One of the most telling failures of Iraq’s reconstruction efforts is the Baghdad government’s inability to turn rocketing oil revenues into results on the ground.

Iraq has budgeted for 2.9 million barrels a day (b/d) of oil exports for 2013 at an average price of $90 a barrel. If realised, this would make it the world’s third-largest crude exporter behind Saudi Arabia and Russia, outstripping the revenues of fellow Gulf producers Iran, Kuwait and the UAE.

But for the Middle East and North Africa’s second-largest oil producer to be the region’s second-poorest by per capita gross domestic product shows what Baghdad must overcome to fulfil its promises to the Iraqi people.

In 2009, Baghdad set the ambitious target of raising production capacity from 2.4 million b/d to 12.5 million b/d by 2017. This target is now likely to be scaled back to 9-10 million b/d, but with this level of oil revenues in the pipeline, Iraq should be aiming to rival infrastructure development in the nearby GCC.

The final report by the US Office of the Special Inspector General for Iraq Reconstruction (Sigir) estimated that more than 15 per cent of the US’ spending on reconstruction over the past decade has been wasted. This figure – about $8bn – is likely to be significantly larger when including funds from Iraq’s government.

Several of Iraq’s ministers interviewed as part of the Sigir report said there remained limited tangible evidence of any positive effects from the rebuilding programme.

According to Iraq’s Finance Minister Rafi al-Eissawi, “thousands of projects” were incomplete at the time they were transferred to the government. The minister highlighting the disastrous Fallujah wastewater treatment project, constructed “to great cost, but little effect”.

Iraq’s oil industry is the only sector visibly improving. Baghdad must now divert its crude revenues to develop much-needed housing, infrastructure, power and water projects, and to learn from the past wasted decade.