FY2004 Supplemental Appropriations for Iraq, Afghanistan, and the Global War on Terrorism: Military Operations & Reconstruction Assistance

CRS Report for Congress
FY2004 Supplemental Appropriations for Iraq,
Afghanistan, and the Global War on Terrorism:
Military Operations & Reconstruction Assistance
Updated November 13, 2003
Stephen Daggett, Larry Nowels,
Curt Tarnoff, and Rhoda Margesson
Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

FY2004 Supplemental Appropriations for Iraq,
Afghanistan, and the Global War on Terrorism:
Military Operations and Reconstruction Assistance
Summary
In a nationwide address on September 7, 2003, the President announced that he
would request an additional $87 billion for ongoing military operations and for
reconstruction assistance in Iraq, Afghanistan, and elsewhere. On September 17, the
White House submitted a formal request for FY2004 supplemental appropriations of
that amount to Congress. Administration officials said they would like to see
congressional action completed some time before October 24, when an international
donors conference was scheduled to meet in Madrid to seek pledges of economic
assistance for Iraq.
On October 29, House and Senate appropriators announced a conference
agreement, on H.R. 3289, a bill providing supplemental appropriations for military
operations and for reconstruction assistance in Iraq and Afghanistan. The House
approved the conference agreement by a vote of 298-121 on October 31, and the
Senate approved the measure by voice vote on November 3. The President signed
the bill into law, P.L. 108-106, on November 6.
The key issue in Congress was whether to provide reconstruction assistance to
Iraq entirely as grants or partly as loans. The conference committee rejected a Senate
proposal to provide about half of the Iraq reconstruction assistance as loans. On
other issues, conferees eliminated a Senate provision adding 10,000 troops to the
Army for peacekeeping duties; agreed to a modified version of a Senate provision to
provide health insurance through the DOD TRICARE program for non-activated
military reservists not eligible for employer-provided health insurance; cut the
Administration request for reconstruction assistance to Iraq by $1.655 billion as in
the House bill rather than by $1.855 million as in the Senate bill; agreed to provide
$400 million more for Afghanistan than the Administration requested, as in the
House bill; agreed to provided $245 million for assessed costs of U.N. peacekeeping
in Liberia, as in the House bill; agreed to provide an additional $100 million for
Liberia and $10 million for Sudan for humanitarian assistance; eliminated a House
provision to require that Iraq reconstruction be coordinated by a Senate-confirmed
official; and did not include $1.3 billion for veterans health benefits that was in the
Senate bill (which may be provided instead in the pending VA-HUD-independent
agencies appropriations bill). The conference agreement also provides $500 million
for the Federal Emergency Management Agency (FEMA) for disaster relief for
Hurricane Isabel and the California wildfires.
In earlier floor action, Congress rejected proposals to roll back tax cuts to pay
for the bill; to shift funds from Iraq reconstruction to domestic programs; to make
release of funds conditional on specific requirements; and to transfer control of Iraq
reconstruction from the Defense Department to the State Department.

Contents
Most Recent Developments..........................................1
Overview ........................................................1
Basic Elements of the Administration Request...........................3
Long-Term Costs..................................................5
Impact on the Federal Budget....................................6
Earlier Administration Statements about Costs.......................7
Reliability of Current Estimates...................................8
Future Costs.................................................10
Issues in Congress................................................10
Proposals to Assert Congressional Oversight.......................11
Taxes and Domestic Priorities...................................11
Additional Funding for Various Programs..........................12
Health Insurance for Military Reservists...........................12
Competitive Contracting and Corporate Profits in Iraq................12
Loans Rather than Grants for Iraq Reconstruction....................13
Congressional Action..............................................14
Senate Appropriations Committee Markup.........................14
Senate Floor Debate and Amendments............................16
Amendments Considered...................................16
Amendments Adopted.....................................18
Amendments Rejected.....................................20
House Appropriations Committee Markup.........................22
House Floor Debate and Amendments............................25
House Motion to Instruct Conferees..........................27
Key Issues in Conference.......................................28
Military and Intelligence Operations: Overview and Issues................30
Basis of the Cost Projections....................................34
Funding Flexibility............................................34
Authority to Train and Equip Foreign Military Forces................35
Military Personnel Benefits.....................................36
Iraq/Afghanistan Reconstruction and Other Global War on Terrorism
Foreign Policy Initiatives.......................................37
Iraq Reconstruction and Security.................................39
Supplemental Request.....................................39
Background .............................................41
Issues ..................................................42
Afghanistan Reconstruction.....................................47
Afghanistan Supplemental..................................47
Background .............................................49
Issues ..................................................51
Other Global War on Terrorism Foreign Policy Initiatives.............52

Legislation ......................................................53
For Additional Reading............................................55
CRS Resources...............................................55
Administration Request........................................55
Cost Analyses................................................56
Other Resources..............................................57
Appendix .......................................................58
List of Tables
Table 1. Basic Elements of the Administration Request for Additional
Funding for Iraq, Afghanistan, and Other Activities...................4
Table 2. Defense Funding for Iraq, Afghanistan, and Other Global War on
Terrorism Activities: FY2001-FY2003.............................5
Table 3. Congressional Action on FY2004 Supplemental Appropriations
for the Department of Defense...................................31
Table 4. Iraq, Afghanistan, Other Foreign Policy Funding.................37
Table 5. Iraq Supplemental: Sector Allocation.........................40
Table 6. Afghanistan Supplemental: Sector Allocation....................48
Table 7. U.S. Assistance to Afghanistan...............................51
Table A1. Costs of Major U.S. Wars.................................58
Table A2. Costs of Major Reconstruction Efforts.......................59

FY2004 Supplemental Appropriations for
Iraq, Afghanistan, and the Global War on
Terrorism: Military Operations and
Reconstruction Assistance
Most Recent Developments
On October 29, House and Senate appropriators announced a conference
agreement, H.Rept. 108-337, on H.R. 3289, a bill providing supplemental
appropriations for military operations and for reconstruction assistance in Iraq and
Afghanistan. The House approved the bill by a vote of 298-121 on October 31, and
the Senate approved it by voice vote on November 3. The President signed the bill
into law, P.L. 108-106, on November 6. The conference agreement rejected a Senate
proposal to provide about half of the Iraq reconstruction assistance as loans.
For a review of conference action on key issues, see the section entitled “Key
Issues in Conference,” below.
Overview
In a nationwide address on September 7, 2003, the President announced that he
would request an additional $87 billion for reconstruction assistance to Iraq and
Afghanistan and for ongoing military operations there and elsewhere.¹ On September
17, the White House submitted a formal request for the funds to Congress. On
September 21, the Defense Department provided backup material to congressional²
committees. On September 23, the Coalition Provisional Authority that is
administering Iraq provided information on the details of its request for
reconstruction aid.
Congressional consideration of the request was completed on November 3,
when the Senate approved a conference agreement on H.R. 3289 providing

¹ President George W. Bush, “President Addresses the Nation,” The Cabinet Room, Sept.

7, 2003, see [http://www.whitehouse.gov/news/releases/2003/09/20030907-1.html].

² Office of Management and Budget, “FY2004 Supplemental: Iraq and Afghanistan Ongoing
Operations/Reconstruction,” Sept. 17, 2003, available electronically at
[ h t t p : / / www.whi t e house.go v/ omb/ budget / a me ndment s / s uppl ement a l _9_17_03.pdf ] .
Department of Defense, “FY2004 Supplemental Request for Operation Iraqi Freedom (OIF),
Operation Enduring Freedom (OEF), and Operation Noble Eagle (ONE),” Sept. 21, 2003.
Available at [http://www.dod.mil/comptroller/defbudget/FY_2004_Supplemental.pdf].

supplemental appropriations of $87.5 billion for FY2004. Earlier, congressional
committees held a number of hearings on issues raised by the Administration request.
Readers in congressional offices may click on the highlighted hearings listed below
(in the .html version of this report) to link to hearing transcripts.
Iraq Supplemental Hearings
September 9:
Senate Armed Services Committee — Witnesses: Paul Wolfowitz, General Richard
Myers, Dov Zakheim, Marc Grossman
September 16:
Senate Banking Committee — Witnesses: Alan Larson, John Taylor, Phillip Merrill
September 22:
Senate Appropriations Committee — Witness: L. Paul Bremer
September 24:
House Foreign Operations Appropriations Subcommittee — Witnesses: L. Paul Bremer,
General John Abizaid
Senate Appropriations Committee — Witnesses: Donald Rumsfeld, General Richard
Myers, General John Abizaid, Dov Zackheim
Senate Foreign Relations Committee — Witness: L. Paul Bremer
House Armed Services Committee — Witnesses: Paul Wolfowitz, L. Paul Bremer,
General John Abizaid, and General John Keane
House International Relations Committee — Witness: L. Paul Bremer
September 25:
Senate Armed Services Committee — Witnesses: L. Paul Bremer, General John Abizaid
September 30:
House Defense Appropriations Subcommittee — Witnesses: Donald Rumsfeld, General
Richard Myers, Dov Zakheim
House Foreign Operations Appropriations Subcommittee — Witnesses: Richard L.
Armitage, Andrew S. Natsios
October 2, 2003:
House Military Construction Appropriations Subcommittee — Witnesses: Ray Dubois,
Larry Lanzillotta, Major General Larry Lust, Major General Dean Fox
House Armed Services Committee — Witnesses: Admiral E. P. Giambastiani,
Brigadier General Robert Cone.
During congressional debate, a wide range of legislative proposals addressing
costs, burdensharing, and other issues were considered, including measures to
^!require the Administration to provide reports on Iraq policy, giving
details of plans to establish security and restore basic services;
^!roll back reductions in the top income tax rate from 2005 through

2010 enough to offset costs;

^!encourage greater allied contributions of troops and reconstruction
aid;
^!transfer control of Iraq reconstruction from the Defense Department
to the State Department; and
^!require fair and open competition on contracts in Iraq.
The major issue in Congress was whether to provide Iraq reconstruction funds as
grants, as the Administration proposed, or as loans.

The following discussion (1) briefly reviews the basic elements of the request;
(2) discusses the debate about long-term costs; (3) discusses congressional action on
key legislative proposals; (4) provides an overview of funding for ongoing military
operations in Iraq, Afghanistan, and elsewhere; and (5) provides an overview of
funding for reconstruction and security in Iraq, for reconstruction in Afghanistan, and
for other foreign policy initiatives.
Basic Elements of the Administration Request
Of the $87 billion that the Administration requested, $65.6 billion was for
defense, and $21.4 billion for foreign policy programs. Of the $65.6 billion for
defense, $51.5 billion was for ongoing military operations in Iraq, $10.5 billion for
U.S. forces in Afghanistan, and the remaining $3.6 billion for homeland defense and
support to allies.³ Of the $21.4 billion for foreign policy programs, $20.3 billion was
for security and reconstruction in Iraq, about $800 million for Afghanistan, and about
$200 million for other Global War on Terrorism foreign policy initiatives. Table 1
provides an overview of the request.

³ DOD has not broken down previous spending by operation, however, so it is not possible
to make a direct comparison between the current request to earlier funding.

Table 1. Basic Elements of the Administration Request for
Additional Funding for Iraq, Afghanistan, and Other Activities
(amounts in billions of dollars)
Defense$65.6
Operation Iraqi Freedom (Iraq)$51.5
Operation Enduring Freedom (Afghanistan)$10.5
Operation Noble Eagle (Homeland Defense)$2.2
Coalition Support$1.4
Foreign Policy$21.4
Iraq Reconstruction$15.2
Iraq Security$5.1
Other Iraq^a$0.1
Afghanistan Reconstruction$0.8
Other Global War on Terrorism$0.3
Total$87.0
^Sources^:^C^oⁿ^g^r^es^sⁱ^on^{al B}^r^iefⁱⁿ^g^m^a^{terial prov}^{ided by}^th^{e Of}^fⁱ^{ce of}^Man^a^g^e^m^eⁿ^t^an^{d B}^u^dg^et,^th^e
^Dep^a^r^t^m^eⁿ^t^o^f^Def^eⁿ^s^{e, th}^{e Dep}^a^r^t^m^eⁿ^t^o^f^{State, an}^d^th^{e Of}^fⁱ^{ce o}^f^th^{e Co}^alitioⁿ^P^r^o^v^isioⁿ^a^l^A^u^th^o^r^ity^,
^S^e^pt^em^{ber 8, 2003;}^O^f^fⁱ^{ce of}^M^aⁿ^a^g^e^m^eⁿ^t^an^{d Bu}^dg^et^{, S}^u^ppl^em^en^t^a^l^A^ppropri^a^tⁱ^oⁿ^s^R^e^qu^es^t^,
^S^e^pt^em^{ber 17, 2003;}^D^e^part^m^eⁿ^t^of^D^e^f^eⁿ^s^{e, F}^Y^{2004 S}^u^ppl^em^en^t^a^l^R^e^qu^es^t^,^S^e^pt^em^{ber 21, 2003.}
^No^te:
^a.^In^clu^d^es^{$61 m}^illion^f^o^{r U.S. diplom}^{atic f}^acilities^an^{d s}^ecu^rity^an^d^$50^m^illion^f^o^r^m^u^ltin^ation^a^l
^divⁱ^sⁱ^on^peacek^eepin^g^cos^t^s^.
Administration officials said that the request was designed to cover only
pressing requirements through the next year to fifteen months — the defense money
through FY2004, which ends on September 30, 2004, and the Iraq reconstruction
money through December 2004. The request for military operations assumed that
current troop levels and the current pace of operations in Iraq, Afghanistan, and
elsewhere would continue unchanged through the fiscal year. The request did not
address ongoing military costs after FY2004. Presumably, if the number of troops
deployed in Iraq were to change, costs would change as well.
The $20 billion requested for reconstruction and security in Iraq finances only
a part of what Administration officials estimate will be needed in the long run.
Current estimates, from a variety of sources, including the U.S. government, put the
figure in the $50-75 billion range. A needs assessment released by the World Bank
and the U.N. Development Program (UNDP) puts the cost of reconstruction in 14 key
sectors at $36 billion over four years, not including $19.4 billion estimated by the
U.S.-led Coalition Provisional Authority (CPA) for security, oil, and other critical⁴
sectors not covered by the Bank assessments. Total Bank/CPA projected

⁴ “UN/World Bank Present Iraq Reconstruction Needs to Core Group.” World Bank/United
Nations press release no. 2004/100/S, Oct. 2, 2003. For the full text of the report online, see
(continued...)

reconstruction costs through 2007 amount to $55 billion, $17.5 billion in 2004 alone.
The White House says that the Iraqi oil revenues and “recovered assets,” along with
additional international support, are expected to contribute to meet remaining needs.
Officials have also said, however, that Iraqi oil revenues are expected to total about
$12 billion in the next year, and that government operations will cost about as much,⁵
leaving no Iraq oil money for reconstruction efforts in the near term.
Long-Term Costs
The request for $87 billion for defense and reconstruction assistance comes on
top of more than $110 billion provided for those purposes since the September 11,
2001, terrorist attacks. Congress has provided $100 billion in defense funding, over
and above regular defense appropriations, for military operations in Afghanistan, for
other global counter-terrorism military and intelligence operations, for homeland
defense, and, most recently — in last April’s Emergency Wartime Supplemental
appropriations bill — for the war in Iraq. Table 2 provides a summary of defense
funding by appropriations bill.
Table 2. Defense Funding for Iraq, Afghanistan, and Other
Global War on Terrorism Activities: FY2001-FY2003
(amounts in billions of dollars)
Name of LawDate ofEnactmentPublic LawNumberDefenseFunding
FY2001 Emergency Terrorism9/18/01;P.L. 107-38;$17.4
Response Supplemental1/10/02P.L. 107-117
Appropriations Act;
FY2002 DOD Appropriations Act
FY2002 Emergency Supplemental8/2/02P.L. 107-206$13.4
FY2003 Consolidated Appropriations2/20/03P.L. 108-8$10.0
FY2003 Emergency Wartime4/16/03P.L. 108-11$62.6
Supplemental
FY2004 DOD Appropriations Act*9/30/03P.L. 108-87 — $3.5
Total — — $100.0
^*N^otes^:^T^o^t^a^l^m^a^yⁿ^o^t^{add du}^{e t}^o^rouⁿ^dⁱⁿ^g^.^T^h^e^F^Y²⁰⁰⁴^D^e^f^eⁿ^s^e^A^ppropri^a^tⁱ^oⁿ^s^A^c^t^res^cⁱⁿ^{ded $3.5}
^billion^of^f^uⁿ^d^s^prov^{ided in}^th^e^{FY2003 Em}^erg^eⁿ^c^y^W^a^rtim^{e Su}^pplem^en^tal.

⁴ (...continued)
the World Bank website at
[http://lnweb18.worldbank.org/ mna/mena.nsf/Attachments/Iraq+J oint+Needs+Assessme
nt/$File/J oint+Needs+Assessment.pdf].
⁵ Congressional briefing by executive branch officials, Sept. 8, 2003.

Since September 11, Congress has appropriated about $12 billion for Iraqi and
Afghan reconstruction and for foreign aid to the “front-line” states in the global war
on terrorism. Of that, Congress has provided $1.4 billion in reconstruction assistance
to Afghanistan, with another $600 million pending in regular FY2004 appropriations
bills. For Iraq, the April FY2003 Emergency Wartime Supplemental provided $2.5
billion in foreign operations funding for relief and reconstruction. Additional
funding for Iraq reconstruction totals $1.6 billion, of which $1.1 billion is from
Department of Defense funds (part of the $62.6 billion shown above in Table 2 from
the FY2003 Emergency Wartime Supplemental), and the remainder from the regular
U.S. Agency for International Development (USAID) budget (see below for a further
discussion).
A large part of the debate in Congress about the Administration’s $87 billion
request focused on cost issues, including
^!the impact of the new funding on the overall federal budget;
^!whether the Administration was adequately forthcoming in its
previous statements about costs;
^!how accurate and complete the current cost projections are; and
^!how great costs will be in future years.
The following sections review each of these issues in turn.
Impact on the Federal Budget
The Office of Management and Budget (OMB) mid-session review of the
budget, released in July, estimated that the federal budget deficit would total $455
billion in FY2003 and $475 billion in FY2004, assuming congressional enactment
of the Administration program for FY2004.⁶ White House officials said that the
requested additional appropriations of $87 billion for FY2004 would push the deficit
to about $525 billion for that year.⁷ The Congressional Budget Office (CBO)
updated budget baseline projected deficits of $401 billion in FY2003 and $480
billion in FY2004.⁸ It is important to note that the CBO baseline for FY2003
included outlays from the April 2003 wartime supplemental, and CBO projections
for future years assumed growth with inflation in overall discretionary spending. So,
in effect, the CBO estimate of the FY2004 deficit already assumed additional
supplemental appropriations for military activities in Iraq and elsewhere roughly
equal to the amount provided in FY2003. (Reconstruction assistance for Iraq and

⁶ Office of Management and Budget, “Mid-Session Review of the Budget: Fiscal Year

2004,” July 15, 2003.

⁷ So OMB projects that of the $87 billion in new budget authority, about $50 billion would
actually be spent as outlays in FY2004, with the remainder as outlays in future years.
⁸ Congressional Budget Office, “The Budget and Economic Outlook: An Update,” Aug.

2003.

