New York: The anti corruption measures put in place by the Iraqi government have confused bureaucrats following which they are afraid to sign on contracts as a result of which Tehran is failing to spend billion dollars earmarked for its reconstruction.

Iraqi ministries are spending as little as 15 per cent of the 2006 capital budgets they received for the rebuilding with some of the weakest spending taking place at the Oil Ministry, which relies on damaged and frequently sabotaged pipelines and pumping stations to move the oil that provides nearly all of the country's revenues, the New York Times today said.

In essence, the money is available despite extensive sabotage, the oil money is flowing but the Iraqi system has not been able to put it to work.

The country is facing this national failure to spend even as American financial support dwindles, the report said.

The inability to spend the money, it said, raises serious questions for the government, which has to demonstrate to citizens who are skeptical and suspicious of Government corruption that it can improve basic services and that at a time when American funds for reconstruction are being reduced, it can prove to other foreign donors that it can quickly put to use the money they may be willing to commit.

"After the expenditure of roughly 22 billion American taxpayer dollars on Iraq reconstruction, the increase of the Iraqi capital budget was seen by many as a sign that oil revenues could finally begin paying for the rebuilding, four years after Bush administration predictions that the country could afford the programme on its own," it said.