Speaking with the Council on Foreign Relations, Iraqi Finance Minister Bayan Jabr Solagh said August reports of a budget surplus of as much as $79 billion through 2008 fail to take into account the true nature of the Iraqi financial system.

"The surplus or the excess in money that people talk about is money that was not spent (in August)," he said. "We are spending it now through the budget process."

The minister said the budget surplus is at the Iraqi Central Bank and not the development fund for reconstruction in New York. Solagh said the Central Bank deposits, which total no more than $30 billion, are used to back the Iraqi currency.

"It is not surplus; it is the federal reserve," he said. "It is the reserve of Iraq. That means we cannot have a fixed currency without it."

He noted further that U.S. officials are not spending American taxpayer money in support of the Iraqi people, but funnel most of the money toward military support.

"Americans, they don't give the Iraqi budget or the Iraqi government any money directly. They spend it on their own military salaries, weapons. This is the money; it's not going to the government," he said.

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