Afghanistan, however, was more than three times as high in the FY2004 request as
in FY2003.)⁹
Administration officials argued that the economy can readily absorb additional
federal borrowing entailed by the requested supplemental, particularly since the
economy is still recovering from recession. Using OMB economic projections, a
deficit of $525 billion in FY2004 would total equal 4.4% of gross domestic
product — less than the 5%-6% of GDP that the government borrowed in the mid-
1980s. Congressional critics argued that funding for domestic programs, though not
tax cuts, has been constrained; that borrowing 20%-25% of the overall federal budget
is fiscally irresponsible; and that continuing deficits will endanger the economy in the
long term.
Others, including some Members of Congress, contended that, given Iraq’s
future oil revenue potential, reconstruction costs should be financed as loans rather
than grants. In this way, they say, future loan repayments would be a source of
revenue for the United States.
Earlier Administration Statements about Costs
In the months leading up to the war with Iraq, Administration officials were
generally unwilling to provide long-term estimates either of the costs of a war or of
subsequent post-war needs, saying that no final decision had been made to go to war
and that costs could not be projected with sufficient accuracy. What little officials
did say, however, became a matter of contention in Congress. In a September 9
Senate Armed Services Committee hearing, Senator Levin recalled that former White
House economic advisor Larry Lindsey had said a year earlier that a conflict with Iraq
could cost $100-200 billion.¹⁰ Other Administration officials, however, notably then-
Budget Director Mitch Daniels, immediately dismissed Lindsey’s figures as ill-
founded, and the press widely reported Administration estimates that costs would be
in the range of $50 billion.¹¹ That figure proved reasonable for the war itself and for
subsequent stability operations for the remainder of FY2003, but did not take account
of later post-war costs.
By March of this year, shortly before the White House submitted its FY2003
supplemental request, some legislators were complaining that the Administration was
withholding cost projections so as not to weaken support for pending tax cut
legislation. At one point, during the tax debate, the Senate approved an amendment
to set aside $100 billion of the of the tax cut as a hedge against unplanned war costs.
Before the war began, several independent estimates of war costs and of post-war
expenses were prepared, including assessments by the Congressional Budget Office,

⁹ CBO estimates that first year outlays from the Senate Appropriations Committee reported
version of the supplemental, S. 1689, will total $37 billion.
¹⁰ For Lindsey’s original comments, see Bob Davis, “Bush Economic Aide Says Cost Of
Iraq War May Top $100 Billion,” Wall Street Journal, Sept. 16, 2002, p. 1.
¹¹ See, for example, Elizabeth Bumiller, “Budget Director Lowers Estimate Of Cost Of A
War,” New York Times, Dec. 31, 2002 Pg. 1.

the House Budget Committee Democratic Staff, Yale economist William Nordhaus,
the Center for Strategic and International Studies, and the Council on Foreign
Relations. Several of these independent estimates projected considerably higher
costs than the Administration was providing, mainly because the independent
projections took account of post-war peacekeeping and reconstruction costs and, in
some cases, costs of borrowing funds because the war added to the deficit. For a list
of major cost studies, see “For Additional Reading,” below.
Estimates of reconstruction costs became a particular focus of attention in view
of the Administration’s request for $20 billion for Iraq. In a widely quoted statement
last March, when asked about long-term reconstruction costs in Iraq, Deputy
Secretary of Defense Paul Wolfowitz said that
the oil revenues of that country could bring between 50 and 100 billion dollars
over the course of the next two or three years. Now, there are a lot of claims on
that money, but ... we’re not dealing with Afghanistan that’s a permanent ward
of the international community. We are dealing with a country that can really¹²
finance its own reconstruction and relatively soon.
More recently, Secretary of Defense Rumsfeld acknowledged that the U.S.
government underestimated Iraq reconstruction costs, saying,
The infrastructure of that country was not terribly damaged by the war at all. It
was damaged by 30 years of Saddam Hussein, with a Stalinist-like economy,
denying the people of that country the money and the funds and the resources
and the investments that they could have had.... Now ... did we underestimate
something? Yes. I don’t think people really fully understood how devastating that
regime was to the infrastructure of the country; how fragile the electric system
is, how poorly the water’s being managed, and how — the extent to which the¹³
people are being denied.
Reliability of Current Estimates
Leaving aside the politically contentious issue of past cost estimates, many
questions remain about the accuracy of the most recent military and reconstruction
cost projections. On the military side, officials have said that they do not believe
there will be any need for more U.S. troops in Iraq, first, because the security
situation in the country is generally good except in areas, like the “Sunni triangle,”
where diehard opposition is concentrated; second, because rapid progress is being
made in organizing Iraqi security forces which, the Administration expects, will take
up most of the burden;¹⁴ and, third, because of expected contributions of forces from

¹² Deputy Secretary of Defense Paul Wolfowitz, before the House Defense Appropriations
Subcommittee, Mar. 27, 2003.
¹³ Secretary of Defense Donald Rumsfeld before the National Press Club, Sept. 10, 2003.
¹⁴ For a discussion of the status of efforts to reconstitute Iraq’s military forces, see Walter
Slocombe, Coalition Provisional Authority Special Advisor on Security and Defense,
Department of Defense News Briefing on the Status of the New Iraqi Army and Police
Force, Sept. 16, 2003. Available electronically at:
(continued...)

other nations. Cost projections justifying the supplemental request assume that
current force levels and the current pace of operations will be maintained for the next
year. Whether that is sufficient, however, depends first of all on whether the security
situation is improving, as Administration officials insist, or getting worse, as others
argue.
There have also been some questions about specific elements of the Defense
Department’s supplemental funding request. In a hearing of the Senate
Appropriations Committee on September 24, Senator Harkin questioned whether
several requested projects were war-related emergencies that require immediate
funding, including $293 million for various military construction projects, $329
million for R&D projects, and $345 million for base camp housing. Others have
raised the opposite question: whether the DOD request understates costs by leaving
for the future projects which will later need funding. One particular issue is that the
request includes relatively little money for “reconstituting” or — in the new DOD
vernacular “resetting” — Army forces. The Army estimates that several billion
dollars will be required to refill stocks of prepositioned materiel and repair equipment
to pre-war standards, but the request does not finance these measures.
In addition, as a recent Congressional Budget Office assessment concluded, it
is questionable whether the current force level can be maintained without further
extending reserve tours and, perhaps, mobilizing even more reserves, either of which
might undermine reserve personnel retention.¹⁵ Several Members of Congress have
proposed increasing the size of the Army to ease pressures on the force, though CBO
cautions that this would take up to five years to implement and would subsequently
cost $9-10 billion per year.
On the reconstruction side, officials acknowledge that they originally
underestimated significantly the weakness of Iraq’s infrastructure and overestimated
potential short-term Iraqi oil revenues. Even now, however, different officials
project somewhat different upper estimates of likely reconstruction costs. Moreover,
how much multilateral donors will contribute to cover the current reconstruction
financing gap ($50 to 75 billion, minus the $20 billion supplemental and perhaps $5
to $6 billion per year from Iraqi oil revenues beginning in 2005) is highly unclear.
Undersecretary of State Larson told the Senate Banking Committee on September 16
that, while the Administration believed that bilateral donors and international
financial institutions should “make a maximum effort to pay their share,” he was not
in a position to provide a specific figure until better estimates of reconstruction costs
are available. With the Madrid donor conference scheduled for October 23-24, U.N.
officials estimate that about $2 billion for Iraq will be pledged for 2004.¹⁶ On top of

¹⁴ (...continued)
[http://www.defenselink.mil/transcripts/2003/tr20030917-0683.html ].
¹⁵ Congressional Budget Office, “An Analysis of the U.S. Military’s Ability to Sustain an
Occupation of Iraq,” Letter to the Honorable Robert Byrd, Sept. 3, 2003. Available
electronically at: [http://www.cbo.gov/showdoc.cfm?index=4515&sequence=0].
¹⁶ “Donors Seen Pledging $2 billion to Iraq in Madrid,” Reuters, Oct. 14, 2003.

this amount, the World Bank plans to recommend to its governing board $1 billion
in concessional and market rate loans to Iraq through June 30, 2005.¹⁷
Future Costs
Of all the uncertainties about costs of U.S. operations in Iraq (and Afghanistan),
perhaps the greatest is how long the United States will have to maintain a substantial
military presence. Secretary of Defense Rumsfeld has said that he does not anticipate
that large numbers of U.S. military forces will be required in the long term. Some
legislators, however, including some supporters of Iraqi regime change, have said
that the United States should expect to be involved for five years or more. Recently
Lt. Gen. Carlos Sanchez, who commands U.S. and allied forces in Iraq, said “it’s
going to be a few years” before the United States can withdraw from Iraq.¹⁸ How
long U.S. forces will stay is the main factor affecting long-term estimates of costs.
Most recently, the House Budget Committee Democratic Staff has prepared an
updated report that projects “that the long-term cost of the war in Iraq and the
post-war reconstruction effort will be more than $178 billion and under plausible
assumptions could exceed $400 billion.”¹⁹ By comparison, the Vietnam war, from

1964 through 1973, cost about $584 billion in FY2003 prices.

Issues in Congress
A number of issues were a focus of legislative attention, including both issues
directly related to the supplemental request and some not directly related. Legislative
measures that were proposed or acted on include
^!proposals to assert congressional oversight;
^!measures on taxes and domestic priorities;
^!proposals to provide additional funding for various programs;
^!a measure to provide health insurance for military reservists;
^!competitive contracting and limitations on profits of corporations
with contracts in Iraq; and
^!proposals to provide loans rather than grants for Iraq reconstruction.

¹⁷ “World Bank Considers Lending $4 Billion to Iraq,” Financial Times, Oct. 15, 2003.
¹⁸ James O’Shea, “Force Reduction In Iraq ‘Years’ Off,” Chicago Tribune, Oct. 5, 2003,
p. 1.
¹⁹ Hon. John Spratt, “News Release: Spratt Statement on Potential Cost of Operations in
Iraq,” Sept. 23, 2003. Available electronically at
[http://www.house.gov/ budget_democrat s/news/iraq_cost_update.htm] .
The full study is, House Budget Committee Democratic Staff, “The Cost of War and
Reconstruction in Iraq: An Update,” Sept. 23, 2003. Available electronically at
[http://www.house.gov/ budget_democrat s/analys es/iraq_cost_update.pdf].

Proposals to Assert Congressional Oversight
From the beginning of the congressional debate, a key issue was how Congress
should exercise oversight over U.S. policy, particularly in Iraq. On September 9, just
a day-and-a-half after the President’s speech, Senator Feinstein and ten other
Democratic Senators introduced a freestanding bill, S. 1594, designed to be attached
to the supplemental, that would require an extensive report on the economic and
security situation in Iraq. The report would be required to include information on
attacks on U.S. and coalition military and civilian personnel, a detailed plan to
establish security and restore basic services, current and projected costs, efforts to
secure increased international participation, a timetable for restoring self-
government, and projected U.S. and international military personnel requirements.
The reporting requirements in the Feinstein proposal were echoed in several
other proposals that were under consideration in Congress. In floor action, the Senate
has adopted a number of amendments to impose various reporting requirements on
the Administration. And in its markup of its version of the supplemental
appropriations bill, the House Appropriations Committee approved an amendment
by Representative Hoyer to establish extensive reporting requirements. (See below
under “Congressional Action” for more details.)
Taxes and Domestic Priorities
Taxes and the budget were another key focus of congressional debate. In a
speech at the National Press Club on September 9, Senator Biden announced that he
would offer a measure to offset costs of the supplemental by delaying implementation
of tax cuts for the top 1% of taxpayers for one year, which, he said, would free up
about $85 billion. The Administration vigorously opposed any offsetting reduction
in tax cuts.²⁰ On October 1, Senator Biden, along with Senators Kerry, Chafee,
Corzine, Feinstein, and Lautenberg, proposed an amendment to limit the planned
reduction in the top marginal income tax rate from 2005 through 2010 sufficiently
to increase revenues by $87 billion. The Senate rejected the amendment on
October 2. In the House, during Appropriations Committee markup on October 9,
Representative Obey proposed a substitute bill that, among other things, offset costs
by reversing tax cuts. (See below under “Congressional Action” for more details.)
Funding for domestic programs was also an issue. Many legislators criticized
the Administration for opposing some domestic spending while asking for larger
amounts for similar programs in Iraq, including border security, schools, and prison
construction. In the House, Representatives Emanuel, DeFazio and others introduced
an amendment requiring parity between money for domestic needs and the amount
devoted to Iraq reconstruction. On October 14, the Senate rejected an amendment
by Senator Stabenow to reduce Iraq reconstruction funding by $5 billion and transfer

²⁰ For the Biden proposal and the White House response, see Bud Newman, “Bush Calls
‘Absurd’ Democratic Proposal To Skip Tax Cuts to Pay for Iraq, Afghanistan,” BNA Daily
Report for Executives, Sept. 11, 2003, p. G-11. For the Emmanuel proposal, see “As
Appropriators, Rank And File Digest Funding Request,” National Journal Congress Daily,
Sept. 10, 2003.

the money to domestic priorities. (See below under “Congressional Action” for more
details.)
Additional Funding for Various Programs
Several measures to provide funds for various domestic and international
programs were matters of continuing debate in Congress, and some were offered as
amendments to the supplemental. Some Members advocated additional funding for
homeland security, while Senator Mikulski discussed adding $100 million for
AmeriCorps. An amendment by Senator Durbin, tabled by the Senate on a vote of
56-43, would have added $880 million for international HIV/AIDS, bringing the total
U.S. commitment in FY2004, as included in other pending bills, to $3 billion. The
House measure added $345 million for Liberia peacekeeping and reconstruction and
for Sudan, in line with an earlier Dear Colleague letter from Representative Payne
and others. The Senate-passed measure included $200 million for Liberia, while the
enacted bill provides $200 million, plus $245 million for a contribution to U.N.
peacekeeping operations in Liberia. A key issue was whether to add $1.4 billion to
the bill for veterans health benefits.
Health Insurance for Military Reservists
The Senate approved an amendment to the FY2004 defense authorization bill
that would offer health insurance to non-active duty reservists (of which there are
about 800,000) and their families through the DOD TRICARE program. Non-active
duty reservists would be allowed access to TRICARE by paying premiums
substantially below the average cost of private health insurance. CBO estimated that
the provision would cost about $500 million in FY2004 and over $2 billion a year by
FY2008 as more reservists signed on. The Administration threatened to veto the
authorization if it included this provision. Supporters said that they might offer the
measure as an amendment to the supplemental if it were not enacted in the
authorization. On October 2, the Senate approved an amendment to its version of the
supplemental bill providing health insurance to non-activated reservists, though only
to those who are unemployed or ineligible for employer provided insurance. (See
below under “Congressional Action” for a discussion of Senate action on this issue.
Also see the discussion of “Military Personnel Benefits” below.)
Competitive Contracting and Corporate Profits in Iraq
A particularly sensitive political issue was whether companies like Halliburton,
which have been awarded non-competitive contracts for support of U.S. forces and
for reconstruction activities in Iraq, may be earning excessive profits. Some
legislators mentioned measures to address the issue – Representative Maloney, for
example, introduced the Clean Contracting in Iraq Act of 2003 (H.R. 3275). In its
markup, the Senate Appropriations Committee approved an amendment by Senator
Leahy to stiffen penalties for fraud and profiteering on contracts for Iraq. The House
version of the bill included a measure to limit non-competitive procedures for
reconstruction contracts, and during House floor debate, Members adopted
amendments by Representatives Kirk and Slaughter tightening reports and
information regarding non-competitive contracts. A third amendment by

Representative Sherman required oil infrastructure procurement to follow normal
competitive bidding procedures. A combination of these proposals was included in
the enacted legislation (see “Congressional Action” below).
Loans Rather than Grants for Iraq Reconstruction
Several Members drafted amendments to require portions of the $20.3 billion
Iraq reconstruction request to be guaranteed by Iraqi oil or extended as loans rather
than grants. The Administration’s proposal called for all assistance to be provided
on a grant basis.
Although most of these efforts failed or were not offered, a Senate-passed
amendment by Senators Bayh, Ben Nelson, and others drew strong objections from
the White House. On October 16, the Senate adopted (51-47) language that would
convert $10 billion of Iraq reconstruction funding to loans. The U.S. would treat
these loans as grants, however, if foreign creditors cancel 90% of Iraq’s debt. This
was one of the key issues during congressional conference deliberations, although it
was dropped from the enacted bill.
Other unsuccessful attempts to shift grants to loans included amendments by
Senator Dorgan, tabled during both Committee markup (15-14) and floor
consideration (57-39), creating an Iraq Reconstruction Finance Authority that would
obtain financing for infrastructure rehabilitation by collateralizing the revenue from
future sales of Iraq oil. The full Senate also tabled a similar amendment by Senator
Landrieu during floor debate (52-47). Representative Wamp offered, but withdrew
under White House pressure, a proposal during House Committee markup that would
have made half of the reconstruction available only after an elected government was
in place and only on a loan basis. A similar amendment by Representative Pence was
ruled out of order during House floor consideration.
Senator Hutchison and others introduced, but did not offer, an amendment
(S.Amdt. 1798) directing $10 billion of the proposed $20.3 billion supplemental to
an Iraq Reconstruction Trust Fund, to be created within the World Bank, that would
issue loans and loan guarantees to implement economic development projects in Iraq.
Any U.S. contribution to the Fund would require a matching pledge from other
bilateral donors. After six months, if the Trust Fund had not been established, the
$10 billion would transfer to the CPA and be used for reconstruction loans to the Iraq
Governing Council.
There were, however, legal questions as to who could assume responsibility in
the near term for accepting sovereign loans and concerns raised by the
Administration, of increasing Iraq’s already large and currently unserviceable debt.
(For more discussion, see below under sections on Congressional Action and Iraq
Reconstruction Issues.)

Congressional Action
The Senate Appropriations Committee marked up its version of a bill, S. 1689,
on September 30, and the Senate began floor debate on October 1. On October 9, the
House Appropriations Committee marked up its version of a supplemental
appropriations bill, H.R. 3289, providing funds for ongoing military operations and
for reconstruction assistance in Iraq and Afghanistan. Floor action began on
October 15. Both the House and the Senate approved their versions of the bill on
October 17. On October 29, House and Senate appropriators announced a conference
agreement, on H.R. 3289. The House approved the conference agreement by a vote
of 298-121 on October 31, and the Senate approved the measure by voice vote on
November 3. The President signed the bill into law, P.L. 108-106, on November 6.
Senate Appropriations Committee Markup
As proposed by Committee Chairman Ted Stevens and as agreed to by the
committee, the reported bill provided the amounts requested both for defense and for
foreign operations, though with some shifts of funds among various activities.
For defense, the bill provided $65.560 billion, equal to the amount requested.
The committee bill made some minor changes in requested equipment funding and,
most notably, rejected an Administration proposal to revise military personnel
benefits. In action on some key issues, the Senate committee bill
^!Extended through FY2004 an increase in Imminent Danger Pay and
in Family Separation Allowances that Congress provided in the
April 2003 Wartime Emergency Supplemental. The Administration
proposed eliminating these increased benefits after December 31,
2003, and instead using an increase in amounts of Hazardous Duty
Pay to provide the same amounts to troops deployed in conflict areas
(see below for a further discussion).
^!Provided an additional $962 million for Army operations and
maintenance and procurement funding for materiel and activities
such as body armor for soldiers in Iraq and Afghanistan, battlefield
ordinance cleanup, transportation of damaged combat equipment to
depots, communications equipment, and replenishment of Army
prepositioned stocks used in combat. These increases were offset by
reductions in Air Force, Navy, and Defense-Wide accounts.
^!Provided the Defense Department with the authority to transfer up
to $2.5 billion among defense accounts without advance
congressional approval rather than $5 billion as requested by the
Administration. The bill also, however, provided authority for DOD
to transfer an additional $5 billion subject to approval by the House
and Senate Appropriations Committees. Senator Byrd proposed
measures to limit the funding flexibility the bill provided.

