I'm not sure about the “lunatic” part, but “incompetent” seems right. In the Washington Post:

But many CPA staff members were more interested in other things: in instituting a flat tax, in selling off government assets, in ending food rations and otherwise fashioning a new nation that looked a lot like the United States. Many of them spent their days cloistered in the Green Zone, a walled-off enclave in central Baghdad with towering palms, posh villas, well-stocked bars and resort-size swimming pools.

It's the sort of thing where they could have demonstrated the arete of the west, practical know-how, and you don't even need to send the “best and rightest” as it says, you just need to send the competent and largely sober. You just have to pick anybody who has some experience and is willing to take the time. But they went the other way, turning the task into a plum for their friends or their friends' children. So they ended up demonstrating ate instead.

I think the story is quite poignant. A country in turmoil, nothing works, bandits roam freely, small groups of men are massacred every night, and the people in charge—a group appointed through their connections, enjoying extraordinary power—have locked themselves into an enclave, where they have drinks brought to them at the pool. “Let's put a stop to their food rations”, they say.