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Both George Bush and Tony Blair said the new Iraq was going to be a prosperous
country with an improved standard of living for all.
But judging by the pace of reconstruction and standard of living in Iraq since
the fall of Saddam Hussein in April 2003, their predictions have yet to be realised.
A series of reports over the last six months indicate that Washington's reconstruction
plan for Iraq has been ineffectual and the sum spent on projects amounts to
much less than what US officials claim.
And there are many accusations of corruption. A handful of US corporations
swallowed up huge sums of Iraqi funds that had been set aside for reconstruction
projects. NGOs say Iraq's oil revenues, the mainstay of the country's economy,
have been mismanaged and sometimes misused.
'Numbers games'
US officials say that some of the $18.4 billion that was allocated by the US
Congress for Iraqi reconstruction is being put to use in projects rebuilding
civilian infrastructure.
"Of the $18.4 billion, $13 billion has been apportioned, of that $10 billion
has been committed. The amount of money that has been obligated to companies,
and that's the indicator of progress, is $7.6 billion," a US defence spokesman
told Aljazeera.net.
But an examination of these figures suggests less has actually been spent.
Reinoud Leenders, Middle East analyst with the Brussels-based think-tank, International
Crisis Group (ICG), and an author of the ICG's September report on reconstruction
in Iraq, says, "It's a number game. Basically the only thing that matters
is what has been spent and at the end of the day they have spent very little."
He says the most accurate figure representing the amount spent by Washington
in Iraq is $1.5 billion, a figure that was given by the US State Department.
Security costs
While $1.5 billion is far less than the figures quoted by the US spokesman,
what makes this figure seem more paltry is the estimate of Leenders and others
that 40% or more of the $1.5 billion figure was spent by foreign companies contracted
to do the work on insurance and security.
By this estimate a mere $900 million of the Congress fund has been spent on actual
reconstruction in Iraq so far.
But despite this, US officials remain optimistic about the utilisation of Congress'
money.
"The disbursement number has increased significantly. ... And that rate
of increase we expect to see continued over the next ensuing months," Charlie
Hess, director of the Iraq Project and Contracting Office, the office responsible
for overseeing Congress' money, told a Pentagon press conference on 15 December.
Funds misused
Other reconstruction funds have fared little better.
The UN and World Bank's fund for Iraqi reconstruction is around $1 billion,
but Leenders said around $200 million had actually been spent.
"You can safely assume that only a fraction of that figure has been spent,
I wouldn't put it at higher than a fifth," Leenders said basing his estimate
on how many projects were in place on the ground in Iraq.
Iraq's oil, which as the source of around 95% of Iraq's foreign currency revenues
is an integral factor in the reconstruction process, appears to have been misused.
Between the fall of Hussein and the start of the interim Iraqi government's
mandate in July 2004, US occupation authorities (known officially as the Coalition
Provisional Authority [CPA]), were in charge of Iraq's oil revenues.
Worsening lot
In a report last summer Christian Aid accused the CPA of lacking any transparency
in its use of Iraq's oil revenues, a figure the group say amounts to around
$20 billion.
"For the entire year that the CPA has been in power in Iraq, it has been
impossible to tell with any accuracy what the CPA has been doing with Iraq's
money," Helen Collinson, head of policy at Christian Aid, said in an article
published on the charity's website.
For the majority of Iraqis, life appears to have worsened since the invasion.
A recent UN World Food Programme report concluded that 27% of all children
under five are chronically malnourished.
According to interim Iraqi government officials, 90% of Iraq's cities have
no decent sewerage system, and one-third of Iraqis have no access to clean water.
In June the US General Accounting Office estimated electricity was available
fewer hours per day on average last month than before the invasion.
No excuse
The US response to criticism over the slow progress of reconstruction in Iraq
is that lack of security has hindered projects.
But observers say this argument does not hold water either.
"Security is not an excuse. There are many parts of the country that are
relatively secure," Isam al-Khafaji, the director of Iraq Revenue Watch,
a department of the Open Society Institute, said.
Critics of the reconstruction plan say the exclusion that many Iraqis felt from
the process exacerbated security problems. Iraqi firms were awarded few contracts,
and foreign companies preferred to employ foreign workers rather than locals.
The Open Society Institute report issued in September said Iraqi firms received
just 2% of the $1.5 billion contracts that were paid with using Iraqi oil revenues
that were managed by the occupation authorities.
"As far as I can see, the Iraqis just got peanuts," ICG's Leenders
said in reference to the amount of reconstruction money that found its way to
Iraqi pockets.
Prime contracts
But the director of the Iraq Project and Contracting Office, Charlie Hess,
says that a lot of the Congress money had gone back into the Iraqi economy.
