On June 30, 2004, the Coalition Provisional Authority (CPA) intends to transfer power in Iraq to a fully sovereign Iraqi interim government. CPA and the Iraq Governing Council took a fundamental step toward this goal in March 2004, when they signed the Law of Administration for the State of Iraq for the Transitional Period (hereafter referred to as the transitional law). The transitional law is intended to govern the affairs of Iraq until Iraqis approve a permanent constitution and a permanent Iraqi government takes office. GAO has ongoing and completed work reviewing various aspects of the U.S. effort to reconstruct Iraq. Our ongoing work includes reviewing the costs associated with reconstruction; the process used to award reconstruction contracts; efforts to develop Iraq's security forces; the rebuilding of Iraq's oil, electricity, and water infrastructure; and programs to help Iraq develop a unified, democratic government. For this report, we describe the following information as it exists at this time: (1) the time frames and Iraqi governmental structures established by the transitional law; (2) arrangements in the law for the U.S.-led multinational force, Iraqi security forces, and militias; and (3) mechanisms in the law for resolving disputes over property and territories within Iraq. In each of these areas, we also explain the transitional law's references to other Iraqi laws and legal provisions that help implement the transitional law. Where legal provisions to address these issues have not been completed, we describe the progress toward their completion or other actions to address the issues. We recognize that the situation is fluid and that there are ongoing efforts to address unresolved issues.

Iraq's transitional law divides the transitional period into two phases3--the interim government phase, which begins June 30, 2004, and the transitional government phase, which begins after elections for a National Assembly are held and the transitional government is formed. The law does not specify how the interim government is to be formed or structured, but provides that the interim government will govern in accordance with an annex to be developed. Since April 2004, the United Nations has been playing a key role in helping form and structure the interim government. Elections for the National Assembly are to be held no later than January 31, 2005, under an election law that, according to CPA officials, they aim to complete before the transfer of power. For the transitional government phase, the transitional law details the government's structure and responsibilities, including procedures for developing a permanent constitution and the federal structure. The National Assembly will draft a permanent constitution for the Iraqi people's approval in a general referendum. However, if a majority of Iraqi voters or if two-thirds of the voters in 3 of Iraq's 18 governorates reject the constitution, elections for a new National Assembly will be held and the process of drafting a permanent constitution begins again. To prevent the concentration of power in the federal government, the transitional law encourages local authority during the transitional period. The transitional law recognizes the Kurdistan Regional Government and specifies that it controls the police forces and internal security in the Kurdistan region. The transitional law includes some provisions under which Iraqi security forces and the multinational force will provide security in Iraq after the transfer of power. Officials from DOD and State are examining what additional provisions, if any, may be necessary to further define the role of the multinational force after June 30, including a new U.N. Security Council resolution or revisions to existing CPA orders. The transitional law also outlines elements of the command and control structure for some Iraqi security forces and outlaws all militias not under the command structure of the transitional government, except where provided by federal law. According to State and DOD officials, CPA is currently considering how it could further elaborate on provisions for both of these areas. The transitional law includes provisions for the transitional government to implement that are related to resolving disputes over property rights and territory. These disputes resulted from the previous regime's practices in altering the demographic character and boundaries of certain regions and territories, including Kirkuk. One provision calls for compensating residents who were deported, expelled, or who emigrated, by restoring their homes and property to them, or, where this is infeasible, providing just compensation within a reasonable time. Another provision establishes a process Iraqis will use to resolve the status of disputed territories. If Iraqis cannot resolve the status of disputed territories through the prescribed processes, they would request assistance from the United Nations. The transitional law provides a road map for establishing a permanent, unified, and democratic government in Iraq. Nonetheless, some issues related to the transfer of power remain unresolved. For example, the transitional law does not specify how the interim government is to be structured, nor does it fully clarify the authority of a multinational force in Iraq after the transition of power. U.S. officials and others are working to resolve these and other issues before June 30, to ensure that the transfer of authority can proceed as planned. These issues are discussed in our summary.