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Unrest unravels US goals in Iraq

Security costs siphon funds for projects, audit says

WASHINGTON -- The US government will complete just a fraction of the planned massive reconstruction projects in Iraq before $18.4 billion in federal funding runs out next year, according to a government audit released yesterday.

The audit by the special inspector general for Iraq reconstruction, which oversees the rebuilding budget, states that only 49 of 136 planned water projects will be finished by 2007, the deadline Congress has set for the allocation. About 300 of 425 electricity projects will be done by then, according to the audit.

Projects addressing water and sewer problems and electricity shortages had initially attracted the largest US commitment among public works projects.

The audit was among several others examining allegations of corruption, mismanagement, and lackluster planning in the reconstruction program.

Yesterday, State Department officials defended their reconstruction efforts, saying the deadly insurgency forced them to shift money that had been set aside for reconstruction to pay for more urgent priorities, such as building an Iraqi security force and promoting democratic governance.

But critics said the government's decision to take on the massive job of rebuilding Iraq's badly-damaged infrastructure -- a project of a scale not seen since the reconstruction of Europe after World War II -- was ill-conceived from the beginning.

''We should have gone into Iraq with a more limited set of promises," said James Dobbins, who served as President Bush's special envoy to Afghanistan and who now directs the Center for International Security and Defense Studies at the Rand Corp. ''We should have gone in saying [to Iraqis], 'We are going to let you chose your own government, and if you work hard, and that government makes wise choices, you'll eventually have a better life.' Instead, we made a series of implicit promises to the Iraqi people of more electricity, better water, other improvements in the quality of life."

The United States' failure to keep those promises, Dobbins said, ''will have an undoubted impact on American credibility" among Iraqis.

Although the audit said fighting the guerrilla insurgency has consumed increasingly large chunks of the reconstruction budget, there were other significant reasons the plan will fall short of its goal.

Some of the initial plans for reconstruction ''were hurriedly put together with little knowledge of actual conditions at proposed project sites," according to the audit. The United States also did not set aside enough money for the administrative expenses of the Coalition Provisional Authority and for the agencies that took over after the CPA was dissolved. Those expenses cost about $785 million, although in 2003 no money was budgeted for them.

US officials also failed to budget for the cost of sustaining and maintaining completed projects, on the assumption that the nascent Iraqi government could immediately fund them, the audit said. As a result, the report said, US officials have been forced to re-route $775 million from the new construction budget to keep completed projects up and running.

It's difficult to assess how the failure to complete the projects will affect ordinary Iraqis, the audit said.

In a nation where power is rationed and blackouts are common, the United States will fall well short of its target of adding 3,400 megawatts of electricity to the system, and half of the money set aside for water projects has been diverted to other priorities, according to the audit. As a result, the goal of bringing clean water to 4 million Iraqis has been reduced to about 2.75 million; about 40 percent of Iraq's 26 million people didn't have access to clean water in 2004, the audit said.

In all, about a third of the $18.4 billion appropriated by Congress in November 2003 is being spent for something other than what it was originally intended, the audit said. Billions of US dollars were siphoned away from infrastructure projects to bolster security and pay for the promotion of democracy.

In the earliest days of the US occupation, the reconstruction plan emphasized the large-scale infrastructure projects, but that changed as the insurgency increasingly threatened national stability. The US government decided to hand over control of the country to Iraqis ahead of schedule and put more money into training and assistance programs to help them create a government.

Recently, Zalmay Khalilzad, the US ambassador to Iraq, said $1 billion in reconstruction money should be frozen until the newly-elected Iraqi government can have a say on how the money would be spent.

The shift in US priorities has meant the cancellation of many projects that were still on the drawing board. In other cases, projects were halted in the middle of the work, after millions of dollars had already been spent.

For example, in western provinces, a project to fix six dams that would provide water for people and livestock ended after just one dam was repaired, even though the US government paid for designs and engineering studies of three other dams. Originally budgeted at $125 million dollars, the project cost $62 million.

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