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Report Measures Shortfall in Iraq Goals
Shifting of Funds Blamed For Abandoned Projects

By Jonathan Finer
Washington Post Foreign Service
Friday, January 27, 2006

BAGHDAD, Jan. 26 -- The United States will not complete hundreds of basic water and electricity projects planned after the 2003 invasion because more than $3 billion was shifted to meet unanticipated security and other needs, according to a U.S. government audit of reconstruction spending in Iraq issued Thursday.

In polls and everyday conversations, Iraqis routinely describe the lack of basic services such as clean water and a steady supply of electricity as perhaps the biggest problem facing the war-ravaged country, ranking it alongside -- and often ahead of -- insecurity and persistent insurgent violence.

But with slightly less than 20 percent of the government's $18.4 billion reconstruction budget unallocated, and the Bush administration not planning to seek more such funds in the budget request going before Congress next month, "some of the original goals will not be fully achieved in some sectors," according to the audit produced by the office of the special inspector general for Iraq reconstruction.

"The United States' reconstruction efforts have shown tangible results in improving the Iraqi infrastructure," Inspector General Stuart W. Bowen Jr. wrote in the report, some of which he previewed in testimony to Congress last year but much of which was presented for the first time Thursday. "However, the significant funding change means that many of the originally planned projects will not be completed."

As much as 60 percent of all projects aimed at improving Iraq's water supply, including work on sewer systems and drinking water supplies, will remain unfinished because more than $2.1 billion originally allocated to that purpose was shifted away, according to the report.

Projects related to drinking water that were expected to benefit about 8 million people will now benefit about 2.75 million, the report said. And only two of 10 planned sewerage projects will be completed, though they will serve an additional 4.5 million people.

More than 125 of a planned 425 electricity projects will also be left unfinished, a total that reflects a steep reduction, announced previously by U.S. officials, in the goal for increasing Iraq's generating capacity. Plans for four gas-powered generating plants and a diesel plant were canceled, as officials reallocated about $1.25 billion in funding. "The system is inadequate to meet Iraq's growing demand and lacks any measure of reliability," the report said.

Another $450 million was shifted from projects to develop the country's oil sector, which was once expected to fund the reconstruction on its own but now produces less than 2 million barrels a day, below prewar levels.

Bowen has referred to the gulf between the aims of U.S. reconstruction officials and what they will be able to accomplish, a shortfall not previously quantified in an audit, as the "reconstruction gap." Much of the discrepancy stems from higher-than-expected costs to provide security for projects. The audit said roughly 16 percent to 22 percent of each project's budget went toward security, including providing armored vehicles and trained security teams with communications equipment -- 9 percent more than anticipated.

"The original CPA planners envisioned a much more permissive security environment than that experienced in 2004 and 2005," the report said, referring to the Coalition Provisional Authority, the U.S.-led body that administered Iraq after the invasion. "The Iraq insurgency has directly affected the cost of reconstruction projects, increased the cost of materials and created project delays."

Reconstruction officials shifted a total of nearly $2.7 billion to the cost of training and equipping Iraqi security forces, securing the country's porous borders and helping fund elections and build political institutions.

More than $1.1 billion of that money went to training Iraq's police force, whose ranks swelled to address security needs in restive cities, and to building a network of 99 border forts equipped with metal detectors and X-ray technology, along with 16,000 additional border guards.

Just under $900 million was added to so-called democracy-building activities, many of them associated with the three nationwide elections conducted here this year.

Bowen said reconstruction planners underestimated the intensity of the insurgency and the damage done over the years to the country's infrastructure, and also failed to set aside money to sustain projects once they were turned over to the Iraqi government. But he also acknowledged that obtaining more accurate information "would have been difficult prior to the end of combat operations."

In Baghdad, where many of the midstream changes in spending priorities were initiated, officials said the decisions were a necessary response to an evolving situation.

"The U.S. continues to fund, and will complete, all projects that are under construction," said Roberta Rossi, a spokeswoman for reconstruction officials in Iraq. "The U.S. has adapted the [reconstruction] spending to the evolving needs of Iraq and in response to changing external requirements and security constraints."

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