IRAQ: Reconstruction

January 27, 2005

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What’s the status of Iraqi reconstruction?

It’s advancing slowly. The U.S.-led coalition in Iraq can cite some progress as it tries to restore basic services and bring stability to Iraq: it has funded the repair of nearly 2,400 schools, introduced a new Iraqi currency, and trained thousands of new Iraqi police and soldiers. But the Coalition Provisional Authority (CPA)—the occupation government disbanded June 28 when power passed to Iraqis—fell short of its goals in key areas.

Where has it fallen short?

Electricity and clean water supplies are below prewar levels. Of the $18.4 billion in reconstruction funds appropriated by Congress in November 2003, just $366 million worth of work was completed before the transfer of sovereignty. A central goal of the reconstruction was to increase security. Over the 14 months of the occupation, however, the number of terror and insurgent attacks rose. And instead of winning Iraqi hearts and minds with new schools and services, Iraqi public opinion toward the occupation grew increasingly negative, according to opinion polls conducted by the CPA. “We failed to capture the Iraqi imagination and failed to get the catalytic result we supposed to get,” says Frederick S. Barton, co-director of the Post-Conflict Reconstruction Project at the Center for Strategic and International Studies (CSIS).

Why didn’t things move faster?

Primarily because of the continued insecurity and violence. “Security is the sine qua non of reconstruction—without it you can’t get the other things off the ground,” says Bathsheba N. Crocker, fellow and co-director of the Post-Conflict Reconstruction Project at the Center for Strategic and International Studies. Progress has been set back by attacks against Iraqi and foreign contractors and sabotage of oil pipelines, water mains, and other infrastructure.

Bureaucratic red tape has also slowed work. The Project Management Office (PMO)—the branch of the CPA responsible for spending the $18.4 billion—didn’t award any contracts before March 2004. Once the contracts were awarded, it took contractors an average of a month to get on the ground in Iraq, says PMO spokesman Steve Susens. Now, he says, “they are actually moving very rapidly.”

How much will reconstruction cost?

About $55 billion, according to World Bank and CPA estimates from last October. The total may rise because of continued sabotage of ongoing projects and rapidly rising security costs for contractors, experts say. Of the $55 billion, some $12.1 billion is needed to rebuild and improve the nation’s electrical system, $8 billion to refurbish the oil industry, and $6.84 billion for water and sanitation projects.

How much money has been spent on reconstruction so far?

It’s unclear, but some experts estimate total spending to be some $7 billion to $8 billion since May 2003. This estimate does not include regular operating expenditures for the Iraqi government ministries, which the CPA says have cost some $8.8 billion.

How is reconstruction financed?

Most of the government’s operating expenses and the largest share of reconstruction funds have come from Iraqi oil revenues, leftover cash from the United Nations Oil-for-Food Program, and assets captured from Saddam Hussein’s regime. These funds are consolidated into the Development Fund for Iraq (DFI), which was controlled by the coalition until June 28 and is now run by the Interim Iraq Government. According to the CPA, $3.39 billion from the DFI has been spent so far on reconstruction projects.

The U.S. Congress has allocated a total of $21 billion for Iraqi reconstruction; $2.5 billion in fiscal year 2003, and $18.4 billion in fiscal 2004. Only about $1 billion of the $14 billion pledged by other nations at the Madrid Donors Conference in October 2003 has been deposited into the International Reconstruction Fund Facility for Iraq, which is managed by the World Bank and United Nations. The Japanese donated some $450 million of the money already sent in.

What is the status of electricity production?

CPA administrator L. Paul Bremer III promised in January that electricity production would reach 6,000 megawatts (MW) of capacity by June 1—the minimum level to meet Iraqi power needs. As of June 17, Iraq was producing 4,320 MW of power, according to a Pentagon status report. Iraq surpassed prewar electricity production of 4,400 MW per day when it generated 4,518 MW in October 2003. But sabotage has since taken a toll on the system. Baghdad now has an average of 11 hours of power a day; most areas in the western half of Iraq have fewer than eight hours.

What’s the status of oil production?

Iraq was producing just over 2 million barrels of crude oil per day between June 11 and 17, the latest period for which statistics are available. In March 2003, before the start of the war, production was 2.5 million barrels daily. The CPA briefly exceeded the prewar levels in April 2004, producing 2.6 million barrels per day. But, again, sabotage and dangerous conditions caused by the insurgency have curtailed output.

What’s the status of Iraqi security forces?

The CPA disbanded the Iraqi Army and other security forces in May 2003 and began to build new organizations. The CPA has done relatively well in terms of raw numbers: the Pentagon reports that 226,000 Iraqis were on duty or in training as of June 18, near Bremer’s goal of 260,000. But the forces’ performance has been uneven, and many soldiers still lack training and equipment. Of the 83,789 Iraqi police on duty as of June 18, 56,913—or 67 percent—had received no training. The Iraqi Armed Forces, the national military, is one-third the size U.S. officials pledged it would be by now. There are 7,100 soldiers on duty, with another 2,630 in training, according to Pentagon totals. Other security forces include: 18,000 border police, 255 of which have received coalition-sponsored academy training; 37,800 members of the Iraqi Civil Defense Corps, now renamed the Iraqi National Guard, which consists of locally organized units that fight insurgents with coalition forces; and 74,000 members of the Facilities Protection Service, who guard buildings and other key structures.

