Friday, March 24, 2006

Costs To Rebuild Shifting To Iraqis

$21 billion U.S. effort to end short of goals
By Thomas Frank
USA Today
March 24, 2006

BAGHDAD — The head of the U.S. program to rebuild Iraq said Thursday that the Iraqi government can no longer count on U.S. funds and must rely on its own money and cash from other Persian Gulf nations to complete the massive undertaking.

“The Iraqi government needs to build up its capability to do its own capital budget investment,” Daniel Speckhard, director of the Iraq Reconstruction Management Office, told reporters.

Speckhard's remarks signal the unwinding of an extensive rebuilding campaign intended to stabilize Iraq and neutralize insurgents after the U.S.-led invasion in 2003. The $21 billion U.S.-funded program set out to fix or build schools, roads, clinics, ports, bridges, government offices, phone networks, power plants and water systems.

The program also was to train Iraqis in accounting, farming, teaching, nursing, banking and other areas.

Hundreds of projects have been completed, but the top U.S. auditor for the program has criticized it for cost overruns, corruption, understaffing and bureaucratic infighting. Stuart Bowen, special inspector general for Iraqi reconstruction, told Congress last month:

*Electrical capacity is below prewar levels.

*Only 49 of 136 planned water projects will be finished.

*300 of 425 electricity projects will be completed.

As much as $5.6 billion for projects was reallocated to tackle “security needs driven by a lethal and persistent insurgency,” Bowen said.

U.S. reconstruction officials once aimed to create public-works jobs for 1.5 million Iraqis. The U.S. Agency for International Development said last week that 77,000 have been created.

Anthony Cordesman, a Middle East expert at the Center for Strategic and International Studies in Washington, called the U.S. plan “a dismal failure. It hasn't met any of its goals. It's left a legacy of half-built projects” that Iraq can't maintain.

Funding reconstruction will pose a huge challenge for Iraq. Its main revenue source — oil production — has been hurt by sabotage to key facilities.

Speckhard said “significant challenges remain.” He said the rebuilding program sought to “kick-start the economy” and “lay a foundation” Iraq could build on with its own money, private investment and other international aid, particularly from the Gulf region.

Speckhard said per capita income has risen from $500 a year before the war to $1,200 today. He said Iraqis have started 30,000 businesses in the past year.

Iraq's deputy finance minister, Kamal Field al-Basri, said it was “reasonable” for the United States to cut funding for rebuilding after spending $21 billion. “We should be very much dependent on ourselves,” al-Basri said in an interview. He said Iraq needs to increase its capacity to produce oil, which generates 93% of government's revenue, to pay for rebuilding.

The Center for Strategic and Budgetary Assessments, a Washington defense-policy research group, said last month that Iraq has little oil revenue left after paying for day-to-day government operations, social services, security and repairs to oil infrastructure.

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