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Iraqi construction funds go to security

- The Washington Times - Thursday, February 9, 2006

The State Department has spent nearly half the U.S. money allocated for Iraqi reconstruction on security, not on the projects themselves, according to testimony yesterday at a Senate hearing.

The testimony from James Jeffrey, senior adviser on Iraq to Secretary of State Condoleezza Rice, shows the hurdles that the fledgling Iraqi government faces in erecting basic water and electrical services, hospitals and schools. Terrorists are so lethal at knocking out power and water that huge sums of money must be diverted to protect reconstruction projects.

Mr. Jeffrey also said European nations and Japan generally are anteing up the money they pledged at a conference in Madrid in October 2003, but Iraq's Middle East neighbors are not coming through.

"We're pushing real hard on the Kuwaitis and the Saudis, for example, who between them pledged $1 billion, and we haven't seen very much of that yet," Mr. Jeffrey told the Senate Foreign Relations Committee. "And there are a couple of other big donors in that category in the Middle East that we're looking at."

Only $3.2 billion of $13 billion pledged by foreign countries for rebuilding has reached Iraq.

The relatively poor money flow from donor countries prompted Sen. Chuck Hagel, Nebraska Republican, to say, "Well, we haven't come very far, because when Secretary Rice was here a year ago, she used the figure $3 billion. So that's not good news."

The hearing focused on how the State Department has allocated more than $20 billion in U.S. taxpayer-funded reconstruction money since June 2004, when the U.S. Embassy in Baghdad took over the prime contractor role from the Pentagon.

Senators seemed stunned to learn that of the $13 billion that has been disbursed, $5.8 billion has been used for security.

"It's important for us to level with folks," said Sen. Joseph R. Biden Jr., Delaware Democrat.

Mr. Jeffrey conceded setbacks.

"We have certainly not done as much as we had originally hoped for," he testified. "We have needed to adjust the situation on the ground, which has often required projects to be canceled [and] in some cases slowed down."

But Mr. Jeffrey listed a number of accomplishments in the face of coordinated terrorist attacks, which cut off the flow of oil and thus Iraq's prime source of revenue.

"We have brought safe water and sewage disposal to millions, stood up, equipped and trained several hundred thousand Iraqi troops and police, and supported with funds and sound advice a remarkable democratic political transformation," he said.

He said one factor worsening the demand for fuel is hundreds of thousands of new Iraqi car owners.

Stuart Bowen Jr., the special inspector general for Iraq, is advocating a new $2 billion fund for Iraq to sustain and protect what already has been built. He testified that the United States was able to increase electricity output from a prewar level of 4,500 megawatts a day to 5,300 megawatts, only to see terror attacks reduce output to 3,800.

"What has happened is an incessant and insidious insurgency has repeatedly attacked the key infrastructure targets reducing outputs," Mr. Bowen said.

He said corruption involving U.S. tax dollars "is not currently a pervasive factor." Iraqi officials say at least $1 billion might have been stolen from a $37 billion development fund primarily made up of Iraqi oil money.

Joseph Christoff, the Government Accountability Office's (GAO) director for international affairs and trade, said direct security costs account for up to 22 percent of all building projects. Making matters worse are disagreements between U.S. agencies, contractors and Iraqis on project priorities, he said.

Mr. Christoff issued an updated GAO report that cast doubt on future sources of funds for Iraq once all U.S. rebuilding money is spent next year.