The Iraqi money pit- conflicting views

The U.S. built hospital was full of new equipment: x-ray machines, dialysis machines, even CAT scanners, but none of the Iraqis had been properly trained to use them. The expensive, desperately needed machines would eventually be scavenged for basic parts.

Complex oil drilling simulators, designed to train Iraqis how to tap their vast reserves, were delivered at a cost of a million dollars each. But the manufacturing company refused to send any advisors to Iraq, so Iraqi never learned how to assemble them. The simulators gathered dust in their shipping boxes for years.

(Two new refineries being constructed at Daura Refinery)

In a Nov. 20th article, Timothy Williams of the NYT lays out the cost to the U.S. taxpayer in reconstructing Iraq- $53 billion, so far. (Some claim the total reconstruction figure is closer to $114 billion including U.S., foreign and Iraqi funds, and projects still in progress.) Out of these totals, the article claims hundreds have millions have been wasted.

Taxpayer waste in Iraqi is an old theme, but revisited at a time when projects are supposed to be improving transferal of ownership to Iraqi counterparts, it's like tearing into scar tissue. There's a natural tendency to blame Iraqis for not taking any ownership over the huge reconstruction projects built to provide essentials like better health care and clean water.. but as the NYT article states, "many projects have remained empty or unused long after completion because not enough Iraqis have been trained to use them."

Amidst the anger and frustration, there' s two sides to this failure. Many U.S. aid and military officials lament Iraqis' lack of initiative and responsibility to cooperate on good projects. A Congressional Research Service Report cited two Baghdad regional power stations rehabilitated in 2007 with U.S. funds as not operational, largely because of insufficiently maintained equipment.

The finger pointing

But several advisors currently working on U.S. funded capacity building programs in Baghdad, reacted strongly against laying the onus on the Iraqis, and letting the American mistakes off the hook. They echo a section of the article stating, "While Iraq has often been guilty of poor management, American authorities have repeatedly failed to ask Iraqis what sort of projects they needed and have not followed up with adequate training."

This too is an old, sad story in reconstruction circles. Americans working unilaterally on huge construction jobs, that they didn't involve the Iraqis in even the initial planning of.

A senior advisor working with a U.S. funded capacity building project to assist the Iraqi Ministry of Planning said, "This is unbelievable to blame the Gov't. of Iraq (GOI) for the lack of sustainability or maintenance of projects funded by the U.S. Gov't. (USG). It is one thing to blame the GOI for its lack of capacity to effectively implement and manage its projects using its own money, but to blame it for not running and maintaining projects which they were never consulted on, or even knew of their existence, is outrageous."

The Congressional Research Service's report on Iraq Reconstruction Assistance stated, the Iraqi Gov't. has not allowed any project transfers from the USG since 2006. As of May 2007, $5.3 billion in USG funded projects awaited transfer to the GOI.

The senior advisor disputed this claim. "I've been working closely with the International Cooperation Directorate at the Ministry of Planning (MoP) for the last three years," he said. "The MoP has been requesting the U.S. Embassy to give them any information about USG funded projects and the later refused until this summer (2009) to do so."

It seems to be a case of finger pointing. The advisor went on to explain, "The U.S. Embassy and Army refused any coordination with the GOI regarding USG funded projects and insisted that these are US tax payer-funded projects and the GOI has nothing to do with them. This summer the Embassy handed over a list of 18,000 projects and claimed that they're worth $21 billion and asked the GOI to take over these projects and start operating them. I will leave you to guess what the answer of the GOI was. If we want to talk about failures, let's talk about both sides and not only one."

One prominent Director General of a state oil company weighed in on the finger pointing, "Get a list of projects from the Americans and come to me (a high level gov't. figure) and I'll tell you if it's right or wrong (completed or not, or if it should be continued or mothballed). The problem is most probably many half finished projects have already been cannibalized."

The underlying problem is the reconstruction efforts were and still are needed, particular in areas of clean water and medical services. The Red Cross estimates 40 percent of Iraqis still don't have access to clean water. Oxfam reports 90 percent of Iraq's 180 hospitals lack basic medical and surgical supplies.

Twin problems: Budget execution and Corruption

Compounding the lack of coordination between U.S. reconstruction efforts and Iraqi ownership, are the ever-present issues of Iraqi budget execution and widespread corruption.

