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State Dept. faces skyrocketing costs as it prepares to expand role in Iraq

By Karen DeYoung and Ernesto Londoño
Wednesday, August 11, 2010; A01

As the last U.S. combat troops prepare to leave Iraq this month, the State Department is struggling to implement an expanded mission that it has belatedly realized it might not be able to afford.

Beginning in September, the State Department will take over all police training in Iraq from coalition military forces, and it has proposed replacing its current 16 provincial reconstruction teams spread across the country with five consular offices outside Baghdad.

But since planning for the transition began more than two years ago, costs have skyrocketed and the money to pay for them has become increasingly tight. Congress cut the State Department's Iraq request in the 2010 supplemental appropriation that President Obama signed late last month; the Senate Appropriations Committee and a House subcommittee have already slashed the administration's $1.8 billion request for fiscal 2011 operations in Iraq.

Gen. Ray Odierno, the outgoing commander of U.S. forces in Iraq, and other U.S. officials are urging lawmakers to reconsider their plans, citing concerns that waning resources could jeopardize tenuous security gains.

"We can't spread ourselves so thin that we don't have the capacity to do the job in the places where we put people," said Deputy Secretary of State Jacob Lew, who has told Congress that State will not deploy civilians where it cannot protect them. "If we don't put people in a place where they have mobility, where they can go out and meet with the people and implement their programs," he said, "there's very little argument for being in the place we send them."

The State Department has signaled in recent weeks that it will need up to $400 million more than initially requested to cover mushrooming security costs, but lawmakers seem in no mood to acquiesce.

"They need a dose of fiscal reality," a senior Senate aide said, speaking on the condition of anonymity amid ongoing negotiations over the State Department funding.

"If they miscalculated by hundreds of millions of dollars, they need to tell us where they propose to find the money," the aide said. "It's not going to come from [funds allotted to] Afghanistan or Haiti."

Lew, at the Center for Strategic and International Studies last week, indicated that State might be forced to revise its plans, including limiting the number of police-training facilities to fortified, central locations in major population areas. "That means there will be other places that we don't have a police-training capacity," he said, although "anyone who has done police training in difficult environments knows that it's much better to be out in the field, working one-on-one, than to do classroom training."

Other officials have said that at least one of the "embassy branch" offices, or consulates, will have to be eliminated, most likely in Diyala province, and that at least two others will have to be scaled back.

To undertake unprecedented tasks in what is still a highly dangerous environment, the State Department plan calls for replacing protection for civilians that the U.S. military now provides with what amounts to its own armed force. It proposes to triple the current 2,700 security contractors and reinforce facilities where diplomats and police trainers will work to specifications beyond what the military considers safe for its own personnel.

To transport civilians around Iraq, including medical evacuation if necessary, State has asked the Pentagon to leave behind two dozen UH-60 helicopters and 50 bomb-resistant vehicles, heavy cargo trucks, fuel trailers and high-tech surveillance systems -- all of which are to be maintained and operated by contractors yet to be funded. Pending since April, the requests were still under military consideration as of this week.

"We don't have a yes, and we don't have a no," Undersecretary of State for Management Patrick F. Kennedy said, adding that "a good dialogue" was underway. If the military does not provide the equipment, he said, it will have to come at an "enormously expensive" price from contractors.

The administration and Congress disagree over whether the State Department is asking for additional funds or for a reallocation of what it has already requested. To some extent, the question is irrelevant, because Lew, now Obama's nominee to head the Office of Management and Budget, warned appropriators that if there was no more money for State's operations budget, it would have to be taken out of development assistance programs in Iraq and elsewhere.

"So now you have security, but no programs," a senior House aide said, also speaking on the condition of anonymity. "That's what drives us nuts about them. They screwed this one up, and we have to fix it."

Congress hasn't bought the argument, first articulated by Secretary of State Hillary Rodham Clinton when she introduced the budget in February, that State's Iraq proposal is a bargain compared with the $16 billion overall the U.S. government will save in reduced military costs after a reduction to 50,000 U.S. troops at the end of this month.

While defense appropriators are used to such funding levels, they are astronomical to lawmakers overseeing the State Department, whose global operations budget request totals about $16 billion for 2011. An additional $36 billion has been requested for worldwide foreign assistance programs.

But even the defense committees are balking at what Defense Secretary Robert M. Gates has called an unsustainably bloated Pentagon budget and continued expenditures for Iraq. The military's request for $2 billion to equip and bolster the Iraqi armed forces next year -- on top of $18 billion spent since 2003 -- was cut in half by the Senate Armed Services Committee this summer. Defense officials have asked for the decision to be reconsidered.

"They've got a surplus of oil revenue," Sen. Carl M. Levin (D-Mich.), whose Armed Services Committee halved to $1 billion the Iraq military equipment request, said in an interview last week. "And we've got a tight budget here. Connect that with the fact that we've got a damned big budget deficit of our own. A billion dollars seems to me to be a very generous contribution."

In an interview, Odierno said there was a "misinterpretation that Iraq has this huge amount of wealth now," adding that it is unlikely the country will substantially boost its output of crude oil before 2013.

Money for the Iraqi military is important, he said, to help "mitigate the risks associated with U.S. forces leaving." The 50,000 U.S. troops who will remain in Iraq after Sept. 1 are due to leave by the end of next year.

Officials in Washington said that the Defense and State cuts were interconnected in several ways, including the expectation that the Iraqi military could assist in providing security for an increased American civilian presence as the U.S. military relinquishes that task.

But while Iraqis are providing some help, officials said they were not yet comfortable depending on them. "We want to work with both the Iraqi army and the Iraqi police in bolstering our security," a senior administration official said. "That has to be worked out in terms of the availability of trained personnel, and it will take time to achieve it.

"I'm not saying it's never going to happen. I'm just saying it's not going to happen tomorrow."

Londoño reported from Baghdad.

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