Some $6.3 billion of the 2005 aid total was U.S. aid to Iraq, probably the largest single-year transfer between two countries since the Marshall Plan. But the index counts aid to Iraq at just 10 cents on the dollar, because the World Bank puts the country ahead of only Somalia when it comes to combating corruption and enforcing the rule of law. Sadly, events in 2005 confirmed fears about the country’s rampant graft and violence. Senior Iraqi government officials estimate that as much as 30 percent of the country’s budget is lost to corruption—ranging from bribery to padded contracts and influence peddling. It isn’t just the Iraqis who are poor administrators. Even the U.S. government estimates that $8.8 billion disappeared during the first 14 months that the Coalition Provisional Authority ran Iraq. As of early 2005, at least 40 percent of U.S. reconstruction aid was spent on security. “I’d say that 60, maybe even 70 percent [of what] we see as reconstruction aid goes into nonproductive expenditures,” says Ali Allawi, Iraq’s minister of finance.
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