Iraq’s Reconstruction Ailments

The reconstruction of Iraq has been hampered by a number of hurdles, including government bureaucracy, corruption, and security concerns, according to an October 30, 2005, report by the Special Inspector General for Iraq Reconstruction (SIGIR), an independent auditor. The effort is the biggest rebuilding project since the post-war rebuilding of Europe in 1945. More than thirty months after the March 2003 invasion, Iraqis still complain of a lack of basic amenities like heating oil, water, and electricity.

Among its findings, SIGIR reports of a “reconstruction gap” in Iraq: of roughly 3,200 projects initially proposed, only 1,887 have been completed, with 897 projects ongoing. Only 79 percent of the $18 billion Iraq Relief and Reconstruction Fund (IRRF) has been committed to projects. This gap is due to factors including project delays, cost overruns, and the constant risk of insurgent attacks, which are diverting reconstruction resources to pay for security. The report also found fifty-four instances of corruption, related to no-bid contracts and billing discrepancies resulting in millions of dollars lost.

The security environment on the ground is growing worse, SIGIR finds; 412 contractors have been killed since March 2003. “That’s about one for every five [U.S.] soldiers killed,” says Frederick Barton, senior adviser to the Center for Strategic and International Studies’ International Security Program. “That has a tremendously negative impact on the ability to do reconstruction work,” he says. Security costs, originally factored in at around 9 percent, now make up more than 25 percent of all reconstruction spending. Further, security issues lead to recruiting problems, which in turn forces contractors to raise wages to attract workers. Anbar, a heavily Sunni province northwest of Baghdad, is so poorly secured that only one U.S. State Department employee and one USAID employee are on the ground, according to Time Magazine.

According to news reports and polls, the three highest priorities of everyday Iraqis are oil, electricity, and water, experts say. Numerous obstacles remain to supplying these staple items. Among them:

Among them:

The U.S.-led reconstruction efforts, despite setbacks and security woes, have shown some progress in places like Najaf and Sadr City, a Shiite suburb of Baghdad. Contractors have refurbished police and fire stations, replaced decaying water pipes, and renovated schools and hospitals. In Baghdad, the first of 120 rebuilt health centers was opened. Increasingly, more of the contracting work is being done by Iraqis, though Arraf says in parts of Kurdistan subcontractors rely increasingly on low-wage Chinese laborers. Despite the fact that Iraq is producing oil below capacity, the high price of crude has pushed Iraq’s oil revenue to a post-war high of $2.63 billion in August.

The U.S.-led coalition is hoping that once Iraq’s security forces are fully operational, the improved security environment will speed along reconstruction projects. Another strategy introduced by Zalmay Khalilzad, the U.S. ambassador to Iraq, is so-called provincial reconstruction teams, or PRTs. An experiment with a proven track record in Afghanistan, PRTs consist of small units of around fifty soldiers paired with several civilians with expertise in certain areas like stability or reconstruction. PRTs are expected to assist reconstruction efforts in Hilla, Mosul, and Kirkuk. Bowen, in the SIGIR report, recommends that Khalilzad host an anti-corruption summit to tackle the growing problem of graft. On the financing side, the Iraqi government is expecting higher future oil revenues to help offset the escalating costs of reconstruction projects. In addition, Baghdad is seeking more funding from donor nations—which have pledged $8 billion so far—and the World Bank and International Monetary Fund, which have pledged $5.55 billion.t