Estimates of the cost of rebuilding Iraq after the overthrow of Saddam Hussein's regime range from $50 billion to $100 billion. In recent months, U.S. lawmakers have provided more than $18 billion in grants to assist in that reconstruction. Other countries and organizations have pledged a similar amount, mostly in the form of loans.

This Congressional Budget Office (CBO) paper--prepared in response to separate requests from the Chairman of the Senate Budget Committee and the Ranking Member of the House Budget Committee--examines the key resource issues related to Iraq's recovery. Those issues include the country's reconstruction needs, its potential oil revenues and debt burden, and what additional resources, if any, may be necessary for the reconstruction effort. The analysis also considers three illustrative approaches to rebuilding Iraq that could require different levels of international funding. In keeping with CBO's mandate to provide objective, impartial analysis, this paper makes no recommendations.

Eric J. Labs of CBO's National Security Division wrote the paper under the supervision of J. Michael Gilmore. Robert Dennis, Richard Farmer, Heywood Fleisig, Doug Hamilton, Arlene Holen, David Moore, Elizabeth Robinson, Joseph Whitehill, and Thomas Woodward of CBO provided thoughtful comments on an earlier draft. Dan Byman of Georgetown University, Michael O'Hanlon of the Brookings Institution, and Admiral David Oliver (ret.) also provided helpful suggestions. (The assistance of such external participants implies no responsibility for the final product, which rests solely with CBO.)

Christian Spoor edited the paper, and John Skeen proofread it. Maureen Costantino designed the cover, Lenny Skutnik produced the printed copies, and Annette Kalicki prepared the electronic versions for CBO's Web site.

Douglas Holtz-Eakin
Director
January 2004