Iraqi Ministries have executed less than half their allocated budgets over the last two years. This doesn't make much sense to an outsider who hears cries for assistance amidst falling oil prices. But many officials admit they're afraid to spend the money for fear of being singled out for corruption.

In 2008 Iraq spent only 39 percent of its capital budget, and that was huge leap forward from 2007. As of Aug. 2009 only forty percent of the total $55.6 billion dollar budget had been spent. Meanwhile ministry operational costs, such as salaries, are skyrocketing. From 2005-2007, Iraq spent $67 billion, 90 percent on operating costs.

The implications are serious- Iraq is spending more and more on employee salaries at over-staffed ministries, still hesitant to use its own money on infrastructure developments while U.S. reconstruction is still pouring in hundreds of millions, and Iraq holds out for favorable international oil company consortium deals to stave severe losses in agriculture and prop up an almost nonexistent private sector.

Ghosts in the project

Earlier this year, a USA Today story reported that USAID suspended its single most expensive program, a $644 million initiative run by a U.S. non-profit to give Iraqis jobs and steer them away from the insurgency. The Community Stabilization Program paid Iraqis cash to do basic public works projects, but the inspector general's audit found the program was rife with phantom jobs and a lack of accountability. One of the companies staffers said that tens of millions worth of projects didn't exist and the documents detailing them were faked.

It's bad, really bad, when one doesn't even know where to start. Kind of chicken or the egg argument. Hard to say whether it's so difficult to account for the money because Iraqi groups and even insurgents used community and religious fronts to enrich themselves, or whether the astounding lack of contractor oversight, itself a form of gov't. fraud, allowed this to happen, probably both. Suffice to say the fact the program was so needed, points to the reasons why it was so easily exploit- corruption perpetuates itself on all levels and both sides.

The most egregious accusations of corruption come from an Iraqi, Salam Adhoob, who according to the Mother Jones article "The Boy Scout of Baghdad" really tried to root out corruption as the country's chief investigator of the Commission on Public Integrity. He went after several of PM Maliki's aides, who eventually issued orders to fire Adhoob.

Thirty two of his 200 employees were killed. The U.S. Embassy was afraid to accuse senior Iraqi officials of corruption, and couldn't protect him. Eventually he made it to the U.S. on an emergency visa.

Mr. Salam Adhoob, whistleblower silenced by both U.S. and Iraqi officials. (Photo: David S. Holloway/Reportage by Getty Images)

According to the article, Adhoob has compared the Maliki administration to the Mafia and declared the government had stolen more than $12 billion.

He also testified before the Senate Democratic Public Committee, where he said, "based on the cases that I have personally investigated, I believe that at least $ 18 billion have been lost in Iraq through corruption and waste, more than half of which was American money." He cited many Iraqi ministries' paying contractors for "phantom projects". He also said an American company delivered only one-third of the 510 Humvees it had been paid to supply the Iraqi military.

After his testimony, Adhoob could not get any kind of job with corruption oversight in the States, he even lost his job as a language instructor.

Ownership

Another senior advisor working on building Iraq's procurement capabilities suggested, "The USG should have involved the Iraqis in the decision on what the country really needed and how much it was going to cost the GOI to operate it. The USG should have ensured that the GOI could operate each project even before reconstruction commenced."

Granted, the point of view of many of these advisors has been shaped by being from the region, by their long-time work in Iraq and by the inter-agency rivalries between U.S. funded projects.

Also there's the pervasive belief that their current practices- embedding local staff with senior Iraqi officials and involving them, even while they are leading them by the hand, in the decision making process, is the best option for continuity and sustainability.

While this intuitively seems to be true, and mid-level bureaucrats respond well to empowerment and skill building training programs, there's no short-term evidence that building the capacity of already bloated, unwieldy ministries will bring systematic change. Those at the top have too much to lose if they let go of their authority.

There's some anecdotal evidence that such training and mentoring will eventually open up bureaucrat mind sets and budgets to much needed fresh ideas, like public private partnerships common in Westernized countries, and without which there is little hope for efficient, corruption-free delivery of basic services.

As the same advisor said, "The most important aspect in reconstruction in an environment like Iraq is ownership..." In this case a slow building of personnel capacity through mentoring may be the only way after so many failures.