Seized Iraq Funds All but Gone, U.S. Says

U.S. authorities in Iraq have all but exhausted the seized assets they have used to pay Iraqi civil servants, and some administration and congressional officials said Tuesday that extra money might be needed sooner than expected for U.S. efforts in the occupied nation.

Treasury Department spokesman Tony Fratto said a cash shipment of $419 million would be made soon from a New York Federal Reserve account that once held $1.7 billion, and this would “nearly exhaust the available vested funds.”

One U.S. lawmaker, after high-level meetings in Baghdad on the funding issue, said other ways would be found to pay Iraqi salaries and pensions, but a senior congressional aide called the situation “a mess.”

L. Paul Bremer III, the U.S. civilian administrator in Iraq, was expected to discuss the issue during meetings in Washington, officials said.

To help stem violence and alleviate the cash crunch, congressional sources said, the White House was considering making an extra $2-billion-to-$3-billion appropriation request in the near future. Sources said money could be freed up before an October donors conference, though Bush officials insisted that no decisions had been made.

The White House is under pressure from Republicans and Democrats in Congress to act quickly. Major revenue sources, such as oil production and international aid, have yet to come through.