During a Senate Appropriations Committee hearing today on waste, fraud and abuse in Iraq, GAO Comptroller David Walker said that “the Iraqis have a budget surplus” which “is not being spent.” He added that oil “revenues are going up” and therefore “one of the questions” regarding Iraq reconstruction is “who should be paying?”

Citing Iraq’s rising oil revenues and the fact that the U.S. has already spent $45 billion rebuilding the country, Sen. Patrick Leahy (D-VT) said that instead of President Bush “asking for billions” more to rebuild Iraq, the Iraqis “ought to be able to use some of their oil to pay for their own costs and not keep sending the bill to the United States.”

Meanwhile, U.S. tax money is ending up in the hands of sectarian militias in Iraq. Later in the same hearing, Walker confirmed that a “significant” amount of what the U.S. spends on Iraqi contracts is being diverted to Sunni and Shiite militias. Stuart Bowen, special inspector general for Iraq reconstruction, agreed, adding that “it is a significant problem.”

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