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Planned $1.2b in aid would make small dent in Iraq needs

Electricity and oil demands not met

Iraqis sat inside a mud house at a Baghdad camp for displaced people, forced out by sectarian conflict and severe weather. (AHMAD AL-RUBAYE/AFP/Getty Images)

NEW YORK -- The extra billion dollars of reconstruction aid in President Bush's Iraq plan won't go far in a country where electricity output still barely meets half the demand and oil production is falling short by almost a million barrels a day.

And a companion part of the plan, to expand US aid teams scattered across Iraq, may falter because of a shortage of volunteers. Some say the ordering of civilian US government employees into the war zone may be necessary , as was done for Vietnam.

"The fact of the matter is that the State Department has had a hard time filling current manning levels on these teams," said retired Major General William Nash, a specialist in postwar reconstruction at the Council on Foreign Relations.

The bulk of US reconstruction aid came in 2003-2005, when almost $22 billion poured into Iraq. As violence spread, some aid was diverted to Iraqi army and police forces, and much of the rest was spent on private security for rebuilding projects. Specialists had estimated Iraq needed $55 billion to recover from war, mass looting, and years of economic deterioration.

By this 2007 fiscal year, new reconstruction aid had dwindled to $750 million. On Wednesday night, Bush proposed adding $1.2 billion to that. By comparison, Washington is spending roughly $100 billion a year on the war .

"It is symbolic, at best, and is unlikely to have substantial impact in Iraq," Gordon Adams, a budget specialist at Washington's Woodrow Wilson Center, said of the Bush aid proposal.

In its December recommendations, the Iraq Study Group had called for boosting US reconstruction assistance to $5 billion a year.

For electricity , Iraq needs $27 billion to fully rebuild the grid to meet growing power needs, Baghdad's Electricity Ministry estimates. In a new Iraq oversight report, the US Government Accountability Office said Iraq's electricity demand averaged 8,210 megawatts last year, but peak generation reached 4,317 megawatts. Baghdad residents got six hours of power a day on average last summer.

The US reconstruction effort added more than 2,000 megawatts of generating capacity to a system that produced 4,200 before the 2003 US- led invasion. But the grid has been crippled by toppled transmission towers and other sabotage, insurgent attacks, looting, poor maintenance, and poor planning.

The Government Accountability Office reports that 16 of 35 gas turbines the Americans installed in Iraqi power plants -- even though Iraq lacks an extensive natural gas network -- are using crude oil or other low-quality fuels, producing as little as half the rated power and causing frequent shutdowns.

"Why did the United States purchase natural gas turbines to generate electricity when the necessary supply of natural gas was not assured in Iraq?" the auditors asked.

Iraq's funds for reconstruction must come from oil exports, but the Government Accountability Office reported that production still falls 900,000 barrels a day short of the US goal of 3 million barrels, and far short of Iraq's production peak of 3.7 million in the 1970s.

Oil's problems are similar to electricity's -- insurgents, sabotage, maintenance -- but the government oil companies also are afflicted by widespread corruption. The Government Accountability Office reported up to 30 percent of Iraq's fuel products are smuggled out of Iraq or into the local black market.

Meanwhile, as of last August the Oil Ministry had spent almost none of its $3.5 billion capital budget for 2006 because of weak financial management systems, the Government Accountability Office said.

As for the US aid coordinators sent out to Iraqi provinces, called Provincial Reconstruction Teams , the State Department said it would deploy several hundred additional civilian advisers for that often-dangerous work .

In an October report, government auditors found that, because of poor security, four of 13 reconstruction team and satellite offices were "generally able" to do their work.