Iraq's Odious Debts

Iraqi reconstruction efforts ‘rife with corruption and waste’

Thomas Catan and Jimmy Burns
Financial Times
January 24, 2005

The authors of a new report on post-conflict reconstruction have warned that efforts to rebuild Iraq have so far proved wasteful, ineffective and rife with corruption. The report, to be released in London today, was funded by the United Nations Development Programme and draws on examples of previous post-war efforts to rebuild countries including Bosnia, Lebanon and Sierra Leone.

The study, carried out by Tiri, the London-based governance campaign group, and the Lebanese chapter of Transparency International, has found that such reconstruction is viewed by much of the international community as a “state of exception” in which the normal rules of business conduct do not apply. The need to spend funds pledged for rebuilding makes it acceptable to bend the rules, award contracts without competitive tender and turn a blind-eye to profiteering and conflicts of interest.

The authors are particularly critical of donors’ tendency to use large western contractors to repair infrastructure damaged in the war, importing foreign personnel and equipment at a huge cost. In Iraq, that policy has proved disastrous, one of the authors said in an interview.

“I don’t believe there is anybody in Iraq that has the slightest confidence in the foreign contractors,” said Jeremy Carver, chairman of Tiri and co-chairman of the UK International Rescue Committee. “The foreign contractors have actually done very little work. They’ve just surrounded themselves with bodyguards. The people that have made money in Iraq are the security companies.”

Mr Carver, who as head of international law at Clifford Chance, was a frequent visitor to the region, said: “The ordinary Iraqi – even if they were passionately against Saddam and delighted to see him go – feel that there’s nothing left for them after 18 months of occupation. The Americans have brought them, precisely, nothing.”

The damning report follows growing criticism – both official and unofficial – of efforts to rebuild Iraq and Afghanistan. The UK’s Christian Aid and George Soros’ Iraqi Revenuewatch have said that billions of dollars in Iraq oil revenues have been spent on reconstruction with few discernible results.

A UN watchdog, the International Advisory and Monitoring Board, and the Coalition Provisional Authority’s own inspector general have also sharply criticised the former occupation authority’s handling of Iraqi oil funds for reconstruction projects.

Former CPA officials have argued that the general chaos and the urgent needs of the Iraqi people often forced them to take quick action and circumvent procedures to get things done. But the report says the strongest safeguard against waste, fraud and corruption is for international donors to reject the notion of a “state of exception” and to expect normal rules to be observed.

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