Pentagon officials ignored reports on dire state of Iraq's oil industry

Senior Pentagon officials ignored bleak in-house assessments of the state of Iraq's oil industry when they gave optimistic predictions to Congress during the war that oil revenue would quickly get the country back on its feet.

The disclosure, in The New York Times yesterday, seems bound to fuel charges that the Bush administration distorted financial and intelligence facts in its determination to make the case for war.

As the problems in Iraq continue, it is becoming clearer that the White House grossly underestimated the dilapidation of Iraq's infrastructure. Nowhere, however, was the gap between assertion and reality wider than over the country's oil sector.

Addressing Congress in April, the deputy defence secretary, Paul Wolfowitz, insisted that "we are dealing with a country that can really finance its own reconstruction and relatively soon". Shortly afterwards, he estimated that Iraq's oil revenues could quickly climb to more than $30bn (£18bn) a year, despite warnings from United Nations and international oil industry specialists who visited Iraq that its oil installations had been damaged by a decade of sanctions and neglect.

It now emerges that a secret task force, based in the Pentagon, had also produced findings that flatly contradicted Mr Wolfowitz's assertions. In an exhaustive report, the Energy Infrastructure Planning Group concluded that output would be at least 25 per cent less than the 3 million barrels a day estimated by Mr Wolfowitz and others. Paul Bremer, the US administrator of post-war Iraq, estimates that revenues will run at only $14bn (£8.4bn) annually.

The disclosure comes at an awkward moment for President George Bush, who stunned Republicans and Democrats alike on Capitol Hill last month with his supplementary $87bn (£52bn) funding request for Iraq for 2004(with every prospect of more to come in future years).

On top of $65bn for military operations, the sum includes $20bn for rebuilding Iraq - at a time when the federal budget deficit is at a record high and state governments are forced to impose spending cuts.