Iraq's Odious Debts

Washington to spend less on Iraq aid, more on police, business, debt

Brian Dominick
The New Standard (U.S.)
September 17, 2004

At a Senate Foreign Relations Committee hearing yesterday, representatives from the State Department defended their request to reallocate almost $3.5 billion within the $18.4 billion set aside by lawmakers for Iraq’s reconstruction.

Originally, $4.2 billion of the reconstruction funds were earmarked for reconstituting Iraq’s police and other security forces, with the remaining $14.2 billion to be spent on rebuilding other infrastructure, including crucial utilities. Without claiming it has used up the already substantial portion reserved for security, the State Department is proposing to take money from elsewhere in the reconstruction budget.

In explaining the necessity of the request, Marc Grossman, the US undersecretary of state for political affairs, argued that “without a significant reallocation of resources for the security and law enforcement sector, the short-term stability of Iraq would be compromised and the longer-term prospects of a free and democratic Iraq undermined.”

A Republican senator, Richard Lugar of Indiana, countered that security and rehabilitation must take place simultaneously. “If the shift of these funds slows down reconstruction,” he said, “security may suffer in the long run.”

At a press conference on Tuesday, the State Department’s Iraq assistance coordinator, Ambassador Robin Raphel, told reporters the effect of these cuts would be negligible, since “the projects that are being deferred… were scheduled to start a year from now.” Raphel concluded, “So, you see, the immediate impact won’t be felt by the Iraqis because they were down the line in the scheduling process.”

Raphel also tried to alleviate concerns that slashing the portion of funds allocated for water and sewage in half, and those intended for electricity reconstruction by 20 percent, would mean necessary work will go undone. “I really do believe either the Iraqis or somebody else will do [the work],” Raphel said, though she laid out no plan for how that might occur.

Meanwhile, much of Iraq continues to suffer massive electricity outages, near catastrophic water shortages and deadly inadequate sewage treatment capacity. By most accounts, Iraq’s hospitals are in turn grossly undersupplied and unable to respond to what the United Nations and many nongovernmental organizations have termed a humanitarian crisis enveloping some parts of the country, with curable diseases claiming victims in Iraq’s poorer towns and neighborhoods.

Though there was no indication that members of the Foreign Relations Committee would deny the reallocation request, Republican and Democratic senators alike expressed outrage and disappointment over what they saw as an admission that plans for rebuilding Iraq’s infrastructure – left tattered by years of strict sanctions and US-led warfare – is in a state of failure.

Noting that only six percent of approved funds – about $1.1 billion, according to State Department figures – has been spent on rebuilding Iraqi infrastructure, Senator Chuck Hagel (R-Nebraska) said, “It’s beyond pitiful; it’s beyond embarrassing – it’s now in the zone of dangerous.”

Talking to reporters earlier this week, Iraq’s planning minister, Mehdi Hafedh, estimated that a mere $700 million of allocated funds had been spent on reconstruction, which he confirmed was “below the level [of spending] planned.” He also said the Iraqi government would indeed look elsewhere for funds. Replacing almost $3.5 billion would be “high on the agenda” at a donors’ conference to be held in Tokyo next month.

In related development, the European Union’s external relations commissioner, Chris Patten, told Agence France-Presse Wednesday that the EU is hoping to secure about $243 million by November for Iraqi reconstruction needs, to be delivered in 2005. However, Patten warned, “The hazardous security climate . . . obviously limits the pace of disbursement.”

State Department representatives said $1.8 billion diverted from critical infrastructure projects will be used to train, equip and pay tens of thousands of new Iraqi security personnel, including police officers, border patrol units and oil industry guards.

Additionally, $450 million that had been earmarked for purchases of refined oil will be reinvested into capacity-building projects for oil production operations in Iraq’s northern and southern oil fields, the State Department told the Senate and reporters. Still more money – about $360 million – will reportedly be diverted from critical humanitarian work to pay off debt owed to the United States.

Another $666 million will be devoted to job creation programs and private sector economic development, more than quadrupling the original fund set aside for those areas.

A State Department press spokesperson contacted by The New Standard was unable to explain why debt repayment is more of a priority than clean water, or why the State Department is already requesting more money for programs that have hardly been dipped into thus far. He was also unable to say what portion of funds originally allocated for security purposes has been spent, but promised to provide the answers later.

How much of an actual security gain the reallocation will constitute is up in the air. So far, more than $4 billion has been committed to training and paying Iraqi police and security forces, yet such units continue to suffer fierce guerilla attacks, high rates of desertion and defection to the resistance, as well as insufficient training and equipment, according to numerous US and Iraqi government sources.

How much of a loss the State Department’s proposed reallocation would actually constitute is also unknown, as the money originally allocated by Congress already fell dramatically short of the $55.3 billion estimated to be required for reconstruction by a United Nations-World Bank joint needs assessment released last October. Additionally, numerous independent observers have suggested that even the limited funds spent so far on Iraq’s reconstruction have been drastically mismanaged.

A report released earlier this month by the International Crisis Group (ICG), a liberal think tank based in Brussels, condemns US-led reconstruction efforts in Iraq to date, saying the former Coalition Provisional Authority handed a “fragile, dysfunctional legacy” to the interim Iraqi government dominated by Western-friendly former exiles in June. The ICG report blasts the United States for a lack of planning, and for ignoring Iraqi input when setting up the reconstruction effort.

Over the past several months, similar critiques have arisen from various quarters concerned about social instability and mismanagement of funds in Iraq, including the United States’ own General Accounting Office and the White House Budget Office.

Another group to recently release a report slamming the Bush administration’s handling of the occupation was the Center for Strategic and International Studies (CSIS), a centrist think tank based in Washington, DC. CSIS was also quick to respond to the proposed reshuffling. “This reprogramming exercise is a recognition that [former occupation chief L. Paul] Bremer, the [Coalition Provisional Authority] and the US military got the first year of the Coalition occupation in Iraq fundamentally wrong,” Anthony Cordesman, an analyst at CSIS, told the New Zealand Herald.

Cordesman also said the decision was “a de facto recognition that the neo-conservatives’ goals . . . for restructuring Iraq can never be achieved,” referring to several figures inside the Bush administration identified as particularly hawkish on foreign policy.

In a separate instance of officials chipping away at money set aside for Iraq’s reconstruction, the Senate Appropriations Committee on Wednesday ordered $150 million of the allotted funds to be diverted to aid victims of famine and bloodshed in the Darfur region of Sudan.

As if to top off the midweek gloom, the New York Times website reported Wednesday night that a newly completed, 50-page “National Intelligence Estimate” portrays Iraq’s future as decidedly bleak. According to “government officials” familiar with the document but not named by the Times, the report is the first of its kind since October 2002, and its findings are described as “pessimistic.”

Commissioned by the CIA and carried out by the National Intelligence Council, the Estimate reportedly presents a best-case scenario wherein Iraq remains politically and economically tenuous, and continues to undergo security problems. At worst, the Associated Press reports from its own anonymous sources, echoing the sentiments expressed by a growing number of analysts lately, the Estimate says a civil war is brewing in Iraq.

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