The Administration's Proposal for Financing Operations Desert Shield and Desert Storm

T-NSIAD-91-9: Published: Feb 27, 1991. Publicly Released: Feb 27, 1991.

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GAO discussed the Administration's proposal for financing Operations Desert Shield and Desert Storm and the Administration's estimate of the operations' costs. GAO noted that: (1) Operation Desert Storm's cost must be financed to ensure that U.S. troops in the Persian Gulf receive all the support they need; (2) Congress should provide needed money only through periodic supplemental funding due to uncertainties and concerns regarding administration cost estimates; (3) the Administration's working capital proposal would give the Department of Defense (DOD) direct access to the funds without further congressional oversight; (4) funds for the war should come first from allied pledges and then from American taxpayers to supplement allied pledges; (5) 31 countries sent military forces to the Gulf region to support the allied effort; (6) Saudi Arabia, Kuwait, United Arab Emirates, Japan, Germany, and Korea pledged a total of $53.5 billion and contributed about $12.2 billion in direct cash and $2.7 billion in in-kind support; and (7) the European Commission and 24 countries pledged a total of about $14.7 billion and contributed about $6.7 billion to Turkey, Jordan, Egypt, and other countries affected by the economic embargo against Iraq. GAO also noted that the Administration's cost estimate: (1) included higher fuel costs than DOD paid for operations outside the Middle East; (2) overstated costs, since it did not take into account rebates and credits that DOD accrued that would reduce actual outlays; and (3) failed to fully reflect the savings from free fuel and other in-kind contributions.

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