What’s the status of the education system?

The October 2003 joint U.N.-World Bank needs assessment found that of approximately 13,000 primary and secondary schools in Iraq, 80 percent—or 10,400—required significant reconstruction. Seven hundred needed to be completely rebuilt. In central and southern Iraq, around 200 schools were destroyed during the conflict, 2,753 were looted, and 197 burned, according to CPA figures.

To date, the CPA has renovated 2,356 schools. It has furnished 8.7 million revised textbooks, 159,000 student desks, and about 2.3 million school kits, which include pens, pencils, paper, and other supplies for Iraq’s 5.8 million school-aged children. It trained 860 secondary school “master teachers” to help them adjust to a post-Saddam curriculum; they in turn held training courses for 31,772 colleagues. There are some 288,700 primary and secondary school teachers in Iraq.

What’s the status of the water and sanitation systems?

Iraq’s 140 major water treatment facilities produced about 3 million cubic meters of clean water a day before the war. According to a report from the United States Agency for International Development (USAID), they are now functioning at about 65 percent of that level, thanks primarily to “years of neglect, electricity shortages, and postwar looting of plant and emergency generators.” Some 60 percent of Iraqis have consistent access to clean drinking water; the CPA aims to raise that total to at least 75 percent. Major water and sewage projects are under way, and some 4 million additional Iraqis should have access to potable water by the end of 2004, according to the CPA.

What’s the status of health care?

Improving. Some 240 hospitals and 1,200 preventative health clinics are now operating—about the same number as before the war. Since May 2003, UNICEF, working with the Iraqi Ministry of Health, has vaccinated some 3 million of the country’s 4.2 million children under the age of five against preventable diseases such as polio, tetanus, diphtheria, whooping cough, measles, and tuberculosis. USAID has provided three large shipments of emergency medicine and distributed high-protein supplementary food rations to more than 240,000 pregnant and nursing mothers and malnourished children.

What did the coalition accomplish regarding local government?

The CPA established 16 governorate (provincial) councils, 91 district councils, 194 city or sub-district councils, and 445 neighborhood councils, covering most of Iraq’s population, according to USAID. In some cases, council members were appointed by local U.S. military commanders or civilian contractors; in others, they were selected through informal local elections. Some $13.4 million in reconstruction funds were channeled through these councils for local infrastructure projects, USAID reports. The councils are supposed to continue to exist at least until elections in January 2005. However, with the transfer of sovereignty, their fate is unclear.

What changes were made to Iraq’s economy?

The CPA’s introduction of a new currency caused almost no disruption to the national economy. The CPA also reformed the tax code, created an independent central bank, and opened Iraq’s economy to foreign investment. The new Iraqi government may seek to revisit some of these changes. Bremer dropped his plan to privatize Iraq’s 192 state-owned industries. The Iraqi government continues to pay all the workers in those industries.

What’s the status of communications?

According to the CPA, there are now 442,000 cell phone subscribers in Iraq, compared to only a few thousand before the war. But there are fewer working land line telephones than before the war: 784,000 now, compared to 833,000 then. Internet use has exploded, with some 60,000 internet subscribers in Iraq now, compared to 2,000 in 2002.

What’s the status of transportation?

Umm Qasr, Iraq’s largest port, reopened in June 2003 and is receiving some 40 cargo ships per month, USAID reports. U.S.-funded dredging is deepening the port from 9 to 10 meters to 12.5 meters, which will allow the world’s largest ships to dock. The port’s main buildings have been renovated. The CPA is also working to revitalize civilian aviation. Included in the $18.4 billion grant from U.S. taxpayers is a provision that will reopen 120 airports throughout Iraq. So far, security concerns have kept air travel low. From May 31 to June 6, an average of nine civilian flights left Iraq daily—four from Baghdad, three from Mosul, and two from Basra.

How will the reconstruction mission change after June 28?

The U.S. side of the effort is not expected to change dramatically. The PMO will change its name to the Iraq Reconstruction Management Office (IRMO), and it will continue to administer the $18.4 billion in reconstruction funds. Some experts estimate it may take three to five years before the work is completed. Before the handover, the PMO reported to Lee Brownlee, the U.S. secretary of the army, and CPA head Bremer. Now, the renamed IRMO will answer to Brownlee and the new U.S. ambassador to Iraq, John Negroponte, Susens says.

Iraqis will take control of the DFI; its oil revenue is estimated at some $12 billion in 2004 and $18 billion in 2005. In addition, more countries may be willing to give foreign assistance to a sovereign Iraq, and the World Bank will be able to issue loans, says Curt Tarnoff, a foreign affairs specialist at the Congressional Research Service, Congress’s public policy research arm.

Will reconstruction move forward faster after June 28?

Perhaps. Now that a lot of the bureaucratic red tape has been cut through, and some $5.3 billion in U.S. contracts for reconstruction work are signed, “it’s possible, but it depends on security,” Tarnoff says. Whether violence will increase or decrease after the transition remains to be seen. “So far, I’d give the reconstruction a C- to D+. But the next three months is when the mid-term grades will come in,” says retired Army Major General William L. Nash, the director of the Center for Preventive Action at the Council on Foreign Relations.

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