Money as a Weapon

By Dana Hedgpeth and Sarah Cohen
Washington Post Staff Writers
Monday, August 11, 2008

In the five-year struggle to finish the war in Iraq, military leaders and their troops have said a particular weapon is among the most effective in their arsenal:

American cash.

Soldiers walk the streets carrying thousands of dollars to pay Iraqis for doorways battered in American raids and limbs lost during firefights. Sheiks appeal to commanders to use larger pools of money locked away in Humvees and safes at military bases for new schools, health clinics, water treatment plants and generators, knowing that the military can bypass Iraqi and U.S. bureaucratic hurdles.

Army documents show that $48,000 was spent on 6,000 pairs of children's shoes; an additional $50,000 bought 625 sheep for people described in records as "starving poor locals" in a Baghdad neighborhood. Soldiers ordered $100,000 worth of dolls and $500,000 in action figures made to look like Iraqi Security Forces. About $14,250 was spent on "I Love Iraq" T-shirts. More than $75,000 sent a delegation to a women's and civil rights conference in Cairo. And $12,800 was spent for two pools to cool bears and tigers at Zawra Park Zoo in Baghdad.

The money comes from the Commander's Emergency Response Program, which has so far spent at least $2.8 billion in U.S. funds. It is not tied to international standards of redevelopment or normal government purchasing rules. Instead, it is governed by broad guidelines packaged into a field manual called "Money as a Weapon System."

The program is intended for short-term, small-scale "urgent humanitarian relief and reconstruction." But as the broader $50 billion effort to rebuild Iraq with big infrastructure projects runs dry, CERP is by default taking on more importance as a reconstruction program, something it may not be equipped to do in a coordinated, nationwide way.

A review by The Washington Post of a government database detailing more than 26,000 CERP records, along with congressional documents and audits, plus interviews with troops and their commanders who have worked on the projects, reveals a program that has evolved beyond its original goals. It has often been used for large projects that can take years to complete, is largely divorced from other reconstruction efforts and lacks the structure needed for overseers to know how well the program works.

About $1 billion of the money spent so far has gone to 605 projects that exceed the Army's definition of "small scale," or more than $500,000 each. And $880 million was spent on projects that took longer than 6 months, considered the definition of "short term" by many commanders.

Government auditors have also found problems with record keeping. In one case, the Army couldn't fully account for $135 million in CERP payments. Auditors and other experts complain that they are unable to judge whether CERP is effective.

Soldiers and their commanders say the program works because there is little red tape, allowing them to fill immediate needs in their assigned towns and cities. On Capitol Hill and in the Pentagon, the program has become a "sacred cow," as one government auditor calls it. Few will openly criticize the popular program for fear of alienating the troops. CERP was recently given an additional $1.2 billion -- to be split between Iraq and Afghanistan -- according to a July report by the Office of the Special Inspector General for Iraq Reconstruction. That money brings the program's total to $3.5 billion. Lawmakers also have proposed to exempt it from restrictions on the spending for large reconstruction projects in Iraq in the future.

But after reports last week that the Iraqi government is running a budget surplus of up to $50 billion, two U.S. senators -- John W. Warner (R-Va.) and Carl M. Levin (D-Mich.), chairman of the Armed Services Committee -- have asked the secretary of defense to review CERP oversight and regulations and said they want Iraq to shoulder more of the rebuilding costs. Warner said he is particularly concerned about a $33 million hotel, office and retail complex at Baghdad International Airport, a project that he said is "far exceeding the purpose" of CERP.

"We never had in mind that it would be for major development," said Warner, who was one of the original supporters for funding CERP. "This was to help our troops fight the counterinsurgency and to help civilians get on their feet. It is looking like it is a bank for development."

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