^!Allowed DOD to transfer $150 million into unplanned military
construction projects rather than the $500 million requested.
^!Provided $200 million to provide training and equipment to the new
Iraqi Army and the Afghan National Army. The Administration had
requested the funds for forces in Iraq, Afghanistan, and “other
nearby regional nations.”
^!Provided $1.0 billion for “coalition support” to reimburse Pakistan,
Jordan, and other cooperating nations for logistical and other support
to U.S. operations. This is $400 million less than the Administration
requested.
Although there was some debate about the defense request, most of the debate
during the Senate markup concerned reconstruction funds. The committee rejected
an amendment by Senator Byrd to eliminate most of the reconstruction funds —
except for amounts for security — leaving reconstruction to be considered later in a
separate measure. The committee also rejected an amendment by Senator Byrd to
limit the transfer authority for defense programs that the bill provides.
For Iraq and Afghanistan reconstruction and other global war on terrorism, S.
1689, as reported, provided $21.445 billion, as requested, supported the full request
for Afghanistan, and made small changes in other areas.
Regarding Iraq reconstruction, the Senate Appropriations Committee supported
the total funding request of $20.3 billion and provided the President with the
flexibility to allocate resources to any federal account. This would allow the
Coalition Provisional Authority, headed by Ambassador Bremer who reports to the
Secretary of Defense, to continue its coordination role and control over
reconstruction funding. The Senate-reported measure, however, deleted the $60.5
million requested for U.S. diplomatic facilities in Iraq, noting that these funds were
previously provided in the FY2003 emergency supplemental measure (P.L. 108-11).
The Administration, however, had planned to use these supplemental resources for
what it considered as more urgent needs for an interim USAID mission in Kabul and
training for the Afghan transitional government. Instead, S. 1689 provided a separate
$60.5 million appropriation for USAID’s Capital Investment Fund to meet the
requirements in Afghanistan, making the FY2003 supplemental funds available for
U.S. facilities in Baghdad.
Other additions and changes made by the Senate panel were to
^!earmark $100 million of the $20.3 billion total for democracy-
building activities in Iraq;
^!require full and open competitive contracting procedures (waivable);
^!apply current and future USAID standards related to meeting the
needs of disabled persons to activities in Iraq and Afghanistan;
^!ensure that a new Iraqi constitution preserves full rights to religious
freedom;
^!prohibit any funds from being used to repay debts incurred by the
former government of Saddam Hussein; and

^!impose fines and criminal charges against persons engaged in war
profiteering and fraud relating to military action, relief, and
reconstruction in Iraq.
Also during Senate Committee markup, the panel tabled (15-14) two amendments
by Senator Dorgan related to reducing U.S. costs of rebuilding Iraq. The first would
have created an Iraq Reconstruction Finance Authority that would use future Iraq oil
revenues to secure financing for reconstruction projects. Senator Dorgan argued that
the Iraq Governing Council had sufficient authority to create such a facility and to
raise money that could reduce the size of proposed U.S. expenditures. Senator
Dorgan subsequently reintroduced the amendment for Senate floor debate, at which
time the Senate tabled the proposal 57-39. The second Dorgan amendment
considered during Committee markup would have converted the reconstruction
package from grants to loans. Opponents of the Dorgan amendments maintained that
adding to Iraq’s already sizable debt obligations would enormously complicate the
difficult task of stabilizing the economy. Also tabled during markup (15-14) was a
proposal by Senator Harkin that would have reduced reconstruction funds to $10
billion and delayed submission of additional requests until the President had reported
on contributions made by other donors and submitted a detailed reconstruction plan.
For other matters concerning the global war on terrorism, S. 1689, as reported,
approved the President’s request for a $100 million emergency fund for complex
foreign crises. The Senate Appropriations Committee expressed support for using
the contingency fund for peace and humanitarian efforts, such as those required in
Liberia. The bill further authorized the use of $200 million for Pakistan debt relief
pending in the regular FY2004 Foreign Operations bill and extends through FY2004
the waiver of foreign aid restrictions that applied to Pakistan prior to September 11,
2001. Beyond agreeing to $50 million proposed for Emergencies in the Diplomatic
and Consular Services for rewards for Osama bin Laden and Saddam Hussein, S.

1689 adds $41 million for two other specific purposes:

^!reimbursement to New York City for additional costs of protecting
foreign missions and officials since September 11 ($32 million); and
^!costs of the 2003 Free Trade Area of the Americas Ministerial
meeting ($8.5 million).
The Senate measure further included $40 million, as requested, for USAID operating
expenses in Afghanistan and Iraq, plus an additional $60.5 million for construction
and upgrades of more secure overseas USAID facilities.
Senate Floor Debate and Amendments
The Senate began floor consideration of S. 1689 on October 1 and continued on
October 2, 3, and, after recess, on October 14, 15, 16, and 17.
Amendments Considered. The major debates on the Senate floor were over
^!an amendment by Senator Byrd to eliminate $15.2 billion of the
$20.3 billion requested for Iraq reconstruction in order to review the

proposal more closely and consider it at a later point (rejected by a
vote of 38-59 on October 1);
^!an amendment by Senator Biden that would have suspended a
portion of tax reductions in order to pay the costs of Iraq security
and reconstruction (tabled by a vote of 57-42 on October 2);
^!an amendment by Senators Daschle and Graham of South Carolina
(S.Amdt. 1816) to offer health insurance under the Defense
Department-run TRICARE program to reservists and their families
who are either unemployed or who are not eligible for employer-
sponsored health insurance (adopted October 2);
^!various amendments to provide some or all of the Iraq reconstruction
funds as loans (the Senate adopted the Senators Bayh-Ben Nelson-
Ensign-Collins-Clinton-Dorgan-Snowe-Graham amendment to
provide $10 billion as loans by a vote of 51-47 on October 16);
^!a Reed-Hagel proposal to add 10,000 active duty personnel to the
Army (rejected a motion to table the amendment by 45 to 52 on
October 15 and adopted the amendment without objection on
October 16);
^!an amendment by Senators Dorgan and Wyden to cut $1.655 billion
from specific Iraq construction projects, as in the House committee
version of the bill, and to cut an additional $200 million for Iraqi oil
imports (agreed to on October 17);
^!a Durbin amendment (S.Amdt. 1879) to reduce Iraq reconstruction
funds by $879 million and provide the same amount for HIV/AIDS
prevention, treatment, and research (tabled by 56-43, October 17);
and
^!an amendment by Senators Chafee and Leahy to add $100 million to
funds available to assist Liberia (agreed to on October 17).
Reconstruction Transfers as Loans. Perhaps the most extensive
discussion during Senate deliberation came on the issue of whether Iraq
reconstruction funding should be financed strictly on a grant basis, as proposed by
the President, or whether some of the money should be loaned to Iraq. On October
17, over strong White House objections, the Senate adopted (51-47) an amendment
(S.Amdt. 1871) by Senators Bayh, Ben Nelson, and others to provide $10 billion as
loans. Should international creditors subsequently agree to cancel 90% of Iraq’s
debt, the President could convert the loans into grants.
Other proposals, however, were either defeated or not offered. Earlier in the
debate, there was substantial discussion of an amendment introduced by Senator
Hutchison and others (S.Amdt. 1798) requiring that the Secretary of the Treasury
negotiate with the World Bank and member nations of the Bank to create within
World Bank an Iraq Reconstruction Trust Fund. Under the terms of the Hutchison

amendment, the Fund would be governed by a Board of Trustees made up of a U.S.
official and five others representing the top country contributors to the Trust Fund.
The Board would use Trust Fund contributions to extend loans and loan guarantees
for projects advancing economic development in Iraq. Of the $20.3 billion
appropriated Iraq reconstruction, the amendment would have directed $10 billion to
the Trust Fund, although the U.S. contribution could not exceed the total amount
pledged by other nations. After 6 months, if the Trust Fund had not been established,
the $10 billion would be transferred to the Coalition Provisional Authority, which
would loan to, or guarantee loans made by, the Iraq Governing Council. Senator
Hutchison, however, did not bring up her amendment for a vote.
Another proposal by Senators Bayh and Nelson (S.Amdt. 1815) would have
required that prior to the obligation of non-security reconstruction funds, each
country that is owed debt incurred during the Saddam Hussein regime forgives such
debt. Otherwise, after 6 months, reconstruction appropriations would be transferred
to an account for use as a loan to the Iraq Governing Council. This amendment was
not debated, although, as noted above, the Senate adopted an alternative Bayh/Nelson
amendment on October 16 addressing the same theme.
Amendments Adopted. Overall, during the seven days of debate through
October 16, the Senate acted on more almost 50 amendments, adopting 47 and
rejecting 16. Those adopted included amendments
^!by Senators Collins and Wyden (S.Amdt. 1820) to require all
contracts over $1 million military purposes and reconstruction in
Iraq to use full and open competition procedures unless the
executive agency responsible for the contract justifies the reasons for
using a non-competitive process (October 2);
^!by Senators Murray and Durbin (S.Amdt. 1822) requiring that a
number of women’s issues be given priority in reconstruction
programs in Iraq and Afghanistan (October 2);
^!by Senators Voinovich and Lott (S.Amdt. 1808) requiring a report
within 6 months on efforts made by the United States to increase
contributions by other nations and organizations for Iraq
reconstruction, the status of pre-war Iraqi debt, and the prospect for
repayment of infrastructure costs by Iraq (October 2);
^!by Senators Daschle and Graham of South Carolina (S.Amdt. 1816)
to offer health insurance under the Defense Department-run
TRICARE program to reservists and their families who are either
unemployed or who are not eligible for employer-sponsored health
insurance (October 2) (see below, under “Military Personnel
Benefits,” for a description of the specific proposal); and
^!by Senators Reed and Kennedy (S.Amdt. 1812), to increase by
$191.1 million the amount provided up-armored High Mobility
Multipurpose Wheeled Vehicles offset by a cut in funds in the Iraq
Freedom Fund (October 2)

^!by Senator Ensign (S.Amdt. 1839) to prevent reconstruction funds
from being used to repay foreign debts (October 15);
^!by Senator Reid (S.Amdt. 1836) and by Senator Hollings (S.Amdt.
1870) to permit citizens held as POWs or as “human shields” in the

1991 Gulf War to pursue damages in court (October 15 and 16);

^!by Senator McConnell (S.Amdt. 1863) to permit the export of lethal
military equipment to reconstituted Iraqi military forces (October

16);

^!by Senator Nickles (S.Amdt. 1876) to express the sense of the
Senate that foreign countries should forgive Iraqi debt (October 16);
^!by Senator Nelson of Florida (S.Amdt. 1858) to provide $10 million
for a National Guard family assistance program (October 16);
^!by Senator Warner (S.Amdt. 1880 and S.Amdt. 1867) to provide
funds for defense facilities damaged by Hurricane Isabel (October

16);

^!by Senator Feingold (S.Amdt. 1852) to all military personnel to take
leave to attend to deployment related business (October 16);
^!by Senator Durbin (S.Amdt. 1837) to require the federal government
to make up any difference between what federal employees who are
members of the military reserves activated for service will earn when
activated and what they would normally earn in basic pay (approved

96-3, October 17);

^!by Senator Boxer (S.Amdt. 1843) to make retroactive the relief of
hospitalized members of the uniformed services from the obligation
to pay for food and subsistence while hospitalized (99-0, October

17);

^!by Senators Dorgan and Wyden (S.Amdt. 1887) to cut $1.655 billion
from specific Iraq construction projects, as in the House committee
version of the bill, and to cut an additional $200 million for Iraqi oil
imports (October 17);
^!by Senators Chafee and Leahy (S.Amdt. 1807) to add $100 million
to the $100 million available in the committee bill for assistance to
Liberia (October 17);
^!by Senator Harkin (S.Amdt. 1860) to provide up to $13 million for
conflict resolution, rule of law, and democracy activities (October

17);

^!by Senator Boxer (S.Amdt. 1845) to prioritize the equipping of
aircraft enrolled in the Civil Reserve Air Fleet when
counter-measures against the threat of shoulder-fired missiles are
deployed for homeland defense (October 17);
^!by Senators Bond and Mikulski (S.Amdt. 1825) to provide an
additional $1.3 billion for in medical care funds for the Department
of Veterans Affairs (October 17); and
^!at least 15 amendments to require various reports on Iraq
reconstruction and security and on other issues.
Amendments Rejected. The Senate also rejected amendments
^!by Senators Leahy and Daschle (S.Amdt. 1803) to place the
Coalition Provisional Authority under the direct authority and
foreign policy guidance of the Secretary of State (tabled 56-42,
October 2);
^!by Senator Dodd (S.Amdt. 1817) to provide an additional $322
million for safety equipment for United States forces in Iraq offset
by reducing the amount provided for reconstruction (tabled by 49-

37, October 2);

^!by Senator Bingaman (S.Amdt. 1830) to authorize the award of the
Iraqi Liberation Medal as a campaign medal for members of the
Armed Forces who serve in Southwest Asia in connection with
Operation Iraqi Freedom (rejected 47-48, October 14);
^!by Senator Stabenow (S.Amdt. 1823) to reduce Iraq reconstruction
funds by $5.03 billion and to provide an equal amount of additional
spending for domestic education, veterans, health, and transportation
programs (tabled by 59-35, October 14);
^!by Senator Dorgan (S.Amdt. 1826) to require that Iraqi oil revenues
be used to pay for reconstruction in Iraq (tabled by 57-39, October

14);

^!by Senators Byrd, Leahy, and Kennedy (S.Amdt. 1818) to allow only
$5 billion of non-security Iraq reconstruction funds to be used prior
to April 1, 2004; after April 1, the remaining funds would become
available if the President issues certain certifications and Congress
approves a subsequent appropriations law approving the additional
funds (tabled by 57-42, October 16);
^!by Senator Leahy (S.Amdt. 1868) to prohibit contracts with
corporations that owe deferred compensation to specific U.S.
government officials (tabled by 65-34, October 16);

^!by Senator Daschle (S.Amdt. 1854) to require that any future
funding for Iraq be matched by foreign contributions (tabled by 55-

44, October 17);

^!by Senator Landrieu (S.Amdt. 1859) to establish an Iraq
Reconstruction Finance Authority (tabled by 52-47, October 17);
^!by Senator Durbin (S.Amdt. 1879) to reduce Iraq reconstruction
funds by $879 million and provide the same amount for prevention,
treatment, and control of, and for research on HIV/AIDS (tabled by

56-43 nays, October 17);

^!by Senator Corzine (S.Amdt. 1882) to establish a National
Commission on the Development and Use of Intelligence Related to
Iraq. (tabled by 67-32, October 17);
^!by Senators Byrd and Durbin (S.Amdt. 1819) to shift $600 million
from the Iraq reconstruction to the Army to secure and destroy
weapons in Iraq (tabled by 51-47, October 17);
^!by Senator Byrd (S.Amdt. 1886) to prohibit involuntary deployment
overseas in support of Operation Iraqi Freedom of members of the
National Guard and Reserves who have been involuntarily deployed
for more than six months during the preceding six years (tabled by

82-15, October 17);

^!by Senator Byrd (S.Amdt. 1888) to eliminate the flexibility given to
the President to reallocate Iraq reconstruction funds without
approval by Congress (tabled by 49-46, October 17);
^!by Senator Brownback (S.Amdt. 1885) to reduce the amount
appropriated for reconstruction in Iraq by $600 million and to
increase the amount available to the Iraqi Civil Defense Corps by
$50 million, the amount available for Afghanistan by $400 million,
and the amount available for Liberia (tabled by 55-43, October 17);
and
^!by Senator Byrd (S.Amdt. 1884, to S.Amdt. 1819), to shift $1.655
billion from Iraq reconstruction funds to reconstruction assistance to
Afghanistan, destruction of conventional weapons in Iraq, disaster
relief in Liberia, and repair or Hurricane Isabel damage to military
and Coast Guard facilities (fell when Byrd-Durbin S.Amdt.1819 was
tabled, October 17).
Also Senators Reid and Lincoln withdrew an amendment (S.Amdt. 1835) to permit
concurrent receipt of military retired pay and veterans administration disability
benefits after a compromise on the issue in the conference on the FY2004 defense
authorization bill was announced. In addition, an amendment by Senator Schumer
regarding appointment of a special counsel was ruled out of order and not
reconsi d ered.

House Appropriations Committee Markup
The House marked up its version of a supplemental appropriations bill (H.R.
3289) on October 9. As approved by the House Appropriations Committee, the bill
^!provided $86.9 billion in total, $184 million below the request;
^!provided $18.65 billion for Iraq reconstruction, $1.65 billion below
the request;
^!provided $1.2 billion for Afghanistan reconstruction, $400 million
above the request;
^!moved $858 million from the defense part of the bill to the foreign
operations part to cover operating expenses of the Coalition
Provisional Authority in Iraq; and
^!added $544 million to the defense part of the bill to cover Hurricane
Isabel damage at military facilities.
In the defense part of the bill, the committee bill also
^!added funds for force protection and unexploded ordnance clearing,
offset by cuts elsewhere;
^!allowed the Army to contract out for security guards at military
facilities in the United States to replace 7,000 to 10,000 reserve
personnel mobilized for those duties;
^!as in the Senate version of the bill, extended through FY2004
increases in Imminent Danger Pay and Family Separation
Allowances provided in the April 2003 Wartime Emergency
Supplemental and rejects the Administration proposal to instead use
Hardship Duty Pay to increase pay to deployed personnel;
^!provided the Defense Department with the authority to transfer up
to $3.0 billion among defense accounts without advance
congressional approval rather than $5 billion as requested by the
Administration (the Senate bill provides $2.5 billion for transfer
without advance congressional approval plus $5 billion subject to
prior approval by the defense appropriations subcommittees);
^!allowed DOD, as requested, to transfer up to $500 million into
unplanned military construction projects, rather than the $150
million allowed in the Senate bill;
^!provided $100 million to provide training and equipment to the new
Iraqi Army and the Afghan National Army, rather than the $200
million provided in the Senate bill — the Administration had
requested $200 million for forces in Iraq, Afghanistan, and “other
nearby regional nations;” and
^!provided $1.3 billion for “coalition support” to reimburse Pakistan,
Jordan, and other cooperating nations for logistical and other support

to U.S. operations, rather than the $1.4 billion requested or the $1.0
billion in the Senate bill.
In the Iraq/Afghanistan reconstruction part of the bill, the committee bill
^!provided all Iraq reconstruction in the form of a grant, as requested;
^!cut Iraq reconstruction by reducing by $300 million funds for
proposed prison modernization and construction, $153 million for
recommended solid waster management programs (including trash
trucks), $335 million for transportation and communication projects
(including zip codes), $100 million for 7 new housing communities,
$150 million for a new children’s hospital in Basra, and $200
million for an American-Iraqi Enterprise Fund (see Table 5, below,
for more details on sector and project adjustments);
^!provided full or near-full funding for security and law enforcement
($3.2 billion), electrical generation and distribution infrastructure
($5.56 billion), and oil infrastructure ($2.1 billion), and adds $100
million for modernizing medical facilities ($493 million total) and
$90 million for education programs;
^!increased funding for Afghan reconstruction from $799 million
proposed to $1.2 billion, adding resources for road construction,
private sector development, power generation, education, and
improved governance;
^!limited the use of non-competitive contracts for Iraq, but with a
presidential waiver;
^!continued the organizational structure for Iraq reconstruction of
Ambassador Bremer reporting to the President through the Secretary
of Defense; and
^!prohibited the use of funds to pay Iraq’s foreign debts.
The Committee bill further added several items unrelated to Iraq and Afghan
reconstruction issues concerning Pakistan, Liberia, and victims of September 11:
^!The Administration had requested authority (but not money) to use
$200 million in Economic Support Funds (ESF) pending in the
regular FY2004 Foreign Operations Appropriation (H.R. 2800 and
S. 1469) for Pakistan debt reduction. The House Committee granted
this authority, plus provides $200 million in ESF to fund debt
restructuring;
^!Responding to international calls for additional humanitarian relief
aid and finances for a U.N. peacekeeping force in Liberia, the House
measure added $100 million for disaster and famine support and

$245 million for a U.S. contribution to a U.N. peacekeeping
operation. The disaster relief money can also be used in Sudan; and
^!The House Committee included $15 million for the Department of
Justice September 11 Victims Compensation Program.
During the markup, the committee agreed to a manager’s amendment by
committee Chairman Bill Young that —
^!added $150 million for Hurricane Isabel storm damage at military
and Coast Guard facilities to the $413 million in the chairman’s
mark, for a total of $544 million; and
^!prohibited the use of any funds in the bill for defense or
reconstruction activities “coordinated by any officer of the United
States Government” not subject to confirmation by the Senate.
The latter provision was a response to the White House decision, announced on
October 6, to give White House National Security Advisor Condoleezza Rice
responsibility for coordinating Iraq reconstruction activities. The issue for Congress
was that officials not subject to Senate confirmation are not readily available to
provide congressional testimony. (See below for a further discussion of issues
regarding management of reconstruction funds.)
The committee also accepted a number of other amendments, including
proposals
^!by Representative Hoyer to require the President to submit a
quarterly report on reconstruction in Afghanistan and Iraq, the
security situation, troop requirements, and other matters;
^!by Representative Wolf requiring the General Accounting Office to
review most reconstruction contracts;
^!by Representative Lowey to shift $90 million of Iraq reconstruction
funds to education;
^!by Representative Cunningham to ensure that impact aid to local
school districts is not reduced if both parents of a student are
deployed abroad;
^!by Representative Kolbe to strengthen requirements in the bill
regarding competitive bidding on reconstruction contracts;
^!by Representative Hinchey to prohibit funding for foreign military
units that are credibly suspected of violating human rights;
^!by Representative Nethercutt to allocate 10% of reconstruction funds
administered by the U.S. Agency for International Development to
small and minority-owned businesses;
^!by Representative Nethercutt to require the Secretary of Defense to
submit to Congress within 30 days an analysis of alternatives for
replacing the existing Air Force fleet of KC-135 tanker aircraft; and
^!by Representative Bonnilla, regarding repatriation of illegal
immigrants (two amendments).

