Saturday, January 14, 2006


By William Fisher

With the billions of dollars appropriated by the U.S. for Iraqi reconstruction almost all spent, Japan, Australia and other nations in President George W. ush’s “coalition of the willing” are likely to be asked to shoulder much of the burden for funding the large number of unfinished projects.

Getting others to take up the slack is reportedly high on Secretary of State Condoleeza Rice’s agenda when she visits the Far East in March. Her trip, originally scheduled for this week, was postponed because of the current crisis in Israeli politics caused by Prime Minister Ariel Sharon’s recent stroke.

The new initiative comes barely a month after President Bush appointed Rice to take over the leading role in supervising and coordinating the U.S. reconstruction program in Iraq. The American administration has signaled that it will not seek further funding for these efforts.

"The U.S. never intended to completely rebuild Iraq," Brig. Gen. William McCoy, the Army Corps of Engineers commander overseeing the work, told reporters at a recent news conference. In an interview, McCoy reportedly told The Washington Post, "This was just supposed to be a jump-start."

However, Gen. McCoy’s assertion seems to be at odds with previous administration statements. For example, in a speech on Aug. 8, 2003, President Bush said, "In a lot of places, the infrastructure is as good as it was at prewar levels, which is satisfactory, but it's not the ultimate aim. The ultimate aim is for the infrastructure to be the best in the region."

Relatively little of the $30 billion allocated for reconstruction since the
invasion remains to be spent, and spending authority is scheduled to run out in June 2007. A decision not to renew the reconstruction program leaves Iraq with tens of billions of dollars in unfinished projects, and an oil industry and electrical grid that have yet to return to pre-war production levels.

It also leaves the State Department with a mandate to provide a “focal point” for reconstruction efforts and to supervise and coordinate reconstruction programs not only in Iraq, but also in other countries emerging from civil strife. These include Afghanistan, but Bush Administration officials have announced they will henceforth rely more on the Afghan Government, NATO, and contractors from other countries.

Steven Aftergood, head of the Government Secrecy program of the Federation of American Scientists, told me the switch from the Pentagon to the State Department was “a belated recognition that existing policy on reconstruction and stabilization has been woefully inadequate."

That switch came in a little-noticed December 7 Presidential National Security Directive that said, “The Secretary of State shall coordinate and lead integrated United States Government efforts”, coordinating these efforts with the Secretary of Defense to ensure harmonization with any planned or ongoing U.S. military operations across the spectrum of conflict.”

The State Department will lead U.S. Government efforts to prevent countries at risk “from being used as a base of operations or safe haven for extremists, terrorists, organized crime groups, or others who pose a threat to U.S. foreign policy, security, or economic interests,” said the Bush directive.

Some administration observers say the switch from the Pentagon to the State Department was a product of increasing frustration with the pace of reconstruction work in Iraq. They also believe the cutoff in reconstruction funding is part of a new White House narrative that also includes reduction in the number of U.S. troops in Iraq before U.S. mid-term elections in November 2006, when the entire House of Representatives and a third of Senators will stand for reelection.

According to a report by the special inspector general for Iraq (IG), reconstruction officials cannot say how many planned projects they will complete, and there is no clear source for hundreds of millions of dollars a year needed to operate the projects that have been finished.

The IG’s report describes some progress but also a number of projects that have failed. For example, expensive electrical substations were built but not connected to the country's electrical grid.

Much of the reconstruction funding has been diverted to other projects. At least $2.5 billion earmarked for infrastructure and schools was diverted to building up a security force. Funds originally intended to repair the electricity grid and sewage and sanitation system were used to train special bomb squad units and a hostage rescue force. The U.S. has also shifted funds to build 10 new prisons to keep pace with the insurgency, and safe houses and armored cars for Iraqi judges.

Hundreds of millions of dollars from the reconstruction fund was also used to hold elections and for four changes of government, and establish a criminal justice system, including $128 million to examine several mass graves of Saddam Hussein’s alleged victims.

In addition to the diversion of funds to other types of projects, the reconstruction efforts have been plagued by substantial corruption and overcharging by contractors.

While 3,600 projects will be completed by the end of the year, the cost of security has eaten up as much as 25% of each project, according to the IG. A U.S. congressional report last October forecast that many reconstruction projects were unlikely to get off the ground because of security costs. Iraqi authorities estimate that 10 billion dollars are needed for the health sector alone, to build or rehabilitate and provide equipment for hospitals and clinics.

Production by Iraq's national electrical grid remains at 4,000 megawatts, 400 megawatts below pre-war levels, with the average Iraqi receiving less than 12 hours of power a day. Oil production, which according to the Pentagon's prewar planning was supposed to provide the funds for Iraqi reconstruction, also remains well below prewar levels. The shortfall has been attributed mainly to sabotage by insurgents. Iraq's refineries are currently producing approximately two million barrels of oil a day, compared with 2.6 million barrels on the eve of the invasion.

The ending of reconstruction funding appears to mark a change from a promise the president made in 2003 to provide Iraq with the best infrastructure in the region.

But just how far the U.S. intended to go in that process has always been murky. While President Bush gave the impression that Iraq was slated for a complete makeover, Defense Secretary Donald Rumsfeld appeared less certain. He told the Senate Appropriations Committee in March 2003, “I don't believe that the United States has the responsibility for reconstruction, in a sense (reconstruction) funds can come from those various sources I mentioned: frozen assets, oil revenues and a variety of other things, including the Oil for Food, which has a very substantial number of billions of dollars in it.”

On the other hand, that view seems to contradict a report submitted the same year by the prime consulting contractor hired by the Pentagon to lay out the future of Iraq’s economy. The company, BearingPoint Inc. of McLean, Virginia, said, “The reconstruction of Iraq has begun. Not the reconstruction of vital public services such as water, electricity or public security, but rather the radical reconstruction of its entire economy.”

Clearly, this has not happened. And the Administration’s recent funding decision suggests it is not likely to happen any time soon.

And with many of Iraq’s key ministries in disarray and some dogged by persistent corruption, observers say it is doubtful that the country’s government will have either the resources or the expertise to manage the many remaining large-scale reconstruction projects.