10 September, 2003
Mystery shrouds Pentagon's extra funds
By Peter Spiegel in London and Marianne Brun-Rovet in Washington
The Financial Times

It noted that $800m of that spending would go to coalition members who cannot afford to deploy their own troops. An additional $300m would go to new life-saving body armour; and $140m to heavily armoured Humvees to protect its soldiers.

But apart from those few details, the Bush administration has been tight-lipped about where the huge sums - which come on top of $62bn appropriated for military operations in Iraq and Afghanistan in April - are going.

Because Iraq military efforts are being funded outside the normal appropriations process, in so-called "supplemental" or emergency spending bills, the funding does not go through the same rigorous congressional oversight to which normal Pentagon spending is subject annually.

As a result, the spending is difficult to track, leading to concerns among some members of Congress, and experts in Pentagon budgeting, about the Defence Department's accountability. John Hamre, a former Pentagon budget chief who headed the administration-backed team of external experts to examine rebuilding efforts this summer, has said the $4bn a month the Defence Department is spending on military operations is high even by Pentagon standards: "A lot of people I know can't figure out why that number is so expensive."

Much of the money, experts said, is directly tied to the high levels of US troops in the region, which include more than 122,000 army personnel inside Iraq and 40,000 combined forces in neighbouring Kuwait.

The cost of paying the nearly 130,000 reservists who have been called up to support the effort - about the same number as activated during the war - is hugely expensive, as is the price tag on flying in tons of supplies.

"There's this presumption of, 'Pay me now and we'll get the books straight later'," says Christopher Hellman, a military spending expert at the Centre for Arms Control and Non-Proliferation. "That's fine for a while but if you do this over a long period of time, if the paperwork doesn't catch up, it raises a lot of questions."

Some respected Democrats are already asking those questions. John Spratt, the top Democrat on the House of Representatives' budget committee, this week questioned whether similar multi-billion-dollar requests would be coming in 2005 and 2006. "The president has levelled with us but he has only lifted the veil on what's needed now," Mr Spratt said.

Operations continuing in places such as Bosnia and Kosovo are funded out of the Pentagon's regular annual budget. But including Iraqi operations in annual operations would push the Defence Department's yearly funding to about $450bn, a figure that might well raise hackles in Congress and force deeper cuts in prized weapons programmes.

In some respects, the opacity of the Pentagon's spending in Iraq is by design. Indeed, when the Bush administration first approached Congress for additional war-related spending during last year's budget negotiations, it suggested a $10bn "contingency fund" be tacked on to the Pentagon's annual 2003 budget - essentially a slush fund.

The Congress rejected the proposal but the department made a similar request in March when it sought its first supplemental spending bill. Dov Zakheim, the Pentagon comptroller, asked that 96 per cent of the $62bn requested go into what he termed a "Defence Emergency Response Fund", which would have given the department wide flexibility to spend money as it sees fit.

Congress balked again, cutting the amount the Pentagon could freely spend to $9bn - and requiring five days' notice before even that could be spent. Because documents for the new supplemental have yet to be sent to Capitol Hill, it is unclear whether the Pentagon will seek that route again. But in making the request in March, Mr Zakheim insisted it was necessary to cut the bureaucratic complications that frequently tie fighter's hands in war.

"The reason you do that is that it gives you the ability to transfer funds from one account to another," he said at the time. "If you lock them into particular accounts, you may be overfunding one account, underfunding another account, and then you can't move the monies around. So we want to allocate the monies based on actual execution."

Budget experts argue, however, that such efforts are part of a strategy by Donald Rumsfeld, the Defense Secretary, to centralise decision-making in his office.

"It definitely fits in with Rumsfeld's view of a streamlined, centrally controlled Pentagon," says Mr Hellman.