Agencies Tangle on Efforts to Help Iraq
Staffers Say Spats Displace Priorities

By Rajiv Chandrasekaran
Washington Post Staff Writer
Sunday, March 11, 2007

As violence in Iraq crescendoed last year, President Bush summoned his secretaries of agriculture, commerce and energy to Camp David in June to meet with his national security team. During a two-hour afternoon discussion in the main lodge, the president urged the three secretaries to become more involved in the Iraq reconstruction effort.

When Commerce Secretary Carlos M. Gutierrez got back to his office, he asked his staff members to develop a list of Iraq-related projects for the agency. They did, and two months later, they shared it with the U.S. Embassy in Baghdad, expecting that diplomats on the ground would welcome a little help from Washington.

Instead, the document, "Secretary Gutierrez's Five Priority Areas for Economic Reform in Iraq," set off a bureaucratic grenade in Baghdad's Green Zone. The second item on the list called for the United States to pressure Iraq's government to cease providing people with monthly food rations, which more than half of Iraq's population relies on for sustenance.

Embassy officials were incensed. Although the embassy's economists favored changes to the ration system, they believed that dismantling it as Commerce was proposing could spark riots that might topple the Iraqi government.

"Commerce was stunningly naive," said a senior State Department official involved in Iraq policy. "They were way out of their lane."

The dispute between Commerce and State illuminates the rivalries that have cropped up within the U.S. government as the White House seeks to involve more parts of the federal bureaucracy in the reconstruction of Iraq. Instead of collaborating, agencies have often found themselves split by the gulf between idealistic officials in Washington, some of whom have never been to Iraq, and embassy staffers whose ambition to promote change has been attenuated by the violence and dysfunction they witness every day.

The disagreements often center on arcane subjects -- such as tariff policy or the rehabilitation of state-owned enterprises -- but the impact can be profound, according to people on both sides of the fights. Embassy staffers said they have wasted countless hours squabbling with Washington instead of focusing on more urgent initiatives to stabilize Iraq. In one incident, as the bickering between Commerce and State intensified, the embassy blocked a team of Commerce officials from entering the country.

Some at Commerce regard embassy staffers and their bosses at the State Department as ungrateful and unwilling to embrace others' ideas -- even as Secretary of State Condoleezza Rice pleads with other federal agencies to send more people to Iraq. "We were willing to help, as the president asked us to do, but the State Department feels that it has control of the situation," said a senior Commerce official involved in the food-ration policy.

Officials at State contend that they do want other federal departments to assist in Iraq, but they said they are less interested in policies that are developed by those agencies in Washington and imposed on Baghdad.

"The problem stems from this view at the White House that the whole Cabinet has to be involved," the senior State Department official said.

The result, an embassy official with direct knowledge of the food-ration debate said, is that "there are too many cooks in the kitchen."

* * *

Staffers in the embassy's economic section called Commerce's plan to end the rations a "zombie idea."

"It was one of those bad ideas that you think is dead, but it keeps coming up every nine to 12 months," the embassy official said. "And each time it comes up, the plan gets worse."

The proposal surfaced in late 2003, when L. Paul Bremer's Coalition Provisional Authority was running Iraq. Bremer's economic team believed that the monthly handouts embodied socialism at its worst, that they promoted corruption, wasted government money, discouraged domestic agriculture and interfered with the CPA's plans to promote capitalism.

Every Iraqi, regardless of need, has been eligible for the basic rations, which Saddam Hussein's government started doling out after the United Nations imposed trade sanctions following Iraq's 1990 invasion of Kuwait. The rations, almost all of which are imported, include wheat, rice, sugar, vegetable oil, salt, tea, cereal, soap and detergent.

It costs Iraq about $4 billion a year -- more than the U.N. World Food Program's global budget. And instead of providing vouchers for people to buy staples on the open market, the Iraqi government buys and hands out the food itself. Each year, more than 2 million metric tons of wheat are distributed by truck across the nation.

Bremer's team wanted to cut off the rich and provide poor Iraqis with cash so they could buy the food they needed. The plan suggested giving Iraqis microchip-embedded "smart cards," even though most Iraqis had never used a credit card. Others in the CPA, including representatives from Britain, and the U.S. military objected, said people involved in the discussions. They argued that the risk of social unrest over problems with the transition was too great. Eventually, in the spring of 2004, the plan was scuttled.

In 2005, economists working for the embassy once again raised the idea. Once again, it was shot down by the military. By early last year, embassy officials assumed that the issue was dead.

Then, in August, they received the list of Gutierrez's priorities. Priority Two was to "dismantle the public food distribution system."

"The system is wasteful and creates a disincentive to produce," the document stated. Iraq's government "should press forward with a program to transfer the supply and distribution to the private sector."

The document was less detailed than the original CPA proposal and did not specify a deadline by which the change should occur, but it acknowledged that the effort would be "politically sensitive" among Iraqis.

It also proved to be sensitive among Americans in Iraq.

"Commerce was off the reservation," said a second embassy official with direct knowledge of the issue. The two embassy officials discussed the dispute in detail on the condition of anonymity because they were speaking without authorization.

The embassy's economic section fired off a classified cable to Washington stating that Commerce's priorities did not mesh with the economic section's priorities, the two officials said. "It was along the lines of, 'Thank you very much for your interest in this issue, however we think Commerce is best positioned to work on other areas,' " the first embassy official said.

But Commerce officials were undaunted. They believed their involvement had the support of Zalmay Khalilzad, the U.S. ambassador to Iraq, who welcomed Gutierrez when he visited Baghdad in July. And Bush himself had asked the Commerce Department to help with reconstruction.

