- The Washington Times - Sunday, March 7, 2004

BAGHDAD — After a power struggle with the State Department, the Pentagon has won control over most of an $18.4 billion aid package for Iraq, and rebuilding that has been delayed for a month will start this week, U.S. officials in Baghdad said yesterday.

Much of the enormous aid package — funded by U.S. taxpayers — will go toward 2,300 construction projects in the next four years. Of these, the State Department will oversee 10 percent. But $4 billion of the aid package has been set aside, and spending authority for those funds is being discussed.

Congress approved the aid in November, but the bickering delayed contracts that were expected to be approved Feb. 2. The State Department had pushed for control on the grounds that it will become the top U.S. agency here after Iraqis are handed sovereignty on June 30.

Officials were so frustrated by the delay that the U.S. head of reconstruction in Iraq, retired Rear Adm. David J. Nash, reportedly threatened to resign in December.

The resolution of the dispute means that the U.S. military will have chief control over rebuilding in Iraq, even after its command of the U.S.-led occupation ends, said officials who spoke on the condition of anonymity.

Starting this week, about $5 billion worth of contracts are to be awarded to 17 companies for projects in seven sectors, said Steven Susens, a spokesman for the Program Management Office, which is overseeing the funds for the coalition authority.

He said 10 more big construction projects will be handed out later this month and that his office expects to complete 2,300 projects in the next four years.

The decision gives the Defense Department a much larger role in shaping the reconstruction of Iraq.

The Pentagon currently controls Iraq through its mainly civilian proxy, the Coalition Provisional Authority (CPA), which is led by L. Paul Bremer.

Previously, the CPA’s portfolio was expected to be handed to the State Department and run by staff of a future American Embassy here, restricting the U.S. military’s role to mainly peacekeeping.

But now, U.S. officials said, the CPA’s Program Management Office probably will stay on after Iraqis take power and will answer to the Army’s offices in Washington, not Secretary of State Colin L. Powell.

“We needed an agency that could manage this at the Washington, D.C., level so it was decided that the Army would do this there,” a CPA official told reporters yesterday. He asked that his name not be used.

He also said despite rock-bottom wages for Iraqi construction workers, the cost of construction in Iraq is expected to be higher than comparable building work in the United States.

Ten percent of the construction funds will be eaten up by security measures safeguarding building sites and workers from attacks by anti-U.S. guerrillas, the official said. Companies also will have to pay to house and feed workers.

Planners expect rebuilding to touch the life of every Iraqi, providing electric power, clean water and sewage treatment, while fixing the tattered oil industry — all of which have been ravaged by three wars, a dozen years of U.N. sanctions and neglect.

By summer, the flow of dollars is expected to turn Iraq into one of the world’s largest construction sites. U.S. officials hope the revitalized infrastructure forms the bedrock for the Middle East’s most freewheeling economy.

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