The Nethercutt amendment regarding tanker aircraft had to do with an Air Force
proposal to lease 100 Boeing 767 aircraft as tankers that is currently being held up.
The Senate removed an identical provision from its version of the bill in floor action
on October 2. Some regarded this measure as a place holder allowing the
appropriations committees to provide funds for the lease in a conference report on
the bill.
The committee rejected (by a recorded vote of 25-36) a substitute amendment
by Representative Obey that would
^!transfer $4.6 billion from Iraq reconstruction to defense to among
other things, increase the size of the Army by 20,000, increase
funding for force protection measures, expand health care for
military personnel, and increase family support services;
^!require that half the remaining $14 billion in reconstruction aid (i.e.,
$7 billion) be provided as loans through the World Bank;
^!require that other donors make a matching contribution of 50%; and
^!reduce tax cuts to offset costs.
Representative Wamp brought up but then withdrew a widely discussed
amendment to provide half of the reconstruction money for Iraq as loans.
Representative Culberson brought up but also withdrew an alternative measure that
would require the President to ensure that the United States is ultimately reimbursed
for the reconstruction funds.
Other measures that the committee rejected included amendments
^!by Representative Goode to eliminate all Iraq reconstruction funds;
^!by Representative Jackson to add $100 million for assistance to
Liberia;
^!by Representative Hinchey to require information on non-
competitive contracts for activities in Iraq entered into after
September 30, 2002; and
^!by Representative Obey to add $14 billion to buy, rather than lease,
Boeing 767 tanker aircraft.
House Floor Debate and Amendments
The House began general debate on its bill on the floor on October 15 and then
took up amendments on October 16 and 17. The Rules Committee approved an open
rule, allowing unlimited amendments, but did not protect any amendments against
points of order. As a result, a number of amendments, including a substitute
amendment by Representative Obey like the one he offered in committee and a loans
versus grants amendment by Representative Pence, were ruled out of order as
constituting legislation on an appropriations bill. In debate on October 16, the only
amendment on loans made in order was a proposal by Representative Obey to
provide that all reconstruction grants should be converted to loans.
In floor action on October 16 and 17, the House adopted amendments

^!by Appropriations Committee Chairman C.W. “Bill” Young of
Florida to exempt servicemembers with combat-related injuries from
a requirement to for meals while hospitalized;
^!by Representative Maloney to make available $20 million for
women and girls in Afghanistan;
^!by Representative Kirk to tighten the congressional reporting
requirements related to non-competitive contracts (405-20)
^!by Representative Slaughter to require more information from the
executive branch related to contracts awarded through a non-
competitive process;
^!by Representative DeFazio that prohibits the funds provided by the
bill to be used for Iraq to participate in the Organization of
Petroleum Exporting Countries;
^!by Representative Millender-McDonald to transfer $50 million
funds from the Operation and Maintenance Defense-Wide to the
Family Advocacy Program;
^!by Representative Ramstad to shift $98 million within the bill to
provide funds for domestic travel for Army personnel receiving rest
and recuperation leave;
^!by Representative Hoeffel to add reporting requirements on
international military and economic cooperation and on guard and
reserve deployment plans;
^!by Representative Velazquez to prohibit funds from being used for
any contract in contravention of Section 8 (d)(6) of the Small
Business Act; and
^!by Representative Sherman to require that normal competitive
bidding procedures are followed in procurement under the funds
appropriated for Iraq’s oil infrastructure (by a recorded vote of 248-

179).

The House rejected amendments
^!by Representative Obey that would have converted reconstruction
grants to loans (200-226);
^!by Representative Obey to shift funds from Iraq reconstruction to
various military programs (209-216);
^!by Representative Goode to delete funding for Liberia;

^!by Representative Blumenauer to shift reconstruction funds from
Iraq to Afghanistan;
^!by Representative Waxman to reduce reconstruction aid for Iraq;
^!by Representative Markey to limit the Defense Department’s
authority to transfer funds (146-279);
^!by Representative Holt to bar funds for petroleum imports into Iraq
(169-256);
^!by Representative Tauscher to transfer $300 million from funding
weapons inspections to Army force protection measures;
^!by Representative Deutsch to prohibit any of the funds for
reconstruction in Iraq from being provided until September 30,

2004;

^!by Representative Kind to reduce funding for the Iraq Relief and
Reconstruction Fund by 50% (by a recorded vote of 156-267 with
one voting “present”);
^!by Representative Stupak to increase the basic rate of pay to all
military services to provide a $1,500 bonus to each person serving
in operations in Iraq or Afghanistan (by a recorded vote of 213-213);
^!by Representative Reyes to increase funding for programs and
scholarships to increase language proficiency and workforce
diversity in the intelligence community (by a recorded vote of 206-

221);

^!by Representative Jackson-Lee of Texas to shift $70 million to
Afghan women’s programs and $300 million from Iraq oil industry
reconstruction to human rights, education, refugees, and democracy
and governance (by a recorded vote of 156-271); and
^!by Representative Weiner to prohibit funds in the bill to be used for
assistance or reparations to Cuba, Libya, North Korea, Iran, Saudi
Arabia, or Syria (by a recorded vote of 193-233).
House Motion to Instruct Conferees. On October 21, the House approved
(by a vote of 277-139) a motion offered by Representative Obey to instruct House
conferees to accept four Senate provisions:
^!providing medical screening for military reservists before
mobilization (Section 317);
^!extending transitional health care and benefits to military personnel
for 180 days from separation from the armed forces (Sec. 321);

^!providing that $10,000,000,000 of the amounts provided for the
reconstruction of Iraq be in the form of loans, subject to certain
conditions (Sec. 2319); and
^!providing of $1,300,000,000 to the Veterans Health Administration
for medical care for veterans (Title IV).
Earlier in the day, Office of Management and Budget Director Joshua Bolten
sent a letter to the House and Senate Appropriations Committees warning that the
President’s advisors would recommend a veto if the conference agreement on the bill
included a requirement that Iraq reconstruction funds be provided as loans. The letter
also opposed the $1.3 billion in the Senate bill for veterans health and the Senate
provision that provides health insurance for some non-deployed military reservists
and their dependents through the DOD TRICARE program.
Key Issues in Conference
The major issue in House-Senate conference consideration of the bill was
whether to provide some of the Iraq reconstruction funds as loans. The Senate bill
included an amendment to provide $10 billion of the Iraq reconstruction funds as
loans. In a vote on October 29, the conference rejected by a vote of 13-16 a proposal
to provide half the $18 billion for Iraq reconstruction assistance as loans.
On other key issues, the conference agreement
^!provides $500 million for the Federal Emergency Management
Agency (FEMA) for disaster relief for Hurricane Isabel and the
California wildfires, which was not in either chamber’s bill;
^!eliminates a House provision requiring that Iraq reconstruction aid
be coordinated by an official subject to Senate confirmation – the
conference also rejected by a vote of 14-15 an alternative proposal
by Senator Byrd to require Senate confirmation of the director of the
Iraq Coalition Provisional Authority;
^!cuts the Administration request for the Iraq Relief and
Reconstruction account by $1.655 billion as in the House bill rather
than by $1.855 million as in the Senate bill. The conference,
however, further directs that $210 million of Iraq funding be
transferred for aid to Jordan, Liberia, and Sudan, leaving resources
for Iraq $1.865 billion less than requested;
^!agrees, as in the House bill, to provide about $1.2 billion for Afghan
reconstruction, $400 million more than the Administration requested
and the Senate provided;
^!provides $245 million for assessed costs of U.N. peacekeeping in
Liberia, as in the House bill, and earmarks a total of $200 million for
Liberian relief aid and $10 million for Sudan humanitarian

assistance rather than $200 million in the Senate bill and $100
million in the House measure;
^!provides $200 million in economic aid to Pakistan, as in the House
bill;
^!includes a modified version of a Senate measure to provide health
insurance through the DOD TRICARE program to non-active duty
reservists who do not have access to employer-provided health
insurance; the conference report presents this and other reserve
health care measures as a one-year trial through FY2004 and
requires that DOD report on its cost and implementation;
^!rejects a Senate provision to increase Army end-strength by 10,000
active duty personnel for assignment to peacekeeping types of
duties;
^!provides $313 million in defense operation and maintenance and in
procurement funds to repair Hurricane Isabel damage at military
facilities, $100 million less than in the House bill, and provides
another $130 million in military constructions funds for disaster
repair, as in the House bill;
^!provides $100 million in a general provision that was not in either
chamber’s bill for munitions security and destruction in Iraq;
^!moves $858 million from the defense part of the bill to the foreign
operations part to cover operating expenses of the Coalition
Provisional Authority in Iraq, as in the House bill;
^!provides $3 billion in general transfer authority to the Secretary of
Defense with a requirement that Congress be notified promptly but
not that Congress provide advance approval as in the House bill and
rejects the Senate provision that would provide $5 billion in such
transfer authority and an additional $2.5 billion subject to
congressional approval; and
^!rejects a Senate provision to provide $1.3 billion for veterans health
benefits, as in the Senate bill; Senator Stevens said that the funding
would be addressed in the pending VA-HUD-independent agencies
appropriations bill.
The conference also adopted compromise language to
^!impose a variety of reporting requirements; and
^!require competition on contracts in Iraq or to report on non-
competitive contracts.

Military and Intelligence Operations:
Overview and Issues
The Administration proposal devotes $66 billion of the $87 billion total to
military and intelligence operations in Iraq, Afghanistan and elsewhere. On
September 21, the Administration provided Congress with backup material justifying
the request. The Senate Appropriations Committee provided the full funding
requested for defense, though it added funds for Army operation and maintenance
and weapons procurement and made offsetting reductions in Air Force, Navy, and
Defense-Wide operation and maintenance. The House Appropriations Committee
cut about $289 million from the defense total. It added funds mainly for Army
weapons procurement and made offsetting cuts similar to those in the Senate bill.
Table 3 provides a breakdown by appropriations account of the request and
congressional committee action.

CRS-31
Table 3. Congressional Action on FY2004 Supplemental Appropriations for the Department of Defense
(thousands of dollars)
^C^h^an^{ge to}^C^h^an^{ge to}^C^h^an^{ge to}
^Request^H^o^use^Request^Sena^t^e^Reques^t^Conference^Request
^M^ilit^a^r^y^Perso^nnel
^Military^P^e^rs^onⁿ^e^l,^A^r^m^y^12,858,870^12,188,870^-^670,⁰⁰⁰^12,858,870^-^-^12,858,870^-^-
^Military^P^e^rs^onⁿ^e^{l, Nav}^y^816,100^816,100^-^-^816,100^-^-^816,100^-^-
^Military^P^e^rs^onⁿ^e^{l, Marin}^e^C^o^rps^753,190^753,190^-^-^753,190^-^-^753,190^-^-
^Military^P^e^rs^onⁿ^e^{l, A}ⁱ^{r Force}³^,384,700^3,384,700^-^-^3,384,700^-^-^3,384,700^-^-
^T^o^{tal Military}^P^e^rs^onⁿ^e^l^17,812,860^17,142,860^-^670,000^17,812,860^-^-^17,812,860^-^-
^O^p^era^tⁱ^oⁿ^a^{nd M}^a^int^e^na^nce
^O^&^{M, A}^r^m^y^24,190,464^24,257,664^+67,²⁰⁰^24,946,464^+756,000^23,997,064^-^193,400
ⁱ^{ki/CRS-RL32090}^O^&^{M, N}^a^v^y^2,106,258^1,934,058^-^172,²⁰⁰^1,976,258^-^130,000^1,956,258^-^150,000
^g/w^O^&^{M, Mari}ⁿ^e^C^o^rps¹^,198,981^1,198,981^-^-^1,198,981^-^-^1,198,981^-^-
^s^.or^O^&^{M, A}ⁱ^{r F}^o^rce⁵^,948,368^5,598,368^-^350,000^5,516,368^-^432,000^5,416,368^-^532,000
^le^ak^O^&^{M, D}^e^f^eⁿ^s^e-^Wi^de^4,618,452^4,485,452^-^133,000^4,218,452^-^400,000^4,355,452^-^263,000
^O^&^{M, Mari}ⁿ^e^C^o^rps^R^e^s^e^rv^e^16,000^16,000^-^-^16,000^-^-^16,000^-^-
^://wiki^O^&^{M, A}ⁱ^{r F}^o^{rce R}^e^s^e^rv^e^53,000^53,000^-^-^53,000^-^-^53,000^-^-
^h^ttp^O^&^{M, A}ⁱ^{r N}^a^tⁱ^oⁿ^a^l^G^u^ard^214,000^214,000^-^-^214,000^-^-^214,000^-^-
^Ov^ers^eas^Hu^m^aⁿ^itarian^{, Dis}^a^s^t^{er &}^Cⁱ^vⁱ^c^35,500^35,500^-^-^35,500^-^-^35,500^-^-
^Ai^d
^{Iraq F}^r^eedom^F^uⁿ^d^1,988,600^2,^086,600^+98,000^1,988,600^-^-^1,988,600^-^-
^T^o^t^a^l^O^p^eratⁱ^oⁿ^an^{d Mai}ⁿ^t^eⁿ^aⁿ^c^e^40,369,623^39,879,623^-^490,000^40,163,623^-^206,000^39,231,223^-¹^,138,400
^Procurem^ent
^Mi^s^sⁱ^l^e^Procu^r^em^en^t^,^A^r^m^y^6,200^-^-^-⁶^,200^6,200^-^-^-⁶^,200
^Procu^r^em^en^t^of^WT^C^V^{, A}^r^m^y^46,000^101,600^+55,600^104,000⁺^58,000^101,600^+55,600
^O^t^h^e^{r Procu}^r^em^en^t^,^A^r^m^y^930,687^1,250,²⁸⁷^+319,600^1,078,687⁺^148,000^1,143,687^+213,000
^Aⁱ^rcraf^t^Procu^r^em^en^t^,^N^a^v^y^128,⁶⁰⁰^158,600^+30,000^128,600^-^-^158,600^+30,000
^O^t^h^e^{r Procu}^r^em^en^t^,^N^a^v^y^76,357^76,357^-^-^76,357^-^-^76,357^-^-
^Procu^r^em^en^t^,^Mariⁿ^e^C^o^rps^123,397^123,397^-^-^123,397^-^-^123,397^-^-
^Aⁱ^rcraf^t^P^r^ocu^r^em^en^t^,^Aⁱ^{r F}^o^rc^e^40,972^53,972^+13,000^40,972^-^-^53,972^+13,000
^Mi^s^sⁱ^l^e^Procu^r^em^en^t^,^Aⁱ^{r F}^o^rce^20,450^20,450^-^-^20,450^-^-^20,450^–

CRS-32
^C^h^an^{ge to}^C^h^an^{ge to}^C^h^an^{ge to}
^Request^H^o^use^Request^Sena^t^e^Reques^t^Conference^Request
^O^t^h^e^{r Procu}^r^em^en^t^,^Aⁱ^{r F}^o^rce³^,441,⁰⁰⁶^3,418,006^-^23,000^3,441,006^-^-^3,438,006^-³^,000
^Procu^r^em^en^t^,^D^e^f^eⁿ^s^e-^Wi^de^435,635^418,635^-^17,000^435,635^-^-^418,635^-^17,000
^T^o^t^a^l^Procu^r^em^en^t⁵^,249,304^5,621,304^+372,000^5,455,304^+206,⁰⁰⁰^5,534,704^+285,400
^R^e^s^e^arch^{, D}^e^vel^o^p^m^en^{t, T}^e^s^t^an^d^E^val^u^a^ti^on
^R^D^T^&^E,^N^a^v^y^34,000^34,000^-^-^34,000^-^-^34,000^-^-
^R^D^T^&^{E, A}ⁱ^{r F}^o^rce^39,070^39,070^-^-^39,070^-^-^39,070^-^-
^R^D^T^&^{E, D}^e^f^eⁿ^s^e-^Wi^de^265,817^195,817^-^70,000^265,817^-^-^260,817^-⁵^,000
^T^o^{tal R}^e^s^earch^{, Dev}^e^lopm^en^{t, T}^e^s^t^an^d^338,887^268,887^-^70,000^338,887^-^-^333,887^-⁵^,000
^Ev^alu^a^tioⁿ
^Rev^o^l^vⁱ^ng^a^{nd M}^a^na^g^e^m^e^nt^F^unds
^D^e^f^eⁿ^s^{e Work}ⁱⁿ^g^C^a^pi^t^a^l^F^uⁿ^d^s^600,000^600,000^-^-^600,000^-^-^600,000^-^-
^N^a^tⁱ^oⁿ^a^l^D^e^f^eⁿ^s^{e S}^ealⁱ^f^t^F^uⁿ^d^24,000^24,000^-^-^24,000^-^-^24,000^-^-
ⁱ^{ki/CRS-RL32090}^T^o^t^a^l^R^e^v^o^l^vⁱⁿ^g^an^{d Man}^a^g^e^m^eⁿ^t^F^uⁿ^d^s^624,000^624,000^-^-^624,000^-^-^624,000^-^-
^g/w^O^t^{her Depa}^rt^m^e^nt^o^f^Def^e^{nse P}^r^o^g^r^a^m^s
^s^.or^D^e^f^eⁿ^s^{e H}^eal^t^h^Prog^ram^658,380^658,380^-^-^658,380^-^-^658,380^-^-
^le^ak
^D^r^{ug I}ⁿ^t^e^r^dⁱ^c^tⁱ^o^{n & Co}^unt^e^r^-D^r^u^g^73,000^73,000^-^-^73,000^-^-^73,000^-^-
^://wiki^A^c^tiv^{ities, Def}^eⁿ^s^e
^h^ttp^T^o^{tal Oth}^e^{r Dep}^a^rtm^eⁿ^t^o^f^Def^eⁿ^s^e^731,380^731,380^-^-^731,380^-^-^731,380^-^-
^Pr^og^r^a^m^s
^{Related Agencies}
^Iⁿ^tellig^en^{ce Co}^m^m^uⁿ^ity^Man^a^g^e^m^eⁿ^t^21,500^21,500^-^-^21,500^-^-^21,500^-^-
^A^ccouⁿ^t
^Co^a^s^t^G^u^a^r^d^O^p^e^r^a^tⁱ^ng^E^x^p^e^nse^s^--²³^,¹⁸³^{-- -- -- -- --}
^T^o^t^a^l^R^e^l^a^t^e^{d A}^g^en^ci^es^21,500^44,683^+23,183^21,500^-^-^-^21,500
^G^eⁿ^eral^Provi^sⁱ^on^s
^S^t^orm^D^a^m^a^g^e^-^-^413,300^+413,300^-^-^-^-^313,000^+313,000
^Muⁿ^ition^s^Des^t^ru^ction^an^d^Secu^rity^-^-^-^-^-^-^-^-^-^-^100,000^+100,000
^T^o^t^a^l^G^eⁿ^e^ral^Provⁱ^sⁱ^oⁿ^s^-^-^413,300^+413,300^-^-^-^-^413,300^+413,300
^M^ilit^a^r^y^Co^nst^r^uctⁱ^oⁿ^a^{nd Fa}^m^ily^H^o^using
^Military^C^oⁿ^s^tru^c^tion^,^A^r^m^y^119,⁹⁰⁰^185,100^+65,200^119,900^162,100^+42,200
^Militar^y^Coⁿ^s^tr^u^c^tioⁿ^,^Nav^y⁴⁵^,⁵³⁰⁺⁴⁵^,⁵³⁰^-^-^-^-⁴⁵^,⁵³⁰⁺⁴⁵^,⁵³⁰

CRS-33
^C^h^an^{ge to}^C^h^an^{ge to}^C^h^an^{ge to}
^Request^H^o^use^Request^Sena^t^e^Reques^t^Conference^Request
^Military^C^oⁿ^s^tru^c^tion^,^Aⁱ^{r Fo}^rce^292,550^292,550^-^-^292,550^-^-^292,550^-^-
^F^a^mⁱ^l^y^H^o^u^sⁱⁿ^g^,^A^r^m^y^-^-^8,151^+8,151^-^-^-^-^11,420^+11,420
^F^a^mⁱ^l^y^H^o^u^sⁱⁿ^g^,^N^a^v^y^an^{d Mari}ⁿ^e^C^o^rps^-^-^6,280^+6,280^-^-^-^-^6,280^+6,280
^F^a^mⁱ^l^y^H^o^u^sⁱⁿ^g^,^Aⁱ^{r F}^o^rce^-^-^6,981^+6,981^-^-^-^-^6,981^+6,981
^T^o^{tal Militar}^y^Coⁿ^s^tr^u^c^tioⁿ^an^d^412,450^544,592^+132,142^412,⁴⁵⁰^-^-^524,861^+112,411
^Fam^ily^Ho^u^sⁱⁿ^g
^G^r^a^{nd To}^t^a^l^65,560,004^65,270,629^-^289,375^65,^560,004^-^-^65,010,165^-^549,839
^Sources^:^H^.^R^e^pt^{. 108-}^312;^S^.^R^e^pt^{. 108-}^160.

