Sat, Sep 10, 2005 - Page 6 News List

Iraqi reconstruction money runs dry

CASTLE IN THE SAND?A large part of the US funds that were earmarked to restore Iraq's electricity, water and sanitation have run out after being diverted to security

THE GUARDIAN , BAGHDAD AND WASHINGTON

Key rebuilding projects in Iraq are grinding to a halt because US money is running out and security has diverted funds intended for electricity, water and sanitation, according to US officials.

Plans to overhaul the country's infrastructure have been downsized, postponed or abandoned because the US$24 billion budget approved by Congress has been dwarfed by the scale of the task.

"We have scaled back our projects in many areas," James Jeffrey, a senior State Department adviser on Iraq, told a congressional committee in Washington, in remarks quoted by the Los Angeles Times. "We do not have the money."

Water and sanitation have been particularly badly hit. According to a report published this week by Government Accountability Office, US$2.6 billion has been spent on water projects, half the original budget, after the rest was diverted to security and other uses.

The report said "attacks, threats and intimidation against project contractors and subcontractors" were to blame. A quarter of the US$200 million worth of completed US-funded water projects handed over to the Iraqi authorities no longer worked properly because of "looting, unreliable electricity or inadequate Iraqi staff and supplies," the report found. Both Democrats and Republicans in Congress also said administrative bungling had played a part.

The US special inspector general for Iraqi reconstruction, Stuart Bowen, said he was reluctant to ask for cash immediately after Hurricane Katrina, and said non-US sources might be asked to plug the gap.

"It is an issue that we need to address at the right time," he said.

After Congress approved funding two years ago, oil, electricity, water and sanitation facilities were found to be more degraded than expected. Amid the chaos and corruption of the post-Saddam administration, insurgents also began to target the infrastructure and anyone working for the US or the Iraqi government.

It is in this context that many of the estimated 20,000 foreign security contractors now in Iraq -- some paid more than US$1,000 a day -- are employed. Bowen said US$5 billion had been diverted to security.

Some areas now get less than four hours of electricity a day, and there's been a surge in dehydration and diarrhea cases among children and the elderly. The cost of providing enough electricity for the country by 2010 is put at US$20 billion.

Fuel shortages have produced mile-long queues at gas stations. Crude oil production is around 2.2 million barrels a day, still below its pre-war peaks, according to the Brookings Institution.

There have been improvements: the health ministry says the overall rate of disease among children under five has dropped; parts of Baghdad are noticeably sprucer; and thousands of schools have been built or rehabilitated. But the House Appropriations Foreign Operations Subcommittee is losing patience.

"It seems almost incomprehensible to me that we haven't been able to do better," said Don Sherwood, a Republican. Another Republican, committee chairman Jim Kolbe, said the Bush administration's vision of stabilizing Iraq by funding reconstruction was "a castle built of sand."

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