"There were discussions at a high level between Washington and Baghdad," the senior Commerce official said. "The top level seemed to be in agreement with the economic priorities that the secretary had identified."

Commerce believed it was best suited to incubating private-sector food producers and distributors -- a key prerequisite to dismantling the ration system. "We are the agency that interacts the most with the private sector [in other countries], and certainly the private sector is key to any reconstruction and stabilization effort in Iraq," the Commerce official said.

The official said the document stating that Gutierrez wanted to "dismantle" the ration system was an "early draft." Now, the official said, the department simply wants to "reform" the system. But the two embassy officials said they never received follow-up documents from Commerce stating that the goal had changed.

* * *

In November, Susan Hamrock, the director of Commerce's Iraq task force, and one of her subordinates, Stephen L. Green, asked the embassy for permission to visit Baghdad. They wanted to meet the Iraqi minister of trade, whose department is responsible for the ration system.

In a highly unusual move, the embassy refused to grant them clearance to visit the Green Zone, the two embassy officials said. The senior Commerce official called the refusal "temporary" and said it was based on a lack of staffing at the embassy. The embassy officials said the clearance was denied because the economic section did not want Commerce officials meeting with Iraqi officials about the ration system.

But that did not dissuade Hamrock and Green. Within a few days, they learned that the minister and his deputy would be traveling to Brussels to meet with European Union officials. Hamrock and Green flew to Brussels to see the Iraqis. According to Hamrock's written summary of the meeting, they discussed changes in the ration system.

Since then, the Commerce official said, Hamrock and other Commerce officials have continued to discuss the ration system with Iraqi officials over the phone and by e-mail.

The minister and other Iraqi officials "fully support our efforts," the Commerce official said.

The trade minister, Abdul Falah al-Sudani, could not be reached for a comment.

Hamrock's boss, Franklin L. Lavin, the undersecretary for international trade, said in an interview that his department prefers "free-market solutions." Any tension between his department and the embassy, he said, "was part of a normal policy formulation process."

"It's natural to have a range of views," Lavin said.

* * *

Commerce was not the embassy economic section's only concern when it came to rations. Last fall, the embassy's Joint Strategic Planning and Assessment Office, headed by a Rand Corp. analyst on contract with the embassy, created its own plan to restructure the ration system. It was even more aggressive than Commerce's. It called for eliminating the rations in 38 weeks.

Once again, the economic section sounded the alarm, the embassy officials said. Because the strategic planning office had the ear of Khalilzad, the economic officers reasoned, they could not ignore the proposal. They had to fight it out.

The officers convened a working group composed of representatives from the economic section, the planning office, the U.S. Agency for International Development, the U.S. military command and the State Department's Iraq Reconstruction and Management Office. No Iraqis were invited, according to the two embassy officials.

Over the course of several meetings last fall, the participants who were not from the strategic planning office chipped away at the 38-week proposal. They eventually reached a compromise: The ration system would cease by the end of 2008 -- in more than 100 weeks.

To the embassy's economists, saying they wanted to kill the program in two years was an elaborate ploy, the embassy officials said. It would get them on the record as favoring major changes, but the timeframe almost certainly meant it would not happen. "Things in Iraq change every six months," the first embassy official said. "If you say you plan to do something in two years, it means you'll never do it."

Although embassy economists thought they had won that round, they found themselves in other battles. There was a tiff between the Office of the U.S. Trade Representative and USAID over the advice that U.S. contractors were providing to the Iraqis about setting tariff rates. More significant, however, was a dispute with Pentagon official Paul A. Brinkley over his plans to resuscitate shuttered government-owned businesses.

Brinkley wanted to get thousands of Iraqis back to work, on the assumption that keeping them busy would keep them from engaging in violence. But staffers in the economic section deemed it bad economic policy.

"We feel that private enterprise is a superior way to develop the economy of Iraq," one of the embassy's economic officers said. "We shouldn't be resurrecting these dinosaurs."

Brinkley, who was traveling in Iraq last week and could not be reached for a comment, has argued that investing in state-owned enterprises has the potential of helping to improve security in Iraq -- the most important goal of the U.S. government.

In the end, the embassy could not stop Brinkley. He had the support of senior Pentagon officials and top military commanders in Iraq. But the embassy is not bending over backward to help him, the economic officer said.

"We're letting him do his own thing," the officer said.

* * *

The ration working group outlined its policy in a two-page document sent to Khalilzad on Nov. 15. His deputy, Daniel Speckhard, raised the issue later that month with Barham Salih, one of Iraq's deputy prime ministers.

Iraqi government officials have told the Americans that they favor restructuring the ration system but that they do not intend to make big shifts anytime soon. Indeed, the only reform the Iraqi government has been willing to undertake has been to exclude senior government officials from receiving rations.

"It needs to be changed, but change has to be done after the security situation stabilizes," Abdul Hadi al-Hamiri, the deputy trade minister, said in a telephone interview.

But that has not stopped Commerce from pushing for reforms. Last month, Lavin traveled to Iraq to meet with trade ministry officials. His PowerPoint presentation included an exhortation to revise the ration system by providing handouts only to the needy.

The Iraqi officials present nodded in agreement. But that is about all they have done, embassy officials said.

"No Iraqi politician wants to get rid of free food. It's political suicide. They're not going to do it," said a former embassy official who worked on ration-related issues. "These grand schemes are irrelevant. I can't tell you how many hundreds of hours everyone has wasted on this issue, when there were all sorts of more productive things they could have been doing with their time."

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