ⁱ^{ki/CRS-RL32090}
^g/w
^s^.or
^le^ak
^://wiki
^h^ttp

Several aspects of the request are worth noting, including
^!basis of the cost projections,
^!funding flexibility,
^!authority to train and equip foreign military forces, and
^!military personnel benefits.
Basis of the Cost Projections
According to DOD officials, the request is based, first, on the assumption that
current force levels and the current pace of operations will be maintained throughout
FY2004, although it assumes some change in the mix of active and reserve forces
deployed. DOD and OMB backup material on the request notes that the number of
Army combat divisions in Iraq will be reduced, but this will not substantially affect
the total number of personnel deployed in Southwest Asia and nearby areas in
support of Operation Iraqi Freedom and Operation Enduring Freedom (in
Afghanistan).
The requested is based, second, on the use of a model for estimating costs of
military operations know as the “Contingency Operations Support Tool” (COST).
The COST model was developed by the Institute for Defense Analyses (IDA) in the
late 1990s under a contract from the Department of Defense Comptroller following
problems the Defense Department had in accurately projecting costs of operations in
the mid-1990s. Using inputs of data about the duration of an operation, the number
and original location of units to be deployed, means of transportation both to deploy
and to sustain forces, and unique expenses, and relying on historical cost factors
based on earlier operations, the model can provide quite detailed breakdowns of
projected costs in advance of an operation.
Although these projections are not technically considered “budget quality” data
for purposes of making congressional requests, the estimates resulting from the
model appear to be the most reliable available advance projections of costs of an
operation, though actual expenses may differ as operations unfold. One question for
Congress may be why the Defense Department is using COST model data now, but
did not choose to provide COST model figures to Congress last spring in advance of
the war. An answer may be the Defense Department did not feel in a position to
provide an estimate of war costs until a final decision was made to go to war, and the
size and composition of the force remained in flux until very shortly before the war
began. DOD’s new cost estimates appear to be substantially higher, on a per troop
basis, than recent estimates by the Congressional Budget Office.
Funding Flexibility
An ongoing issue between the Administration and Congress — particularly the
appropriations committees — has been how much flexibility the Defense Department
needs to reallocate funds after they are appropriated. In the FY2003 Emergency
Wartime Supplemental, the Administration proposed that $59.9 billion of the $62.6
billion it requested for the Department of Defense be provided in a flexible transfer
account called the Iraq Freedom Fund. Congress agreed to provide $15.7 billion in

the fund, some of which was subject to additional ceilings on expenditures. In the
new request, the Defense Department asked for $2.0 billion to be appropriated into
the Iraq Freedom Fund, while the rest is requested in regular appropriations accounts.
The Iraq Freedom Fund amount is, in effect, a contingency fund, that DOD says it
will use either to support a multinational division or, if allied forces are not available,
to deploy two Army National Guard Enhanced Separate Brigades and one Marine
Expeditionary Force.²¹
The Defense Department also requested authority to transfer $5 billion between
appropriations accounts provided that “the Secretary shall notify the Congress
promptly of each transfer made pursuant to this authority.” According to DOD,
“promptly” means that the Secretary will inform Congress within five days after such
transfers. This money, therefore, would not be subject to normal limitations on
“transfers” — or, in DOD parlance “reprogramming” of funds — in which transfers
above certain thresholds require advance approval of congressional defense
committees. In addition, in another proposed general provision, the Defense
Department has requested that $500 million of the amounts appropriated be available
for a contingency construction account for military construction projects that are not
otherwise authorized by law.²² (See above for a discussion of Senate and House
Appropriations Committee action on these proposals.)
Authority to Train and Equip Foreign Military Forces
Though not a budget item, per se, one element of the request reintroduces an
issue that has been controversial in Congress in the past. The request includes a
proposal to provide the Defense Department with general authority to use up to $200
million of available funds for “training and equipping” military forces in Iraq,
Afghanistan and “other friendly nearby regional nations” to carry out counter-
terrorism operations and support U.S. military operations in Iraq and Afghanistan.
In earlier funding bills, Congress has agreed to Administration requests to provide
money, termed “coalition support,” to reimburse nations, such as Pakistan and
Jordan, that have provided material support for U.S. military operations, and to “lift
and sustain” foreign troops, such as the Polish forces now in Iraq, that are directly
participating in operations. The new request includes $1.4 billion for coalition
support, and additional amounts to lift and sustain multinational forces.

²¹ An Army National Guard brigade, like active duty brigades, normally has about 3,000
personnel. (Three combat brigades are typically in a division, which also includes
additional support units — full divisions range from about 10,000 to 15,000 personnel.) A
Marine Expeditionary Force (MEF) typically includes 30,000-50,000 personnel, including
ground combat units, air units, and support units. It seems unlikely that a full MEF would
be deployed for peacekeeping in Iraq. More likely, only ground elements of a Marine
Expeditionary Brigade (MEB), about 3,000 troops, would be deployed.
²² See Department of Defense, “FY2004 Supplemental Request for Operation Iraqi Freedom
(OIF), Operation Enduring Freedom (OEF), and Operation Noble Eagle (ONE),” Sept. 21,
2003. For the Iraq Freedom Fund request, see p. 46, and for the general transfer authority
and construction contingency fund request, see pp. 65-66.

Congress has, however, rejected repeated Administration requests for funds for
the Defense Department to train and equip foreign militaries, which would be, in
effect, a DOD-run military assistance program not approved through the usual
congressional budget procedures and not subject to human rights and other
provisions of standing law governing U.S. foreign aid. Most recently, the
Administration requested $200 million for that purpose in the regular FY2004
appropriations, but neither the House nor the Senate approved the request in any
version of the regular FY2004 defense authorization or appropriations bills. The new
request differs in that it is limited to support for nations in the region of Iraq and
Afghanistan. The Senate Appropriations Committee agreed to provide $200 million
to train and equip the new Iraqi Army and the Afghan National Army, and the House
Appropriations Committee provided $100 million (see above). Both committees also
required 15 days’ advance notification to Congress before obligating funds.
Military Personnel Benefits
In the April 2003 Emergency Wartime Supplemental (P.L. 108-11), Congress
increased Imminent Danger Pay (from $150 to $225 per month) and the Family
Separation Allowance (from $100 to $250 per month). These increases expired at
the end of FY2003 on September 30. The first continuing resolution for FY2004,
H.J.Res. 69, P.L. 108-84, extends the benefits through October 31, 2003. The House
and Senate have taken somewhat different approaches to extending these benefits
permanently in their versions of the FY2004 defense authorization bill (H.R. 1588).
In its supplemental proposal, the Defense Department requested that the increased
Imminent Danger Pay and Family Separation Allowance payments continue through
December 31, 2003. After that, DOD requested that it be permitted instead to
provide $225 per month in additional Hardship Duty Pay to personnel serving “in a
combat zone” in Operation Iraqi Freedom and Operation Enduring Freedom. DOD
argues that this would equalize pay between troops deployed in combat zones; troops
with dependents now receive more because of the Family Separation Allowance. It
may also mean, however, that troops not actually deployed “in a combat zone” would
receive less, so there may be some opposition from military advocacy groups and in
the Congress. Both the House and the Senate Appropriations Committees, however,
rejected the Administration request and instead extended increased Imminent Danger
Pay and Family Separation Allowances through FY2004.
Another significant issue in Senate action on the supplemental was whether to
provide health insurance for non-deployed military reservists. The Senate approved
an amendment to the FY2004 defense authorization bill that would allow non-
activated reservists to sign up for health insurance for themselves and their
dependents through the DOD-run TRICARE program. The Administration has
threatened to veto the authorization if it includes this provision. In floor action on
the supplemental, the Senate approved an amendment by Senators Daschle and
Graham of South Carolina to offer health insurance to reservists through TRICARE,
though with somewhat different provisions from those in the Senate version of the
FY2004 authorization. Specifically, the Daschle-Graham amendment is available
only to reservists who are receiving unemployment compensation or who are not
eligible for an employer-sponsored health insurance plan. The measure also requires
a co-payment of 28% of the value of the plan, on the model of the federal
government’s FEHBP insurance plan for civilian employees. So the Daschle-

Graham amendment is much more limited and more targeted than the Senate
provision in the FY2004 defense authorization bill.
Iraq/Afghanistan Reconstruction and Other Global
War on Terrorism Foreign Policy Initiatives
The Administration sought a total of $21.44 billion in its FY2004 supplemental
for reconstruction activities in Iraq and Afghanistan and for other foreign policy
programs related to the global war on terrorism. As shown in Table 4 $20.4 billion
would be allocated for Iraq. To put the amount of resources in some perspective,
Congress appropriated about $9.6 billion in FY2003 for similar activities, including
Iraq reconstruction and aid to the “front-line” states in the global war on terrorism,
and has been considering funding requests totaling roughly $4.9 billion in the
pending FY2004 Foreign Operations appropriation bill (H.R. 2800/S. 1426).
Table 4. Iraq, Afghanistan, Other Foreign Policy Funding
(billions of dollars)
Act i vi t y Request Senat e H ouse Enact ed
Iraq $20.415 $18.499 $19.597 $19.512
Reconstruction and security$20.304$18.449$18.649 ^a$18.439
^bb
CPA Operating Expenses$0.858$0.983
^ccc
U.S. diplomatic facilities $0.061
Peacekeeping for a multinational^d$0.050$0.050$0.050$0.050
division
Broadcasting to Iraq$0.000$0.000$0.040$0.040
Afghanistan ^e$0.839$0.900 $1.258$1.265
Economic reconstruction$0.422$0.422 $0.672 $0.672
Train, equip, deploy police$0.120$0.120 $0.170$0.170
Military aid for Afghan army$0.222$0.222 $0.297$0.287
Anti-terrorism training/Karzai$0.035$0.035 $0.035$0.035
protection
Kabul Embassy annex$0.000$0.000$0.044$0.044
USAID operating expenses — Iraq &^f$0.040$0.040 $0.040$0.040
Afghanistan
USAID interim facility– $0.061– $0.017
Other Global War on Terrorism$0.226$0.091 $0.370$0.536
^g^g^g
Emergency Fund for Complex Crises$0.100
D&CS - Personnel security in
Afghanistan & Iraq; Machine^h$0.076$0.036 $0.156 $0.156

Readable Visa shortfall

Act i vi t y Request Senat e H ouse Enact ed
Diplomatic & Consular Programs — ($0.036)($0.036)($0.036)
(rescission)
Emergencies in Diplomatic &
Consular Services - Terrorist$0.050$0.091$0.050 $0.116
Rewards & Machine Readable Visa^f
shortfall
Jordan economic aid–––$0.100
ⁱⁱ
Pakistan economic aid$0.200$0.200
Other $0.000$0.100$0.360$0.480
Liberia & Sudan relief$0.000$0.200 ^g$0.100$0.220
Off-set for Liberia aid — ($0.100) — —
U.N. Peacekeeping – Liberia$0.000$0.000$0.245$0.245
Sept. 11 Victims Compensation Prog.$0.000$0.000$0.015$0.015
TOTAL $21.480 $19.590 $21.585 $21.793
^{a. Ex}^clu^d^es^{$210 m}^illion^tran^s^f^{erred f}^o^{r aid to J}^o^rdan^{, L}ⁱ^{beria, an}^{d Su}^dan^,^asⁿ^o^{ted below}^.
^b^.^T^h^{e A}^d^mⁱⁿⁱ^str^a^tioⁿ^an^d^Sen^a^{te b}^{ill in}^clu^d^ed^CP^A^o^p^e^r^a^tin^g^ex^p^eⁿ^s^e^f^uⁿ^dⁱⁿ^g^uⁿ^d^er^title^I⁽^D^ef^en^se)^,
ⁱⁿ^th^{e accou}ⁿ^t^f^o^{r Operation}^s^an^{d Main}^ten^aⁿ^{ce, A}^r^m^y^.
^c^.^T^h^e^A^d^mⁱⁿⁱ^s^t^ra^tⁱ^oⁿ^propos^e^d^t^o^u^s^e^f^uⁿ^d^s^pre^vⁱ^o^u^s^l^y^a^ppropri^a^t^e^{d f}^o^{r Ba}^g^h^d^a^d^f^a^c^ilitie^{s i}ⁿ^P.^L^.
^108-^{11 f}^o^{r u}^r^g^eⁿ^t^USA^I^{D n}^eedsⁱⁿ^A^f^g^h^aⁿⁱ^s^t^an^an^{d requ}^es^{ted in}^th^is^s^u^pplem^en^{tal addition}^a^l
^reso^u^r^{ces f}^o^{r Iraq}^f^{acilities to}^rep^l^{ace th}^o^s^{e d}ⁱ^v^e^rted^to^A^f^g^h^aⁿⁱ^stan^{. T}^h^e^S^eⁿ^a^{te b}^ill
^a^p^p^r^o^p^rⁱ^a^t^e^d^fund^{s fo}^r^U^S^A^I^Dⁱⁿ^A^f^ghaⁿⁱ^st^aⁿ^se^p^a^r^a^t^e^l^y^,^t^h^e^r^e^b^y^m^a^ki^{ng fund}^{s p}^r^o^vⁱ^d^e^dⁱⁿ^P^.^L.
^108-^{11 av}^{ailable f}^o^{r U.S. diplom}^atic^fa^cilitiesⁱⁿ^B^a^g^h^d^{ad, w}^ith^ou^{t th}^{e n}^{eed f}^o^{r n}^e^w
^ap^p^r^o^p^r^iatioⁿ^sⁱⁿ^th^{is su}^p^p^l^em^en^{tal. T}^h^{e Ho}^u^s^{e b}^{ill an}^d^th^{e co}ⁿ^f^er^en^{ce ag}^r^e^e^m^eⁿ^{t p}^r^o^v^id^ed
^$35.8^m^illion^f^o^{r a n}^e^w^{U.S. m}ⁱ^s^sⁱ^onⁱⁿ^{Iraq in}^th^{e D&}^C^S^accouⁿ^t^below^,^an^d^res^cⁱⁿ^ded^$35.8
^m^illion^prov^idedⁱⁿ^P^.^L^.^108-^11.
^d^.^T^h^{e Ho}^u^s^{e b}^{ill an}^d^th^{e co}ⁿ^f^eren^{ce ag}^reem^en^{t sp}^ecifⁱ^ed^th^{at p}^eacek^eepⁱⁿ^g^f^uⁿ^d^s^are^av^ailab^l^{e f}^o^r
^bot^h^{Iraq an}^{d A}^f^g^h^aⁿⁱ^s^t^an^.
^{e. I}ⁿ^ad^d^itioⁿ^to^th^{e am}^o^uⁿ^t^{s sh}^o^wⁿⁱⁿ^th^is^to^tal^f^o^r^A^f^g^h^aⁿⁱ^stan^,^th^{e A}^d^mⁱⁿⁱ^str^a^tioⁿ^{is r}^e^p^r^o^g^r^a^m^mⁱⁿ^g
^{$390 m}^illion^f^r^om^oth^e^{r def}^eⁿ^s^{e, State Depart}^m^eⁿ^t^{, an}^{d f}^o^rei^gn^aⁱ^d^a^ccouⁿ^t^s^f^o^{r A}^f^g^h^aⁿ
^r^e^c^o^nst^r^uc^tⁱ^o^n.
^f^.^Th^e^A^d^mⁱⁿⁱ^s^t^r^a^tⁱ^oⁿ^h^a^d^r^e^q^u^e^s^t^e^{d $40 m}^illioⁿ^f^o^r^U^S^A^I^D^o^p^e^r^a^tⁱⁿ^g^e^x^p^eⁿ^s^e^sⁱⁿ^b^o^t^h^I^r^a^q^aⁿ^d
^A^f^g^h^aⁿⁱ^s^t^an^{. T}^h^{e Sen}^a^{te bill an}^{d th}^{e con}^f^er^en^{ce ag}^reem^en^{t prov}^{ided $40 m}^illion^f^o^r^USA^I^D
^o^p^e^r^a^tⁱ^{ng e}^x^p^e^nse^sⁱⁿ^A^f^ghaⁿⁱ^st^aⁿ^oⁿ^l^y^.
^g^.^In^s^t^{ead of}^f^uⁿ^dⁱⁿ^g^th^{e Em}^erg^eⁿ^c^y^accouⁿ^t^{, th}^e^Ho^us^e^bⁱ^l^l^prov^{ided $100}^m^illionⁱⁿ^dis^a^s^t^{er an}^d
^f^a^mⁱⁿ^e^re^lⁱ^e^{f aid f}^o^{r L}ⁱ^{beria an}^{d Su}^dan^,^below^.^T^h^{e Sen}^a^{te bill prov}^{ided $200 m}^illionⁱⁿ^th^e
^Em^erg^eⁿ^c^y^C^r^is^es^F^und^accouⁿ^t^{, bu}^{t des}ⁱ^gⁿ^a^{ted all of}^{it f}^o^{r L}ⁱ^{beria an}^{d requ}^{ired th}^{at $100}
^m^illioⁿ^b^e^d^r^awⁿ^b^y^t^r^aⁿ^s^f^e^r^f^r^o^m^an^y^o^t^h^e^{r acco}^uⁿ^tⁱⁿ^th^{e b}^{ill. T}^h^{e co}ⁿ^f^eren^{ce ag}^reem^en^t
^prov^{ided $210 m}^illion^f^o^{r L}ⁱ^{beria an}^{d Su}^dan^,^f^uⁿ^d^s^drawⁿ^f^r^o^m^t^h^e^{Iraq R}^e^lief^an^d
^R^e^c^o^ns^t^r^uction^accouⁿ^t^an^{d f}^r^om^{a n}^e^w^accouⁿ^t^f^o^{r In}^tern^ation^a^{l Dis}^a^s^t^{er an}^{d Fam}ⁱⁿ^e
^A^s^sⁱ^s^t^an^{ce, as}^s^h^owⁿ^below^.
^h^.^Un^{der th}^{e accou}ⁿ^t^fo^{r Diplom}^{atic an}^{d C}^oⁿ^s^u^l^{ar S}^e^rv^ices^(D&^C^S⁾^{, th}^{e A}^d^mⁱⁿⁱ^s^t^ration^propos^ed
^{$11 m}^illion^f^o^{r addition}^a^{l s}^ecu^ri^t^y^o^p^e^r^a^tion^sⁱⁿ^A^f^g^h^aⁿⁱ^s^t^an^an^{d $29.5 m}^illion^{to cov}^e^{r a}
^proj^{ected s}^h^ortf^{all in}^Machⁱⁿ^{e R}^eadable^Vis^a^(MR^V^{) f}^ees^th^{at h}^a^{d been}^ex^{pected to f}^uⁿ^d^border
^s^ecu^rityⁱⁿ^itiativ^es^{. T}^h^{e Sen}^a^te^{bill prov}^{ided $35.8 m}^illion^as^{a res}^c^is^sⁱ^on^an^{d reappropriation}
^f^o^{r s}^ecu^rity^operation^sⁱⁿ^A^f^g^h^aⁿⁱ^s^t^an^an^d^Iraq,^an^d^{added f}^uⁿ^dⁱⁿ^g^uⁿ^d^{er th}^{e s}^e^{parate accou}ⁿ^t
^of^Em^er^ge^ncⁱ^e^sⁱⁿ^th^{e Diplom}^{atic an}^{d C}^oⁿ^s^u^l^{ar Serv}^ices^{to cov}^e^{r th}^{e MR}^{V s}^h^ortf^{all. T}^h^e
^A^d^mⁱⁿⁱ^s^t^ration^requ^es^{ted f}^uⁿ^d^s^uⁿ^d^{er th}^is^{latter accou}ⁿ^t^on^ly^f^o^r^rew^a^rds^related^to^Os^am^{a bin}
^L^a^den^an^d^Saddam^Hu^s^s^eⁱⁿ^{. T}^h^{e Hou}^s^{e bill pr}^ov^ided^$156.3^m^illionⁱⁿ^th^{e D&}^C^S^accouⁿ^t^{, of}
^w^hⁱ^c^h^$109.^{5 m}^illio^{n w}^a^s^f^o^{r M}^R^V^f^e^e^s^aⁿ^{d c}^oⁿ^s^u^l^a^r^s^e^rvⁱ^c^e^s^,^{$11 m}^illioⁿ^f^o^r^secu^r^ity
^m^eas^u^r^esⁱⁿ^A^f^g^h^aⁿⁱ^s^t^an^{, an}^{d $35.8 m}^illion^f^o^{r a diplom}^atic^mⁱ^s^sⁱ^onⁱⁿ^Iraq.^T^h^e^con^f^eren^ce
^ag^reem^en^{t prov}^{ided $115.5 m}^illion^f^o^{r Em}^erg^eⁿ^c^iesⁱⁿ^th^{e Diplom}^{atic an}^{d C}^oⁿ^s^u^l^{ar Serv}^ices^,