"With the exception of some of the perhaps physical equipment and things
that might have been purchased back in the US, most of this is going into the
economy in Iraq. Much of the subcontracts, the prime contracts are being done
by Iraqi firms," he said.
But Iraqis and observers say this exclusion was the cause of much anger in
Iraq, left huge numbers unemployed and reinforced Iraqi fears of a foreign takeover
of their country.
"All this subcontracting is simply window dressing to show the world that
they are working with Iraqis. In reality, the reconstruction is left to US companies.
Iraqis can just do the petty, dirty jobs, like painting schools, while US companies
are making millions," the ICG quotes one Iraqi entrepreneur as saying.
Inflated cost?
The work that was contracted to foreign firms was often done at a vastly inflated
cost or sub-contracted to other firms for a far smaller fee.
"When we were confronted with the costs of a high school (reconstruction),
the costs are unbelievable by Iraqi standards. Any Iraqi would say you could
reconstruct two schools for that cost," Khafaji said.
But Hess told the Pentagon press conference that 100,000 Iraqis were employed
in projects that were being paid for with Congress money.
"We would expect that number to increase even more, until some time right
around the elections. It'll peak probably this summer, somewhere between 140,000
and 150,000, with respect to individuals working on the PCO programmes,"
he said.
Accusations of corruption are strengthened by the way the CPA awarded contracts
Misuse unchecked
The Open Society Institute said in its September report that of the $1.5 billion
in contracts that was paid with Iraqi funds, US and British companies received
85%, and Halliburton subsidiary Kellogg, Brown and Root received 60% of these
contracts.
US Vice-President Dick Cheney was chief executive of Halliburton from 1995
to 2000 before he took office. Cheney denies he has any link to Halliburton
despite allegations he still has stock options with the firm and receives deferred
salary payments.
"The CPA did not do its job regarding the oversight of reconstruction funds,"
Svetlana Tsalik, director of the Open Society institute's Revenue Watch project,
said in an article published on the institute's website.
"It failed to stop the misuse and waste of money that belonged to the
Iraqi people and American taxpayers."
Low impact
From the moment looters tore apart government buildings immediately after the
arrival of US-led forces in Baghdad, plans for the reconstruction of Iraq appear
to have been in disarray.
Rather than address a long-term revival plan for the destroyed Iraqi economy,
the CPA seemed to focus on short-term projects that would give Bush administration
figures political accolade.
"Attention shifted to high-visibility but often low-impact projects,"
the ICG report said.
The CPA's policy of "de-Baathification", aimed at purging members of
Hussein's Baath Party from positions of power, which sacked up to 30,000 management
level staff, resulted in a loss of expertise that was hard to replace.
Although privatisation of state-owned companies was never carried out in full
by the CPA, the liberal economic policy that was applied by Washington in Iraq
was considered by many to be inappropriate.
"What it comes down to is an ideologically driven blueprint that assumes
liberalisation is the effective way of dealing with economic problems,"
Kamil Mahdi, an Iraqi exile and Middle East economics professor at Exeter University
in the UK, said.
"This was applied in the Soviet Union and the results were catastrophic.
In Iraq it was going even further and the results are even more catastrophic."
Vicious circle
Poverty is blamed for much of the criminal and political instability in Iraq.
"Unemployment is the main problem and main source of resentment. It's
a vicious circle: Lack of security leads to lack of reconstruction which leads
to lack of jobs, which leads back to lack of security," the ICG report
quotes Iraqi economist Hajir Adnan as saying.
Analysts say the country's assets are at risk of being divided among ethnic
and sectarian groups, weakening the state and worsening factionalism.
Due to Iraq's reliance on oil, some observers recommend creating a special fund
for oil revenues whose management will be separate from the political process
in Iraq.
"Too many oil-rich countries go down the road of unaccountable government,
riches for the few, poverty for the many. Iraq can avoid this route, but only
be ensuring transparency," the Christian Aid report said.
Khafaji drew parallels with the experience of post-Soviet Russia.
"What worries me is not Stalinism v Liberalism, it's the Yeltsin-type
liberalisation similar to the one that went under way in Russia. Iraq is at
risk of going down that road."
Scandalous divide
Khafaji said: "You will have a prosperous elite and you will have the
people eating out of the garbage cans or you will have a healthy capitalist
economy. This is the choice."
Mahdi said the only way for the economic situation to improve is for an Iraqi
government to have total sovereignty.
"The process has been a failure. There is no way that this policy can
be rescued," Mahdi said.
"The chaos in Iraq will not be resolved by additional funds or more direct
intervention of economic institutions or a brave corporation walking into Iraq.
"What is required is a coherent decision-making structure that is responsive
to the needs of the Iraqi people and this means sovereignty and a full withdrawal
of US troops."