminate our continuing investment, post-2005?

MR. BREMER: Certainly on anything like this scale, yes.

SEN. MURRAY: Okay. Let me ask you a more specific question about Umm Qasr. I know that rehabilitation of that port was essential to getting food and other supplies into Iraq, shortly after --

MR. BREMER: Done by the Stevedore's Association of Seattle.

SEN. MURRAY: Correct. And I know that there's been a lot of problem with sabotage and looting. I note in here that you have $45 million for the rehab of the port there. Do you think that's enough to cover the costs, now that we've seen some of what the infrastructure is like there and some of the costs of security that weren't anticipated?

MR. BREMER: Yes, although the fact that I think it's enough is less important than that my experts think it's enough. The people we worked with in the Ministry of Transportation and our own experts believe that this should be enough to put the port, which is a very important port, it is our only port.

SEN. MURRAY: Right.

MR. BREMER: So it's very important, particularly for the import of food products, and now for the import of fuel oils that we're importing.

SEN. MURRAY: And it is open and operational at this point?

MR. BREMER: Yes, it is. It's been open since June 16th.

SEN. MURRAY: Okay. And is the $45 million enough to cover security for the people running the port?

MR. BREMER: Yes. Of course the security part of this supplemental comes more in the front part of it, where we talk about the roughly $5 billion for an Iraqi police force, for the Facilities Protective Service, which is more likely to take on fixed-site security on places like ports. It's more likely to come through a different part of this supplemental. But we believe the amount that's in here for security should be enough.

SEN. MURRAY: Okay. Because I was noting that railroad rehab was $303 million. That's a lot more than 45 (million dollars) for the port. Is that -- am I just looking at that --

MR. BREMER: Well, it's an extremely -- it's a very -- it's the region's largest rail system. It's a very extensive rail system. Again, drastically underinvested in over the years, with an outmoded rail -- the actual physical rails are not adequate and need to be replaced. It's a very big capital project.

SEN. MURRAY: All right, thank you very much, Ambassador.

MR. BREMER: Thank you.

SEN. STEVENS: Thank you.