^{$50 m}^illion^of^w^h^ich^w^a^s^f^o^{r rew}^a^rds^an^{d $65.5 m}^illion^w^a^s^f^o^{r cos}^t^s^of^prote^c^tⁱ^ng^fo^reigⁿ
^mⁱ^s^sⁱ^on^s^an^d^of^fⁱ^ci^al^sⁱⁿ^N^e^w^Y^o^rk^Cⁱ^t^y^{, an}^{d s}^ecu^ri^t^y^an^{d prot}^ectⁱ^oⁿ^f^o^{r t}^h^e²⁰³^F^r^ee^T^r^adeⁱⁿ
^t^h^{e A}^m^eri^cas^Miⁿⁱ^s^t^eri^a^l^an^{d t}^h^{e 2004 S}^u^m^mⁱ^t^of^t^h^{e In}^du^s^t^ri^alⁱ^{zed N}^a^tⁱ^oⁿ^s^.
^{i. T}^h^{e A}^d^mⁱⁿⁱ^s^t^ration^requ^es^{ted au}^th^ority^{to u}^s^{e $200 m}^illionⁱⁿ^Econ^om^{ic Su}^{pport Fu}ⁿ^d^s^pen^dⁱⁿ^g
ⁱⁿ^t^h^{e reg}^u^l^{ar F}^Y^{2004 F}^o^rei^gⁿ^O^p^eratⁱ^oⁿ^s^A^ppropri^a^tⁱ^oⁿ^(H^.R^{. 2800}^a^{nd S}^.^{1469) f}^o^{r debt}
^r^e^d^u^ctioⁿ^f^o^r^P^a^kⁱ^stan^{. T}^h^{e Sen}^a^{te b}^{ill in}^clu^d^ed^th^{is au}^th^o^r^ity^{, w}^hⁱ^l^{e th}^{e Ho}^u^s^{e b}^{ill in}^clu^d^ed
^both^th^{e au}^th^ority^f^o^{r debt}^r^e^du^ction^an^{d th}^{e $200 m}^illion^{appropriation}^.^T^h^{e con}^f^eren^ce
^ag^r^eem^en^{t is th}^{e sam}^e^{as th}^{e Ho}^u^s^{e b}^ill.
Iraq Reconstruction and Security
Supplemental Request. The $20.3 billion Administration request for
reconstruction and security in Iraq represented a significant increase from amounts
previously appropriated for reconstruction. Up to then, the United States had
committed $4.1 billion to reconstruction, including the $2.5 billion appropriated to
an Iraq Relief and Reconstruction Fund established by the April 2003 Emergency
Wartime Supplemental (P.L. 108-11.)²³
These earlier funds had been used to support a broad range of humanitarian and
reconstruction efforts. The new request was intended to fund the most pressing,
immediate needs in Iraq, with the aim of having a noticeable impact on the two
greatest reconstruction concerns that have been raised since the occupation of Iraq
began security and infrastructure. More than $5 billion would be targeted at
improving the security capabilities of the Iraqi people and government, including
training and equipment for border, customs, police, and fire personnel, and to
develop a new Iraqi army and a Civil Defense Corps. Enhanced efforts to reform the
judicial system would also be included.
Most of the remaining $15 billion supplemental request would go toward rapid
improvements in infrastructure, including electricity, oil infrastructure, water and
sewerage, transportation, telecommunications, housing, roads, bridges, and hospitals
and health clinics (see Table 5 for a breakdown). According to Administration
officials who briefed Members of Congress and staff, these investments represented
the most urgent needs over the next 12 months, but by no means addressed total
reconstruction requirements in the coming year.²⁴ Other concerns in such areas of
government reform, agriculture, economic development, and education, were not
included in the Administration request. A relatively small amount of funds, $300
million, was requested for programs designed to encourage the growth of the private
sector and jobs training.

²³ Other reconstruction components have been funded out of DOD’s Iraq Freedom Fund,
established in P.L. 108-11, to repair of oil facilities ($502.5 million) and for costs of the
Coalition Provisional Authority ($599 million). An additional $529.2 million has come
from USAID and other agencies regular funding.
²⁴ Congressional briefing by executive branch officials, Sept. 8, 2003.

Table 5. Iraq Supplemental: Sector Allocation
(billions of dollars)
Sector Request Senate House E nacted
Security$5.136$4.561^a$4.561 ^a$4.561
Public safety, including border$2.100 — — —
enforcement, police, fire, & customs
Security forces and Iraq Civil Defense$2.100 — — —
Corps
Justice and civil society development$0.900 — — —
Reconstruction $15.168 $13.888 $14.088 $13.878
Electric power rehabilitation$5.675$5.560$5.560^b$5.560^b
Oil infrastructure rehabilitation$2.100$1.900$2.100$1.890^c
Water and sewerage services repair$3.710$4.332 ^d$4.332^de$3.557
and improvement
^dd^e
Water resources improvement$0.875$0.775
Transportation and$0.835$0.500$0.500^f$0.500^f
telecommunications rehabilitation
Housing, building, road, and bridge$0.470$0.370$0.370^g$0.370^g
repair/reconstruction
Health facility construction and$0.850$0.793$0.793^h$0.793^h
medical equipment replacement
Private sector business initiatives and$0.353$0.153$0.153ⁱ$0.153ⁱ
job training programs
Refugee aid, local governance, other$0.300$0.280$0.280^j$0.280^j
human rights/civil society
TOTAL $20.304 $18.449 $18.649 $18.439
^Source:^Of^fⁱ^{ce of}^th^{e C}^o^alition^P^r^ov^is^ion^a^{l A}^u^th^ority^R^e^pr^e^s^eⁿ^t^a^tⁱ^v^{e, Septem}^{ber 8, 2003, OMB}^,
^F^Y^{2004 S}^u^ppl^em^en^t^a^l^A^ppropri^a^tⁱ^oⁿ^requ^es^t^,^S^e^p^t^e^m^b^e^{r 17, 2003, an}^{d H}^o^u^s^{e an}^{d S}^eⁿ^a^t^e
^A^p^p^r^o^p^r^iatioⁿ^Co^m^m^ittees.
^{a. T}^h^{e Hous}^e^bⁱ^{ll ex}^clu^d^{ed $50 m}^illion^requ^es^{ted f}^o^{r Iraq traf}^fⁱ^{c police an}^{d $400 m}^illion^f^o^{r tw}^o
^p^r^isoⁿ^{s; r}^e^d^u^ced^f^uⁿ^dⁱⁿ^g^f^o^r^th^{e Natio}ⁿ^a^l^Secu^rity^C^o^m^m^uⁿⁱ^cation^s^Netw^ork^.^T^h^e^con^f^eren^ce
^ag^reem^en^{t als}^o^ex^clu^d^{ed $50 m}^illion^f^o^{r I}^r^a^q^tr^af^fⁱ^{c police, redu}^{ced by}^{$300 m}^illion^f^uⁿ^dⁱⁿ^g
^f^o^{r t}^w^{o pri}^s^on^s^,^an^{d f}^u^rt^h^e^{r redu}^{ced s}^e^v^e^ral^ot^h^e^{r requ}^es^t^e^d^und^e^r^Ju^s^tⁱ^{ce, Pu}^blⁱ^c^S^a^f^e^t^y
^In^f^r^as^tru^c^tu^{re, an}^{d C}ⁱ^v^{il Society}^.
^{b. Ex}^clu^d^{ed $25 m}^illion^f^o^r^con^s^u^ltan^t^s^to^plan^f^o^{r con}^tin^u^e^{d dev}^e^lopm^en^{t an}^{d bu}^ildin^g^reh^a^bilitation
^an^{d redu}^{ced am}^ouⁿ^t^s^f^o^{r electric g}^eⁿ^e^ration^.
^c.^T^h^e^con^f^eren^ce^ag^reem^en^{t redu}^{ced f}^uⁿ^d^s^f^o^{r em}^er^g^eⁿ^c^y^s^u^pplⁱ^e^s^of^refⁱⁿ^e^{d oi}^l^pet^r^ol^eu^m^produ^ct^s
^by^$210^m^illion^.
^d^.^Ho^u^s^{e an}^d^Sen^a^{te b}^{ills co}^m^bⁱⁿ^ed^th^{e categ}^o^r^{ies o}^f^W^a^ter^an^d^sew^e^r^a^g^e^ser^v^ic^e^s^aⁿ^d^W^a^ter
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^f^o^{r edu}^cation^.
Background. Among the key policy objectives laid out by the Bush
Administration in conjunction with the war in Iraq were the restoration of basic
human services and the economic and political reconstruction of the country. The
Coalition Provisional Authority (CPA) under the administration of Ambassador L.
Paul Bremer is responsible for the formulation and implementation of this effort.
The CPA has initiated a process intended to lead to Iraqi self-rule. It has
appointed a 25-member Iraqi Governing Council and provided it with specific
powers and duties, including the choosing of a cabinet to serve as ministers under the
supervision of CPA advisors and the responsibility to set in motion formulation of
a national constitution. It has encouraged establishment of councils in villages and
cities throughout the country to run local affairs and identify community needs. With
CPA funding and encouragement, institutions of civil and economic society have
been reconstituted. Schools, including universities, hospitals and health clinics, are
functioning. The oil-for-food program continues to provide basic foodstuffs. New
police and security forces are being trained. Programs to renovate and repair electric
power, water, oil production, roads and bridges, airports, and the seaport have been
launched. Jobs programs have been instituted to help stimulate the economy and
lessen unemployment.
Although much has been accomplished since the U.S. occupation began in
April, the occupation authority in the view of many has failed to successfully
reestablish order and security, restore infrastructure, and introduce political and
economic reform, including Iraqi self-governance, in a timely manner. These
problems are interlinked; the successful conduct of much reconstruction work is
contingent on an environment of order and stability, and the lack of visible progress
in restoring basic infrastructure and institutions of security opens the door to political
discontent and opposition. The $20.3 billion supplemental request apparently sought
to address those infrastructure and security needs on which other U.S. objectives in
Iraq hinge.
Until recently, the Administration had suggested that the cost of reconstruction
through the end of 2003 could largely be met by Iraqi and already previously
appropriated U.S. resources. A national budget for Iraq covering the rest of the year,
announced by the CPA on July 7, estimated expenditures of $6.1 billion and the
creation of a Central bank currency reserve of $2.1 billion, for a total budget of $8.2
billion. New oil revenue, taxes, and profits from state owned enterprises would make
up $3.9 billion of these costs, according to the CPA’s analysis. The remaining deficit
of $4.3 billion would be covered by recently frozen and seized assets ($2.5 billion),
the Development Fund for Iraq ($1.2 billion), and $3 billion in already appropriated

U.S. assistance. Iraq was projected to have $1.1 billion remaining for reconstruction
by end of December 2003.²⁵
The Administration request suggested that a re-assessment of Iraq’s immediate
reconstruction needs demanded greater outlays of revenue than projected in July. It
also suggested that presumed sources of additional revenue in the coming year —
chiefly, oil export production and international donor contributions — might not be
as large as originally anticipated. In any case, the result was a supplemental
reconstruction request nearly 20% larger than the size of the entire national budget
for Iraq projected on an annualized basis in early July.²⁶
Issues.
Total Iraq Reconstruction Needs. The supplemental request was intended
to meet only the most important, immediate needs in Iraq in the 2004 fiscal year. Up
to that point, the cost of Iraq reconstruction was based on speculation and educated
guesswork. However, as part of the lead-in to an international donors conference
held in Madrid on October 24, the World Bank and the U.N. Development Program²⁷
released a needs assessment they conducted of 14 Iraqi economic and social sectors.
The resulting Bank/UNDP estimates have established targets by which the adequacy
of available resources will be judged. The Bank/UNDP assessments put the cost of
reconstruction for the 14 sectors at $36 billion over four years, a figure that does not
include $19.4 billion estimated by the CPA for security, oil, and other critical sectors
not covered by the Bank assessments.²⁸ Total Bank/CPA projected reconstruction
costs through 2007 amount to $55 billion, $17.5 billion in 2004 alone. If Iraqi oil
revenues are not sufficient to meet the projected needs — which appears likely in the
near term by most accounts — and other international donors do not pledge
significant contributions, the United States may face increased financial demands, if
it seeks to meet projected Iraqi needs.
The new needs assessment points out another possible concern. The
Bank/UNDP report suggests that Iraq cannot absorb more than $6 billion in
infrastructure program commitments (excluding oil) in 2004, in view of the unstable
security situation and the time it takes to plan and implement contracts.²⁹ The
Administration request for infrastructure (excluding oil) was $12.4 billion. In

²⁵ See [http://www.cpa-iraq.org/Budget2003.pdf] for text of the budget.
²⁶ For a more detailed discussion of the Iraq reconstruction program, see CRS Report
RL31833, Iraq: Recent Development in Humanitarian and Reconstruction Assistance.
²⁷ For the full text of the report online, see the World Bank website at
[http://lnweb18.worldbank.org/mna/mena.nsf/Attachments/Iraq+J oint+Needs+Assessme
nt/$File/J oint+Needs+Assessment.pdf].
²⁸ “UN/World Bank Present Iraq Reconstruction Needs to Core Group.” World Bank/United
Nations press release no. 2004/100/S, Oct. 2, 2003.
²⁹ The Bank further notes that, based on its experience in previous post-conflict situations,
if commitments were made on all $36 billion in identified reconstruction needs, actual
disbursements in 2004 would likely only reach $5.2 billion. United Nations/World Bank
Joint Iraq Needs Assessment, Oct. 2003, page x.

response to this point, OMB has reportedly confirmed that the reconstruction request
is intended to cover 18 months.³⁰ That the Administration request in categories such
as electric power and water composes half or more of requirements projected by the
World Bank assessment over a four-year period, however, suggests that the request
may meet needs beyond even 18 months.
Iraqi Oil Revenues and Financing Reconstruction. Until recently, the
Administration had expected most costs of reconstruction to be borne by Iraq through
receipts from its oil exports. While the decrepit state of oil production infrastructure
and recurrent sabotage to pipelines and facilities have forced experts to downgrade
expectations of potential exports and receipts, any sustained increase in production
will assist the reconstruction effort. Current rates of production are nearing 2 million
barrels a day, but Iraqis do not expect to reach the prewar level of 2.8 million barrels
until spring. After subtracting 0.5 million barrels/day for domestic consumption, a
level of 2.3 million might generate between $18.5 billion and $23 billion annually,
depending on the price of oil. Production levels of 6 million/day, possible within a³¹
decade, would require significant investment outlays. In the near term,
Administration officials said that their budget calculations assume an average
production of 2 million barrels per day over the next 12 months, generating about $12
billion in revenues that will roughly cover government operating expenses, but not³²
the type of urgent reconstruction needs identified in the supplemental request.
Roughly $503 million has already been allocated from the 2003 Emergency
Wartime Supplemental for repair of oil facilities and restoration of production and
distribution systems. The Administration request for these purposes under the
FY2004 supplemental was $2.1 billion. Additional sums for Iraqi security forces
were in part intended to create an Iraqi force to defend against pipeline and other oil
facility sabotage.
Loans vs. Grants for Reconstruction. Closely related to the issue of Iraqi
oil revenues as a means of financing reconstruction projects was the question of
whether assistance could be extended on a loan rather than grant basis. Some argued
that, given the substantial amount of oil revenues that Iraq will generate at some point
in the future, Baghdad will have the means to service debt incurred for the purpose
of rebuilding its infrastructure. Loans, either extended bilaterally or through some
sort of trust fund, possibly managed by the World Bank, would be repaid at some
point, thereby reducing reconstruction costs to the United States, they said.
The Administration, which proposed that the entire $20.3 billion supplemental
be offered as grants, argued repeatedly during congressional hearings against adding
to Iraq’s already substantial debt obligations. Witnesses asserted that Iraq owes
roughly $200 billion in pre-war debts, reparations, and other claims. G7 leaders
agreed informally at the June 2003 summit to suspend through 2004 the requirement

³⁰ “White House Defends Iraq Spending,” Financial Times, Oct. 10, 2003.
³¹ See Petroleum section by Larry Kumins in CRS Report RL31944, Iraq’s Economy: Past,
Present, Future, pp. 17-23.
³² Congressional briefing by executive branch officials, Sept. 8, 2003.

for Iraq to service any existing debt, giving time to construct some sort of multilateral
debt restructuring arrangement.³³ Further, U.N. Security Council Resolution 1483
states that Iraqi oil exports or proceeds could not be attached by creditors through

2007 unless authorized by the Council.

