Security costs slow Iraq reconstruction

By Renae Merle and Griff Witte

updated 7:18 a.m. ET July 29, 2005

WASHINGTON - Efforts to rebuild water, electricity and health networks in Iraq are being shortchanged by higher-than-expected costs to provide security and by generous financial awards to contractors, according to a series of reports by government investigators released yesterday.

Taken together, the reports seem to run contrary to the Bush administration's upbeat assessment that reconstruction efforts are moving vigorously ahead and that the insurgency is dying down.

The United States, Iraq and international donors have committed more than $60 billion to run Iraq and revive its damaged infrastructure. But security costs are eating away a substantial share of that total, up to 36 percent on some projects, the Government Accountability Office reported yesterday. The higher security costs are causing reconstruction authorities to scale back efforts in some areas and abandon projects in others.

Security costs limit progress
For instance, in March, the U.S. Agency for International Development canceled two electric power generation programs in order to provide $15 million in additional security elsewhere. On another project to rehabilitate electric substations, the Army Corps of Engineers decided that securing 14 of the 23 facilities would be too expensive and limited the entire project to nine stations. And in February, USAID added $33 million to cover higher security costs on one project, which left it short of money to pay for construction oversight, quality assurance and administrative costs.

"If we didn't have a bunch of extremists running around trying to derail the progress of the Iraqi government and the Iraqi people and the coalition, the amount of money spent on security would be far less," said Lt. Col. Barry Venable, Pentagon spokesman. "It is a fact of life, one which cannot be wished away."

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Heather Layman, spokeswoman for USAID, said security accounts for an average of 22 percent of a project's cost in Iraq. "We are making some really important and good progress in this challenging environment," Layman said. "Security is part of the cost. But we're doing things like providing clean water and power and building schools."

The new reports were released to Congress yesterday. They were compiled by the GAO and the Office of the Special Inspector General for Iraq Reconstruction, which was created to monitor the rebuilding process.

GAO investigators did find some bright spots: "The U.S. has completed projects in Iraq that have helped to restore basic services, such as rehabilitating oil wells and refineries, increasing electrical generation capacity, restoring water treatment plants, and reestablishing Iraqi basic health care services," the report's authors concluded.

In other areas, developments were less auspicious.

Despite $5.7 billion committed to restoring electricity service in Iraq, power generation was still at lower levels as of May than it had been before the U.S. invasion in 2003. In one case, the GAO reported, the United States led an overhaul of an Iraqi power plant but then did not adequately train the Iraqis how to operate it. A widespread power outage resulted.

Crude oil production has also dropped in the past two years, even with more than $5 billion in U.S. and Iraqi funds available for rebuilding. Oil export revenues are needed to fund more than 90 percent of the nascent Iraqi government's 2005 budget, the State Department has said.

"It's quite clear that we've got massive amounts of taxpayer money funneled into Iraq, with very little oversight and a substantial amount of waste and abuse," said Sen. Byron L. Dorgan (D-ND). "These are very discouraging reports."

Dorgan said the high costs associated with providing security are particularly troubling.

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