Bush taps into emergency Iraq funds

4.00pm - By ADAM ENTOUS

WASHINGTON - The Pentagon has begun tapping into its US$25 billion ($38.27 billion) emergency fund for the Iraq war to prepare for a major troop rotation and intense fighting this fall, administration officials said on Tuesday, despite the White House's initial insistence that it had enough money.

The Pentagon has already used more than US$2 billion from what the White House dubbed its "contingency reserve" fund for Iraq. The money is being used to ramp up production of armoured Humvees to support the troop rotation, as well as to buy body armour and bolster fuel supplies, the officials told Reuters.

The decision to use the US$25 billion in Iraq reserves underscores concern within the administration about the rise in anti-American violence in Iraq.

The decision follows last week's announcement that President George W Bush plans to divert nearly US$3.5 billion from Iraqi water, power and other reconstruction projects to improve security.

The White House had initially asserted it would not need additional war funding until January or February, 2005 -- well after the November presidential election.

Even after requesting the US$25 billion reserve fund in May, White House officials insisted it was an "insurance policy" that they hoped not to tap, though they acknowledged that could change if violence flared up.

"As we've always said, our troops in the field will have what they need, when they need it," said Chad Kolton, spokesman for the White House Office of Management and Budget.

"In this case, making some of those resources available now ensures that our troops will have the equipment they need going into the fall (rotation)," Kolton added.

Democratic presidential candidate Senator John Kerry accused Bush this week of hiding plans to call up more members of the part-time National Guard and Reserve after the election.

The Bush campaign called Kerry's assertion "false and ridiculous," and administration officials said the Pentagon decided to tap into the reserve fund because resources were running low as the fiscal year nears its September 30 end.

Congressional aides and defence analysts said the use of the reserve funds could be an early sign that the Pentagon will run out of money sooner than the White House had expected.

Bush has so far spent US$120 billion in Iraq, not including the US$25 billion contingency fund, and officials said he could seek another US$50 billion in February.

With the rate of spending in Iraq already at more than US$1 billion a week, the Pentagon may not have enough money to "get past Christmas," let alone wait until February, said John Pike, a defence analyst with GlobalSecurity.org. He said the White House could need closer to US$75 billion next year.

Steven Kosiak, a defence analyst with the Centre for Strategic and Budgetary Assessments, said the administration could shift funding around to fill any shortfall. He added that the decision to dip into the reserve fund so soon was further evidence "the war is costing more than the administration anticipated."

Critics have long accused Bush of understating war costs.

Before the invasion, then-White House budget director Mitch Daniels predicted Iraq would be "an affordable endeavour," and Deputy Defence Secretary Paul Wolfowitz even assured Congress: "We are dealing with a country that can really finance its own reconstruction and relatively soon."

Senator Kent Conrad of North Dakota, the top Democrat on the Senate Budget Committee, said tapping into emergency reserves was "another example of this administration saying one thing and doing another."

"This administration is riddled with flip-flops," Conrad added, echoing a charge Bush uses against Kerry.

- REUTERS

Herald Feature: Iraq