Beyond the matter of whether Iraq should incur more debt obligations in the
near term is the question over who could legally assume responsibility for new
sovereign debt. Although it is possible that the World Bank could manage an Iraq
reconstruction trust fund that would receive contributions from international donors,
if the Bank were to use these resources for project lending, it would almost certainly
require, as it has in the past, that some sort of sovereign Iraq authority assume the
debt obligation. Until such time that legal authority is transferred to Iraqi hands, the
Coalition Provisional Authority is the temporary government of Iraq and would be
the one signing for the loans. Most legal scholars take the position that an occupying
power has no authority to incur new debts on behalf of the displaced sovereign.³⁴
Some contend, however, that there is an exception in which a new government would
be responsible for the debt if it can be shown that the loans were required for the
welfare of the occupied territory and the terms were fair and reasonable.³⁵
Also, while loan reconstruction assistance would likely require smaller
appropriations than grant aid, some congressional appropriation would be necessary.
Under the 1990 Credit Reform Act, Congress must provide a subsidy appropriation
in advance of the U.S. government extending direct loans or loan guarantees. The
size of the subsidy appropriation is based on several factors, including any subsidy
value of the loan terms and the likelihood that the loan will be repaid fully and on
time. Given the current state of the Iraqi economy and the high degree of uncertainty
over when the debt service payments could begin, the necessary subsidy
appropriation likely would be quite large.
As discussed in more detail above under “Congressional Action,” this issue was
closely examined by lawmakers. The Senate adopted (51-47) an amendment by
Senators Bayh, Ben Nelson, and others on October 16 converting $10 billion of
reconstruction grants to loans, which could be later restored as grants if foreign
creditors cancel 90% of Iraq’s debt. Conferees, however, rejected the Senate
proposal on a 13-16 vote.

³³ See, for example, testimony of Secretary of Defense Rumsfeld before the Senate
Appropriations Committee on September 22 and L. Paul Bremmer before the House Foreign
Operations Appropriations Subcommittee on Sept. 24.
³⁴ See, for example, Pieter H.F. Bekker, “The Legal Status of Foreign Economic Interests
in Occupied Iraq.” ASIL Insights. American Society of International Law. July 2002.
Available at the ASIL web site at [http://www.asil.org/insights/insigh114.htm]. See also
Gerhard von Glahn. The Occupation of Enemy Territory...A Commentary on the Law and
Practice of Belligerent Occupation. Minneapolis: University of Minnesota Press, 1957, p.

159, citing various sources.

³⁵ von Glahn, citing (with comments) U.S. Army Judge Advocate General’s School. Law
of Belligerent Occupation. (JAGS Text No. 11) Ann Arbor: JAGS 1944, pp. ix, 277.

Earlier, Senator Dorgan had offered amendments in committee markup and on
the Senate floor (tabled in both venues) that would have created an authority to use
Iraqi oil to secure reconstruction financing and convert U.S. grants to loans. A
similar amendment by Senator Landrieu was also rejected. Senator Hutchison and
others submitted an amendment that did not come up for floor debate directing $10
billion of the total reconstruction supplemental to a Trust Fund, to be established
within the World Bank, out of which loans and loan guarantees would be made.
On the House side, Representative Wamp proposed but later withdrew an
amendment during Committee markup that would have withheld one-half of Iraq
funds until after the election of a new Iraqi leader, at which time the remaining
money would be available in the form of a loan. Representative Obey offered an
amendment (defeated 25-36) that, among other things, would have transferred about
$7 billion of reconstruction funds to a World Bank-administered loan facility. A
further amendment by Representative Obey regarding a shift of grants to loans was
defeated in the House 200-226.
The Supplemental’s Impact on Other Donors. Many, including
Administration officials, believed that congressional action on the supplemental
could influence the contributions of international donors at the late-October donors’
conference. Some argued that a large pledge of U.S. aid prior to the conference
might stimulate other donors to contribute more; diminution of the Administration
plan, they argued, might have the opposite effect. Opponents of making U.S. aid for
reconstruction in the form of loans also contended that other donors might follow the
American lead and offer loans rather than grants, adding further to Iraq’s debt
problems. In addition, the supplemental targeted sectors — infrastructure and
security — that other donors would be less likely to support themselves. In similar
“nation-building” exercises elsewhere, donors have tended to funnel contributions
to the social sectors, such as education and health, and grassroots democratization
and economic development, all areas relatively untouched by the supplemental.
Perhaps a more important factor in other donor calculations was the extent to
which they would have a say in the use of funds. Up to then, donors had been
reluctant to provide assistance because they were wary of being perceived as
supporting a unilateral U.S. policy. In response to this concern, donors discussed at
a September 6 meeting in Brussels, the concept of creating Iraq reconstruction trust
funds, managed by the U.N. or World Bank, which would accept and distribute
contributions. Control over how the money was spent, according to Undersecretary
of State Alan Larson who represented the U.S. at the September 6 meetings, would
be handled by some sort of a multilateral management board that might include
officials from international organizations, major donors, and Iraqis representing
interim ministries.³⁶ The Madrid donors’ conference created two trust funds, one
managed by the World Bank and the other by UNDP.

³⁶ Iraq Reconstruction an International Responsibility, Larson Says. Press briefing by
Under Secretary of State for Economic, Business, and Agricultural Affairs Alan Larson,
Sept. 4, 2003 [http://usinfo.state.gov/topical/pol/terror/texts/03090434.htm].

Management of Iraq Reconstruction Funds by U.S. Agencies.
Administrative control over Iraq reconstruction funds became a significant issue
during congressional debate on the $2.475 billion appropriation in P.L. 108-11. At
that time, most had expected that transfers for reconstruction and post-conflict aid
would be made to USAID, the State Department, and other traditional foreign
assistance management agencies. But with plans for the Defense Department to
oversee the governing of Iraq immediately after the end of hostilities, the White
House wanted to maintain maximum flexibility over the distribution of resources so
the President could transfer some or all of the funding to DOD. The proposal
stimulated immediate controversy with a number of critics, including Members of
Congress, arguing that aid programs should remain under the policy direction of the
State Department and under the authorities of a broad and longstanding body of
foreign aid laws. Although initial House and Senate decisions would have blocked
Administration efforts to place control of reconstruction funds with the Pentagon,
ultimately Congress agreed to allow the White House to allocate the resources among
five agencies, including DOD. Funds for the Iraq Relief and Reconstruction Fund
appropriated in P.L. 108-11 have been managed by L. Paul Bremer, head of the
Coalition Provisional Authority (CPA), and the U.S. civilian administrator in Iraq,
who reports to the Secretary of Defense.
The Administration proposed that the entire $20.3 billion be placed in the Iraq
Relief and Reconstruction Fund, as was the case with the previous supplemental, and
to continue Ambassador Bremer and the CPA’s role as administrators of the Fund
under DOD guidance. Since submission of the supplemental, however, the White
House announced the establishment of a new “Iraq Stabilization Group,”headed by
National Security Advisor Condoleezza Rice. The Group is intended to help speed
up reconstruction efforts by identifying and resolving problems that had in some
cases been the source of decision-making disputes in Washington. Some analysts
believe that the move is also intended to allow the State Department a greater voice
in reconstruction policy. At the same time, the State Department staff serving under
the CPA in Iraq is expected to grow from 55 to about 110. Nevertheless,
Ambassador Bremer will continue to report to the Secretary of Defense.³⁷
As noted above, the Senate tabled (56-42) an amendment by Senators Leahy and
Daschle (S.Amdt. 1803) that would have placed the CPA under the direct authority
and foreign policy guidance of the Secretary of State. The House bill, however,
added a provision barring the coordination of defense or reconstruction activities in
Iraq or Afghanistan by a U.S. government officer who is not subject to confirmation
by the Senate. The House Committee wanted to ensure that whoever is in charge of
coordination be available to testify at congressional oversight hearings. This
proposal appeared to block the initiative of placing National Security Council
Advisor Rice, who is not subject to confirmation and who does not testify before
Congress, in charge of coordinating reconstruction. The White House, however,
contended that the new Iraq Stabilization Group does not affect control of
reconstruction efforts and that the job remains under control of the Defense

³⁷ “White House to Overhaul Iraq and Afghan Missions,” New York Times, October 6, 2003;
“Rice to Lead Effort to Speed Iraqi Aid,” Washington Post, Oct. 7, 2003.

Department.³⁸ Conferees, however, decided to delete this House-added provision
from the enacted legislation.
Reconstruction Priorities and Costs. The Administration said that the
request included only the most pressing, immediate needs for Iraq in FY2004.
However, the relative importance of certain items detailed in the request — ‘re-
engineering of postal service business practices’ and construction of seven residential
communities, for example — was closely questioned in Congress. Further, the costs
associated with reconstruction requests have been subject to skepticism, with some
congressional staff reportedly suggesting that the price tag was intentionally inflated
so that the Administration would not have to return to Congress to ask for more funds
in 2004.³⁹
As mentioned above in the Congressional Action section, the House bill
proposed a $1.655 billion cut in Iraq reconstruction funding, reducing or eliminating
resources for a wide range of activities that the House found to be un-executable, low
priority, or likely to receive funding from other international donors. The Senate
adopted an amendment by Senators Dorgan and Wyden reducing Iraq reconstruction
by $1.855 billion. The Senate cuts were identical to those approved by the House,
with an additional reduction of $200 million for oil infrastructure rehabilitation. The
conference agreement closely follows the reductions proposed in both House and
Senate bills, including the Senate’s cut of $200 million for emergency supplies of
refined oil petroleum products. While the enacted legislation provides $18.649
billion for the Iraq Relief and Reconstruction Fund – $1.655 billion less than
requested – the bill further transfers $210 million from the Fund to assistance for
Jordan, Liberia, and Sudan. Consequently, the President’s $20.3 billion proposal for
Iraq was reduced by Congress to $18.439 billion, a cut of $1.885 billion. See Table

5 above for details of sector and project reductions directed by Congress.

Afghanistan Reconstruction
Afghanistan Supplemental. The Administration’s $1.2 billion
supplemental aid request was made up of $799 million from new appropriations and
$390 million from previously appropriated DOD, State Department, and USAID
funds, which together would more than double current U.S. assistance to Afghanistan
for FY2003. The proposal came at a time of growing criticism over delays in aid
delivery, deteriorating security conditions, and concern that U.S. and international
attention had shifted to Iraq.⁴⁰ Key features of the $799 million in new

³⁸ “Pentagon Still in Charge in Iraq, Rice Tells Reporters,” American Forces Information
Service, Oct. 15, 2003.
³⁹ “In GOP, Concern Over Iraq Price Tag; Some Doubt Need for $20.3 Billion for
Rebuilding,” Washington Post, Sept. 26, 2003.
⁴⁰ The supplemental also arrives while Congress is still considering a $550 million regular
FY2004 request for Afghanistan. Over one-third of this total would continue infrastructure
rehabilitation, focusing largely on roads, bridges, schools, health clinics, and wastewater
facilities. House passed and Senate-reported legislation (Foreign Operations
Appropriations, FY2004; H.R. 2800 and S. 1426, respectively) provide not less than $600
(continued...)

appropriations included targeting projects intended to have the most immediate
impact on the lives of the Afghan population, such as
^!$402 million for security, with funding included to train and support
police, border patrol, the military and counter-narcotics forces,
disarmament and de-mobilization programs, and courthouse
construction in Kabul;
^!$129 million to reinforce the authority of the government of
Afghanistan with budget support for high priority projects, technical
experts placed in Afghan ministries, and voter registration and
election support;
^!$105 million for completion of the Kabul-Kandahar-Herat major
highway, a program jointly financed by the United States, Japan, and
Saudi Arabia; and
^!$163 million for social programs and critical infrastructure,
including education, health, and local projects.
An additional $390 million would be made available from reallocated, prior-year
funds, but the Administration did not specify how they would be used. The White
House further asked that the $300 million limit on military drawdowns from DOD
stocks enacted in the Afghanistan Freedom Support Act of 2002 (P.L. 107-327) be
increased to $600 million.
Table 6. Afghanistan Supplemental: Sector Allocation
($ in millions)
Sect or/ P rogram Request Senat e H ouse Enact ed
Economic Reconstruction:
Disarmament, Demobilization,$60$60$30$30
Reintegration
Govt of Afghanistan support$37$37$70$70
Elections/Governance $37 $37 $69 $69
^aa
Experts/Policy $20 $20
Roads $105 $105 $191 $181
Schools/Education $40 $40 $95 $95
Health Services and Clinics$28$28$49$49
Provincial Reconstruction Teams$50$50$50$58

⁴⁰ (...continued)
million for Afghanistan.

Private Sector/Power Generation$45$45$95$95
Water Projects — — $23$23
Economic Reconstruction Total$422$422$672$672
Security/Military Assistance:
Police/Rule of Law$120$120$170$170
Afghan National Army$222$222$297$287
Karzai Protection/Anti-Terrorism$35$35$35$35
Security/Military Aid Total$377$377$502$492
TOTAL, Afghanistan^b$799$799$1,174$1,164
^a.^Ho^u^s^e^b^{ill an}^d^coⁿ^f^er^en^{ce ag}^r^eem^en^{t in}^clu^d^ed^f^uⁿ^dⁱⁿ^g^f^o^r^Ex^p^e^r^t^{s an}^d^P^o^licy^w^ithⁱⁿ^th^e^categ^o^r^y
^f^o^{r Election}^s^an^{d Im}^prov^{ed Gov}^e^rn^an^ce.
^{b. T}^o^{tal does}ⁿ^o^{t in}^clu^d^{e $61 m}^illion^prov^ided^by^th^e^Sen^a^te^f^o^r^{a USA}^I^{D in}^terim^f^acilityⁱⁿ^Kabu^l,
^{$44 m}^illion^prov^{ided in}^th^{e Hou}^s^{e bill f}^o^{r an}^anⁿ^e^x^{to th}^{e U.S. em}^bas^s^yⁱⁿ^{Kabul, or $56.6 m}^illion
^prov^{ided in}^th^e^c^oⁿ^f^eren^{ce ag}^reem^en^{t f}^o^{r USA}^I^{D operatin}^g^ex^pen^s^esⁱⁿ^A^f^g^h^aⁿⁱ^s^t^an^{, a USA}^I^{D in}^terim
^f^acilityⁱⁿ^Kab^u^{l, an}^d^th^{e USA}^I^{D I}ⁿ^sp^ecto^r^Gen^e^r^a^l.
As demonstrated in Table 6, the enacted legislation increased the overall
reconstruction funding from new appropriations by $365 million with significant
changes over the Administration’s request in allocations for infrastructure
(particularly power generation and road construction), governance, and social
services. Of note, the conference agreement includes an earmark of $60 million from
the ESF for women’s programs, including technical and vocational education,
programs for women and girls against sexual abuse and trafficking, shelters for
women and girls, humanitarian assistance for widows, support of women-led NGOs,
and programs for and training on women’s rights.
The conference agreement also amends the authorization levels in the
Afghanistan Freedom Support Act of 2002 (P.L. 107-327) to be consistent with the
levels of funding provided in the FY04 Supplemental and H.R. 2800.
Background. Since the beginning of post-conflict aid in late 2001, U.S.
assistance has focused on three broad areas: security, governance, and reconstruction.
Security. Much of the U.S. program for Afghanistan is intended to establish
security institutions to bolster the authority of the central government and prevent the
regrouping of the Taliban or Al Qaeda. The pillars of this effort are (1) the presence
of an International Security Assistance Force (ISAF);(2) the establishment and
training of an Afghan National Army; (3) the demobilization of private militias; and
(4) the formation of “Provincial Reconstruction Teams” (PRTs).
Despite their defeat, Taliban groups reportedly continue to operate in
Afghanistan, mostly in the southeast, targeting U.S. and Afghan forces and creating
a perception of continuing insecurity. Factional in-fighting and increased criminal
activity have also undermined humanitarian operations. In some cases, where

international operations have been directly targeted, this has led to the temporary
suspension of U.N. missions or withdrawal of aid agencies from certain areas.
In mid-December 2002, the Defense Department said it would work to create
secure conditions for aid workers by forming eight “Provincial Reconstruction
Teams” (PRTs) composed of about 60 U.S. forces plus Defense Department civil
affairs officers, representatives of U.S. aid and other agencies, and allied and some
Afghan personnel. The objective of the PRTs is to provide safe havens for
international aid workers, to help with reconstruction, and to extend the writ of the
Kabul government throughout Afghanistan. PRTs, each with about 60 U.S. military
personnel, have begun operations at Gardez, Bamiyan, Konduz, and Mazar-e-Sharif.
The PRT in Mazar-e-Sharif is led by Britain and the one in Bamiyon is led by New
Zealand. Reportedly, the United States might be considering increasing the PRT
program to 16 such enclaves in which Germany and others may take a leadership
role. Some report the Provincial Reconstruction Teams (PRTs) are helping the
security situation in their deployed areas, but other reports dispute their effectiveness.
Governance and Institution Building. A conference in Bonn in December

2001, held as the Taliban regime was falling in the U.S.-led war, the pro-U.S.

Pashtun leader Hamid Karzai was selected chairman of the interim administration
and the loya jirga, held during June 11 - 19, 2002, selected him to continue to lead
Afghanistan until national elections are held sometime in 2004.
The loya jirga adjourned without establishing a new parliament. The scope and
powers of such a body might be dependent on the outcome of a “constitutional loya
jirga,” which is expected to fashion a permanent governing structure in a new
constitution. This assembly was to be held in October 2003, but it has now been put
off until December 2003. However, the draft constitution was made public on
November 3, 2003. Observers say that preparations for the 2004 elections have also
fallen behind and that the elections might be delayed beyond the planned June 2004
time frame, although the United Nations and the Afghan government have begun a
program to register voters.
Concerns remain about the power of regional leaders and their relative
independence from central government authority, although Karzai has moved since
May 2003 to bolster his authority in Kabul by shuffling or firing some local leaders.
In the runup to the planned 2004 Afghan national elections, the United States plans
to try to bolster the efficiency and effectiveness of the Kabul government by placing
about 120 U.S. officials as advisers to various Afghan ministries.
Reconstruction. The international recovery and reconstruction effort in
Afghanistan is immense and complicated, involving the Afghan government,
numerous U.N. agencies, bilateral donors, many international organizations, and
countless non-governmental organizations (NGOs). Intended outcomes of the
reconstruction process identified by the international community and the Afghan
government include political stability and security, access to basic services, an
adequate standard of living for the Afghan people, economic growth, and, in the long
term, independence from foreign aid.

According to many observers, successful reconstruction will stop
disillusionment with the new system in Afghanistan and will keep Afghanistan from
again becoming a haven for terrorists. Programs intended to yield benefits within a
short time frame (four to six months) initiated the transition from the humanitarian
relief phase to programs targeted toward reconstruction. These so-called “quick
impact” programs were followed by more long-term programs in education, health,
poppy eradication, and other areas. Numerous small-scale and some large longer-
term projects, mostly for road reconstruction, are currently underway.
Table 7. U.S. Assistance to Afghanistan
($s – billions)
FY2004
F Y 2001 F Y 2002 F Y 2003Estimate F Y 2004Request F Y 2004House F Y 2004Senat e Suppl e-
mental
$0.184 $0.686 $0.711 $0.550 $0.600 $0.600 $1.164
Issues.
Reconstruction Priorities and Progress.According to some observers,
Afghans have become frustrated with what they perceive to be a lack of progress on⁴¹
reconstruction. Many factors may be slowing the reconstruction effort: lack of
security, lack of human and physical capacity to implement substantial
reconstruction, funding shortages, and funding predominately going towards the
continuing humanitarian crisis and towards the administrative costs of the
international donor community. Analysts agree that both enhanced security and
progress on reconstruction are necessary in order to sustain international donor
involvement in Afghan reconstruction, encourage private investment in Afghanistan,
and maintain Afghans’ hope for improvement in their country and their own lives.
Effective reconstruction assistance, according to USAID, could reduce the war
and drug economies and provide incentives for beneficial economic growth, such as
government capacity building, employment generation, and agricultural
rehabilitation. Other reconstruction initiatives include road construction, urban
reconstruction, infrastructure repair, energy development, and programs for women,
education, health, and the media. The strength and influence of the central
government is viewed as a key factor in the success of the intervention and assistance
on the part of the international community.
Impact of Efforts to Accelerate Reconstruction. The international
community and the Afghan government are now seeking to increase the pace of
reconstruction. If progress on security, road construction, and reconstruction efforts
are made in advance of the 2004 elections, it could increase the chances of the

⁴¹ Rashid, Ahmed. “Afghanistan is Waiting for This.” Far Eastern Economic Review, Aug.

