Bush Considers Economic Package for Iraq
Officials Describe the Initiatives as Part of a Series of Steps Designed to Counter Insurgency

By Michael Abramowitz and Robin Wright
Washington Post Staff Writers
Friday, December 29, 2006

CRAWFORD, Tex., Dec. 28 -- As he puts the finishing touches on his revised Iraq plan, President Bush is considering new economic initiatives to go along with a possible increase in troops to help stabilize the country, according to officials familiar with the administration's review.

Among the steps being considered are short-term jobs and loan programs aimed at winning back the waning local support for the U.S. presence in Iraq, the officials said. They described the ideas as part of a classic effort to quell an insurgency through a combination of economic, political and military means.

"The president is looking at a variety of ways to work with the Iraq government to provide new economic opportunities for Iraqis, which will be essential to sustaining security gains and draining the influence of extremists," said Gordon Johndroe, the spokesman for the National Security Council.

That view underscores how Bush is looking beyond just military issues as he gears up for one, potentially final, try to achieve stability in Iraq. Officials said economic and political issues were among the key elements discussed Thursday when Bush huddled here with his top national security advisers to discuss the situation in Iraq.

The president emerged after three hours to tell reporters that he has made "good progress" on developing a new plan to stanch sectarian violence and strengthen the Iraqi government. But he said that he intends to hold more consultations with Iraqi leaders and U.S. lawmakers before formally unveiling his plan sometime next month.

"The plan is taking shape," said one senior administration official who briefed reporters outside the president's ranch, where Bush is spending the holidays.

The senior official said Bush heard an extensive presentation about military conditions in Iraq from Robert M. Gates, the new defense secretary, and Marine Gen. Peter Pace, the chairman of the Joint Chiefs of Staff, who had just returned after their fact-finding mission there. One idea gaining currency in the administration is to send between 15,000 and 30,000 additional troops to Iraq, at least on a temporary basis, to help improve security, but there are questions among senior military leaders about how effective this move would be.

The Pentagon has pressed for political and economic plans to complement such a possible surge in troops.

The political component of the emerging Bush package would set up benchmarks for long-overdue steps, such as amending the constitution to help address the objections of Iraq's Sunni minority and dismantling 23 predominantly Shiite militias. But it is unclear whether the Iraqi government would go along with such milestones, which were among the recommendations of the Iraq Study Group.

Some U.S. officials think an economic package may be the most promising element of a revised strategy, since it would deal with the Iraqis' deteriorating conditions and growing disillusionment with the U.S. intervention. Others, however, have severe questions about whether such a package would work almost four years after the American invasion and after previous botched efforts to stimulate economic activity.

The economic package now on the table focuses on three elements, and is separate from the long-term jobs-creation program being promoted by the U.S. military. One senior official cautioned that all three elements have been discussed in some manner but that the final package has not been determined.

One element, traditionally linked to a counterinsurgency strategy, is to follow up any military sweep with a short-term work program that would immediately hire people in the neighborhood to clear up trash or do other small civil-affairs jobs.

This project would begin within hours rather than days of a military operation and would help signal a return to normalcy. It might also help wean young unemployed Iraqi men from the militias or prevent them from joining any of the armed factions that are fueling Iraq's escalating sectarian strife.

The second part would be a micro-loan program -- involving modest loans to help individuals get businesses going -- to generate new economic activity in poor neighborhoods. Unemployment is worse today than during the rule of Saddam Hussein, Iraq's ousted leader.

The third part of the package, which has been developed in part by the Treasury Department, would review dormant state-owned industries to try and determine which ones are economically viable and worth reopening. The package would be a shift from the large-scale and long-term development projects that, in the past, relied heavily on Western contractors and expertise.

In brief comments to reporters here, the president made clear that the focus of his review is to strengthen the government of Iraqi Prime Minister Nouri al-Maliki, which has been struggling to quell militia violence and bring about political reconciliation between Sunnis and Shiites.

"The key to success in Iraq is to have a government that's willing to deal with the elements there that are trying to prevent this young democracy from succeeding," Bush said. "We want to help them succeed."

Bush, clad in an open-neck shirt and sport jacket, was flanked by Gates and Pace, as well as by Vice President Cheney and Secretary of State Condoleezza Rice. Joining the five at Thursday's meeting were White House Chief of Staff Joshua B. Bolten, presidential counselor Dan Bartlett, national security adviser Stephen J. Hadley and his deputy, J.D. Crouch, who is managing the White House's Iraq review.

Administration officials said they expect the president to unveil his full plan for Iraq sometime in the early part of January, but Bush and his advisers made clear that more consultations are planned with U.S. lawmakers and Iraqi leaders -- and that there could well be another meeting of the National Security Council before the plan is released.

"I fully understand it's important to have both Republicans and Democrats understanding the importance of this mission," Bush told reporters.

Wright reported from Washington.

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