Washington, D.C., November 6, 2003—The Iraq Supplemental bill President Bush signed today goes far in addressing key concerns regarding transparency of U.S. governance in Iraq, but close scrutiny is required, says the Open Society Institute.

Against a background of criticism over sole source contracts to Halliburton, allegations of price inflation by U.S. contractors, and the obstacles both Congress and outside observers have encountered in obtaining information about contracts for reconstruction, Congress demanded increased reporting on how U.S. funds to Iraq are spent.

The new law will create an Office of the Inspector General for Iraq to conduct audits and investigations of the Coalition Provisional Authority’s management of U.S. funds, and provide much-needed oversight of American reconstruction efforts. This change is welcomed by the Iraq Revenue Watch project of the Open Society Institute, which monitors Iraq’s public finances and has called for improved transparency.

The Inspector General will submit quarterly reports to Congress on U.S. activities and expenditures in Iraq, and will require the coalition to justify any contracts awarded without a competitive bid. The Coalition Provisional Authority must also submit monthly reports to Congress on Iraqi oil production and the use of oil revenues. The reports will be published on the coalition’s website in both English and Arabic.

Further, the bill requires the Secretary of State to submit within three months a report detailing U.S. government efforts to garner increased international support for Iraq’s reconstruction.

The Department of Defense has been tight-lipped about Iraq’s finances so far. Congress has now made significant moves to ensure accountability in U.S. spending in Iraq. The administration must follow suit.

United Nations Resolutions 1483 and 1511 demand full transparency in U.S. management of Iraq’s finances, but these requirements have been mostly ignored. The administration must vigorously enforce the Iraq Supplemental bill’s provisions and fully cooperate with the newly appointed Inspector General.

Anthony Richter of Iraq Revenue Watch, said: "The new bill is a belated first step toward making the American authorities accountable for Iraq’s finances. American accountability is a key pillar for building peace in Iraq. Renewed vigilance will be needed to see that the high standards of transparency are met."

For more information on Iraq Revenue Watch visit www.iraqrevenuewatch.org.