7, 2003; “US to Revamp Afghan Efforts.” Chicago Tribune, Aug. 18, 2003.

success of moderates in those elections. Supporters argue that additional funding
could also have an impact on decisions by the international donor community,
possibly resulting in larger contributions. It could also help efforts now being
discussed to expand the International Security Assistance Force (ISAF), which is
currently limited to Kabul.
Increased funding may also have negative effects. There are concerns that more
money could add to the already high levels of corruption. Some experts are
concerned about absorption capacity and whether additional funds can be allocated
quickly and effectively. If progress is not achieved, the increase may be seen as
largely symbolic and ineffective. Others have raised the possibility that the United
States will be perceived as giving too much support to the Karzai government in
advance of the elections next spring.
Other Donors. So far, the international community has continued to provide
significant amounts of aid and resources for the reconstruction effort, although
Afghanistan officials have reportedly complained about the slow pace at which
pledged funds were being paid. Among examples of other reconstruction efforts by
other countries, Italy is providing advice on judicial reform and Germany is helping
establish a national police force. The United States, Japan, and Saudi Arabia are
financing the building of the Kabul-Kandahar-Herat highway.
Some experts consider a long-term commitment will be necessary to ensure a
stable, democratic Afghanistan emerges. The outcome of the international donors
conference in January 2002 and of other donor conferences since then indicate a
willingness on the part of the international community to assist in the restoration of
Afghanistan. However, in a preliminary needs assessment presented in January 2002
by UNDP, the World Bank, and the Asian Development Bank, reconstruction costs⁴²
were estimated to be more than $15 billion over the next decade. United Nations
and Afghan government officials have since reportedly said $15 billion will be⁴³
needed over 5 years. Amounts pledged and committed to date fall well below these
estimates. With the estimates on the significant cost of Iraq reconstruction now
emerging, some are concerned that international donors might shift their focus to Iraq
reconstruction, and lose interest or run too low on resources to continue to participate
in Afghan reconstruction.
Other Global War on Terrorism Foreign Policy Initiatives
The supplemental proposal also included $201 million for four other foreign
policy initiatives labeled by the Administration as “Other Global War on
Terrorism”programs:
^!$50 million for terrorist rewards for information leading to the
capture or killing of Saddam Hussein and Osama bin Laden,

⁴² “Donors Receive Estimates of Afghanistan’s Reconstruction Ahead of Tokyo
Conference,” UNDP Press Release, Jan. 15, 2002.
⁴³ “Can Afghan Reconstruction Surge After Latest Violence,” Eurasia Insight, Aug. 20,

2003.

^!$11 million for additional diplomatic security,
^!$40 million for USAID facilities, operations, and security in Iraq and
Afghanistan, and
^!$100 million for an Emergency Fund for Complex Foreign Crises
Congress has considered a request to create a foreign policy contingency fund twice
this year as part of the regular FY2004 Foreign Operations appropriations and the
FY2003 Iraq war supplemental. For many years, Administrations have asked
Congress for various types of contingency resources that can be drawn upon
immediately to address unanticipated foreign policy emergencies. Except in the case
of humanitarian situations, however, Congress has been reluctant to support such
requests, stating that the President has other mechanisms and special authorities for
temporarily “borrowing” funds from other aid accounts over which Congress can
maintain closer scrutiny and consult in advance about the purposes of the transfers.
Congress deferred the proposal in the FY2003 supplemental (P.L. 108-11), choosing
instead to allocate the resources for specific needs in Iraq and for coalition partners.
Thus far, House and Senate-passed FY2004 Foreign Operations appropriation bills
(H.R. 2800), do not provide money for a Complex Foreign Crises Fund, as requested
by the Administration.
As enacted, the supplemental legislation includes relief aid for Liberia and
Sudan in lieu of appropriating money for the more general Emergency Fund for
Complex Crises. Congress provided $200 million specifically for Liberia, and $10
million for Sudan.
The supplemental proposal further included two provisions concerning Pakistan.
The first would extend through FY2004 an existing waiver on aid restrictions to
Pakistan. Since September 11, 2001, Congress has authorized temporary waivers of
foreign aid restrictions regarding nuclear proliferation and military coups that would
prohibit Pakistan from receiving U.S. assistance. The current waiver expires on
September 30, 2003. The supplemental also requested that up to $200 million in
FY2004 economic aid to Pakistan be made available to cover the costs of canceling
debt owed by Pakistan to the United States. As enacted, the supplemental includes
the aid waiver for Pakistan, plus $200 million in economic aid for Islamabad which
may be used for debt reduction in lieu direct grant assistance. This will presumably
remove the need for Congress to consider the debt reduction request, and a $200
million aid proposal for Pakistan when it concludes deliberation on the regular
FY2004 Foreign Operations spending measure. The enacted supplemental further
provides $100 million in additional economic aid for Jordan that had not been
requested. This too could reduce the amount necessary for Congress to include for
Jordan in the regular pending Foreign Operations bill for FY2004.
Legislation
S. 1689 (Stevens)
An original bill making emergency supplemental appropriations for Iraq and
Afghanistan security and reconstruction for the fiscal year ending September 30,

2004, and for other purposes. Senate Appropriations Committee consideration and

markup held, September 30, 2003. Report filed by the Senate Appropriations
Committee, October 2, 2003, S.Rept. 108-160. Considered on the Senate floor,
October 1, 2, 3, 14, 15, 16, and 17, 2003. Passed by the Senate with amendments
(87-12), October 17, 2003. Incorporated into H.R. 3289 as an amendment and
passage of S. 1689 vitiated, October 17, 2003.
H.R. 3289 (Young)
Making emergency supplemental appropriations for defense and for the
reconstruction of Iraq and Afghanistan for the fiscal year ending September 30, 2004,
and for other purposes. House Appropriations Committee markup held and ordered
to be reported, October 9, 2003. Reported by the House Appropriations Committee
(H.Rept. 108-312), October 14, 2003. Considered on the House floor, October 15,

16, and 17, 2003. Passed by the House, with amendments, October 17, 2003 (305-

125). Considered by the Senate, Senate struck all after the enacting clause and
substituted the language of S. 1689, passed by the Senate by unanimous consent, and
Senate requested a conference, October 17, 2003. House agreed to a motion to
instruct conferees (277-139) and appointed conferees, October 21, 2003. Conference
held and conference report agreed to, October 29, 2003. Conference report filed
(H.Rept. 108-337) October 30, 2003. Conference report agreed to in the House (298-

121) October 31, 2003. Conference report agreed to in the Senate, by voice vote,

November 3, 2003. Signed into law by the President (P.L. 108-106), November 6,

2003.

For Additional Reading
CRS Resources
CRS Report RL31187. Combating Terrorism: 2001 Congressional Debate on
Emergency Supplemental Allocations, by Amy Belasco and Larry Nowels.
CRS Report RS21644. Defense Funding by Mission For Iraq, Afghanistan, and
Homeland Security: Issues and Implications, by Amy Belasco.
CRS Report RL31999. Disaster Relief and Response: FY2003 Supplemental
Appropriations, by Keith Bea.
CRS Report RL31829. Supplemental Appropriations FY2003: Iraq Conflict,
Afghanistan, Global War on Terrorism, and Homeland Security, by Amy
Belasco and Larry Nowels.
CRS Report RL31406. Supplemental Appropriations for FY2002: Combating
Terrorism and Other Issues, by Amy Belasco and Larry Nowels.
CRS Report RL31715, Iraq War: Current Situation and Issues for Congress, by
Raymond W. Copson (Coordinator).
CRS products on Afghanistan
[ h ttp://www.congress.gov/er p/hotmap/afghanistan.html]
CRS products on Iraq
[ h ttp://www.congress.gov/ erp/hotmap/iraq.html]
CRS products on defense policy and budgets
[ h ttp://www.crs.gov/products/browse/all-legi slative-categories.shtml#Defense]
CRS products on foreign affairs
[ h tt p : / / www.crs.gov/products/browse/all-legi slative-categories.shtml#Fo reign_Aff
airs-Global]
Administration Request
President George W. Bush, “President Addresses the Nation,” The Cabinet Room,
September 7, 2003, available online at [http://www.whitehouse.gov/news/
releases/2003/09/20030907-1.html] .
Office of Management and Budget, “FY2004 Supplemental: Iraq and Afghanistan
Ongoing Operations/Reconstruction,” September 17, 2003, available online at
[ http://ww w . w h i t ehouse.gov/omb/budget/amendments/supplemental_9_17_0

3.pdf].

Department of Defense, “FY2004 Supplemental Request for Operation Iraqi
Freedom (OIF), Operation Enduring Freedom (OEF), and Operation Noble
Eagle (ONE),” September 21, 2003. Available electronically at
[ http://www.dod.mil/comptroller/def budget/FY_2004_Supplemental.pdf] .
Office of the Coalition Provisional Authority, “Coalition Provisional Authority
Request to Rehabilitate and Reconstruct Iraq,” September 23, 2003.
Cost Analyses
Congressional Budget Office, “Testimony on the Ability of the U.S. Military to
Sustain an Occupation in Iraq,” before the House Armed Services Committee,
November 5, 2003. Available electronically at
[ ftp://ftp.cbo.gov/47x x / doc4706/ 11-05-IraqTestimony.pdf] .
Congressional Budget Office, “Letter to the Honorable John M. Spratt, Jr. Regarding
the Estimated Costs for the Occupation of Iraq,” October 28, 2003. Available
electronically at
[ ftp://ftp.cbo.gov/46x x / doc4683/10-28-Spratt.pdf] .
Congressional Budget Office, “An Analysis of the U.S. Military’s Ability to Sustain
an Occupation of Iraq,” Letter to the Honorable Robert Byrd, September 3,
2003. Available electronically at
[ h ttp://www.cbo.gov/showdoc.cfm? i ndex =4515&sequence=0] .
Congressional Budget Office, “Letter to the Honorable Kent Conrad and John M.
Spratt Jr. Regarding Estimated Costs of a Potential Conflict with Iraq,”
September 2002 . Available electronically at
[ h ttp://www.cbo.gov/showdoc.cfm? i ndex =3822&sequence=0] .
Congressional Budget Office, “Letter to the Honorable Pete V. Domenici Regarding
the Cost of Activities Related to the Military Operations Taking Place in and
Around Afghanistan,” April 2002. Available electronically at
[ h ttp://www.cbo.gov/showdoc.cfm? i ndex =3362&sequence=0] .
Council on Foreign Relations, “Iraq: The Day After — Report of an Independent
Task Force on Post-Conflict Iraq,” Thomas R. Pickering and James R.
Schlesinger, Co-Chairs, Eric P. Schwartz, Project Director, March 12, 2003.
Available electronically at [http://www.cfr.org/publication.php?id=5681].
House Budget Committee Democratic Staff, “Assessing the Cost of Military Action
Against Iraq: Using Desert Shield/Desert Storm as a Basis for Estimates,”
September 23, 2002. Available electronically at
[ h ttp://www.house.gov/budget_democ r a t s / a n a l ys e s / s p e n d ing/iraqi_cost_repo
rt.pdf].
House Budget Committee Democratic Staff, “The Cost of War and Reconstruction
in Iraq: An Update,” September 23, 2003. Available electronically at
[ h ttp://www.house.gov/budget_democrat s/analys es/iraq_cost_update.pdf] .

Kosiak, Steven, “Potential Cost of a War with Iraq and Its Post-War Occupation,”
Center for Strategic and Budgetary Assessments, February 25, 2003. Available
electronically at
[ h ttp://www.csbaonline.org/ 4P ublications/Archive/B .20030225.Potential_Co
sts_of/B.20030225.Potential_Costs_of.pdf] .
Nordhaus, William D., “The Economic Consequences of a War with Iraq,” in War
with Iraq: Costs, Consequences, and Alternatives, American Academy of Arts
and Sciences, December 2002. Available electronically at
[ h ttp://www.amacad.org/ publications /monographs/W ar_with_Iraq.pdf] .
Other Resources
Kay, David, “Statement by David Kay on the Interim Progress Report on the
Activities of the Iraq Survey Group (ISG) Before the House Permanent Select
Committee on Intelligence, the House Committee on Appropriations,
Subcommittee on Defense, and the Senate Select Committee on Intelligence,”
October 2, 2003. Available electronically at
[ http://www.cia.gov/cia/public_ a ffai r s / s p eech es / 2003/david_kay_10022003.
html].
U.S. Central Command, Operation Iraqi Freedom Web Site. Available electronically
at [http://www.centcom.mil/Operations/Iraqi_Freedom/iraqifreedom.asp].

Appendix
Table A1. Costs of Major U.S. Wars
(amounts in millions and billions of dollars)
^Am^{erican Revolution}
^C^u^rren^{t Year}^$120^m^illion
^C^oⁿ^s^tan^t^{FY2003 $}^$3,¹⁷⁷^m^illion
^W^a^{r of 1812}
^Cu^r^r^en^{t Year}^$⁸⁹^m^illioⁿ
^C^oⁿ^s^tan^t^{FY2003 $}^$1,⁰⁰⁰^m^illion
^M^e^xⁱ^ca^{n Wa}^r
^Cu^r^r^en^{t Year}^$⁸²^m^illioⁿ
^C^oⁿ^s^tan^t^{FY2003 $}^$1,⁷⁶⁵^m^illion
^Civ^{il Wa}^r:^Unioⁿ
^Cu^r^r^en^{t Year}^$²^,³⁰⁰^m^illioⁿ
^C^oⁿ^s^tan^t^{FY2003 $}^$50,⁰⁰¹^m^illion
^Civ^{il Wa}^r:^Confederacy
^Cu^r^r^en^{t Year}^$¹^,⁰⁰⁰^m^illioⁿ
^C^oⁿ^s^tan^t^{FY2003 $}^$21,⁷⁶⁵^m^illion
^Spa^{nish Am}^erica^{n Wa}^r
^C^u^rren^{t Year}^$270^m^illion
^C^oⁿ^s^tan^t^{FY2003 $}^$6,⁴⁷¹^m^illion
^Wo^{rld Wa}^{r I*}
^Cu^r^r^en^{t Year}^$³³^b^illioⁿ
^C^oⁿ^s^tan^t^{FY2003 $}^$588^b^illion
^Wo^{rld Wa}^{r II}
^C^u^rren^{t Year}^$360^billion
^C^oⁿ^s^tan^t^{FY2003 $}^$4,⁷⁹⁹^billion
^Korea
^Cu^r^r^en^{t Year}^$⁵⁰^b^illioⁿ
^C^oⁿ^s^tan^t^{FY2003 $}^$408^b^illion
^Vietna^m
^C^u^rren^{t Year}^$111^billion
^C^oⁿ^s^tan^t^{FY2003 $}^$584^b^illion
^Persⁱ^aⁿ^G^u^l^f^W^a^{r (1991)**}
^Cu^r^r^en^{t Year}^$⁶¹^b^illioⁿ
^C^oⁿ^s^tan^t^{FY2003 $}^$82^billion
^Sources^{and Notes}^:^A^m^e^rⁱ^c^aⁿ^Re^vo^l^u^tⁱ^oⁿ^t^h^r^o^{ugh K}^o^r^e^aⁿ^W^a^r^c^o^st^{s fr}^o^m^t^h^e
^S^t^a^tistica^l^Ab^stra^{ct o}^f^th^{e Un}^ited^S^t^a^t^e^s^,¹^994;^def^l^at^ors^an^{d al}^l^ot^h^e^{r dat}^a
^f^r^om^t^h^e^O^f^fⁱ^ce^of^t^h^{e U}ⁿ^{der S}^ecret^ary^of^D^e^f^eⁿ^s^{e (C}^om^pt^rol^l^e^{r). F}^Y^{2003 $}
^fi^gur^e^s^fo^r^A^m^e^rⁱ^c^aⁿ^Re^vo^l^u^tⁱ^o^{n t}^h^r^o^{ugh t}^h^e^K^o^r^e^aⁿ^W^a^r^w^e^r^e^up^d^a^t^e^d^fr^o^m
^F^Y^{1967 con}^s^t^aⁿ^t^dol^l^a^{r f}ⁱ^g^u^r^es^ci^t^e^{d i}ⁿ^t^h^e^S^t^a^tistica^l^Ab^stra^ct^.
^*^W^o^r^l^d^W^a^r^I^fⁱ^g^u^r^{es in}^clu^d^{e th}^{e am}^o^uⁿ^t^o^f^w^a^r^lo^an^s^to^allies,^w^h^ich^to^taled
^b^e^tw^een^$⁹^.⁴^an^d^$⁹^.⁵^b^illioⁿⁱⁿ^cu^r^r^eⁿ^t^y^ear^d^o^llar^s^{, o}^r²⁸^%^-²⁹^%^o^f
^th^{e to}^{tal co}^st.
^*^*^Mo^{st P}^e^r^s^ian^Gu^lf^W^a^r^co^{sts w}^e^r^e^o^f^f^s^{et b}^y^allied^coⁿ^t^rⁱ^b^u^tⁱ^oⁿ^s^o^r^w^e^r^e
^ab^so^rb^ed^b^y^{DOD. Net co}^{sts to}^{U.S. tax}^p^ay^{ers to}^taled^$⁴^.⁷^b^illioⁿⁱⁿ
^cu^rren^t^y^{ear dol}^l^a^rs^{, or 7.7%}^o^f^th^{e to}^{tal co}^{st. So}^u^r^ce:^D^e^par^t^m^ent^of
^D^e^f^e^ns^{e Annual}^Repor^t^t^o^C^ongr^es^s^{, Jan}^.^1993.

Table A2. Costs of Major Reconstruction Efforts
(amounts in billions of dollars)
^M^a^rs^h^a^l^l^Pl^an^(1948-1951)
^C^u^rren^t^Y^{ear $}^$13.325
^C^oⁿ^s^t^aⁿ^t^F^Y^{2003 $}^$105.037
^Bosⁿⁱ^a^(1996-1999)*
^C^u^rren^t^{Year $}^$0.936
^C^oⁿ^s^t^aⁿ^t^F^Y^{2003 $}^$1.041
^Kos^{ovo (1999-2001)*}
^C^u^rren^t^{Year $}^$0.860
^C^oⁿ^s^t^aⁿ^t^F^Y^{2003 $}^$0.916
^A^f^gh^anⁱ^s^tan^(2001-2003)
^C^u^rren^t^{Year $}^$1.174
^C^oⁿ^s^t^aⁿ^t^F^Y^{2003 $}^$1.185
^Sources^{and Notes}^:^{U.S. A}^g^en^cy^f^o^{r In}^tern^ation^a^l^D^e^v^e^l^o^p^m^en^{t, Departm}^eⁿ^t
^of^S^t^at^{e, an}^{d H}^o^u^s^{e an}^{d S}^eⁿ^a^t^e^A^ppropri^a^tⁱ^ons^Co^m^mⁱ^t^t^ees^{. D}^e^f^l^at^ors^are
^f^r^om^O^f^fⁱ^{ce of}^Man^a^g^e^m^eⁿ^t^an^{d Bu}^dg^et^{, F}^e^bru^a^ry^2003.
^*^A^l^t^h^o^{ugh t}^h^e^Uⁿⁱ^t^e^d^St^a^t^e^s^c^o^ntⁱⁿ^u^e^s^t^o^p^r^o^vⁱ^d^e^e^c^o^no^mⁱ^c^a^ssi^st^aⁿ^c^e^t^o
^B^o^sni^a^aⁿ^d^K^o^so^vo^,^fi^gur^e^s^sho^w^{n he}^r^e^r^e^fl^e^c^t^a^m^o^unt^{s o}^f^hum^aⁿⁱ^t^a^rⁱ^aⁿ
^an^d^r^ecoⁿ^s^tr^u^c^tioⁿ^aid^tr^an^sf^er^r^e^d^d^u^rⁱⁿ^g^th^{e p}^o^s^t-^coⁿ^f^lict,
^“^r^econ^s^tru^c^tion^”^ph^as^{e of}^econ^o^mⁱ^{c an}^{d s}^o^{cial s}^t^abilization^ef^f^o^rts^.