The Marketplace Report: Security Costs in Iraq

Madeleine Brand talks to John Dimsdale of Marketplace about a new government watchdog report on security costs in Iraq. The Government Accountability Office report says security costs are adding significantly to the price tag for rebuilding the war-torn country.

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MADELEINE BRAND, host:

Back now with DAY TO DAY. I'm Madeleine Brand.

Reconstruction in Iraq and Afghanistan is making only limited progress. That from the non-partisan Government Accountability Office. A new report says the main reason is lack of security and how much protection costs. Joining us now to talk about this is "Marketplace's" John Dimsdale. He's in Washington.

And, John, how are security costs affecting the rebuilding efforts?

JOHN DIMSDALE ("Marketplace"): Well, they can make the price tag for some projects more than a third higher, and that means that some of these rebuilding projects have been cut back or even canceled because so much money's been diverted to security. It's taking a toll especially on projects to rebuild Iraq's oil infrastructure and electric utility plants. In fact, even after $9 billion has been spent, the GAO finds that oil production and electricity generation in Iraq are lower today than before the war began. Another example: In Afghanistan, the US had a goal of building 250 new health clinics by now. But by now, only 15 have been finished.

BRAND: So security is the main reason, but is it the only reason for lack of progress?

DIMSDALE: No, no. The GAO also found there are bureaucratic delays, that the US government hasn't been very quick to distribute some of the money. There has been some poor performance by contractors. For example, there were mistakes in deciding to build new costly structures when refurbishing the existing buildings would have done the trick. And there's been some price gouging by contractors. The GAO found that some private security contractors are paying their workers more than $30,000 a month.

And as you can imagine, all of this is giving fodder to skeptics of White House claims that, you know, things are going well in the rebuilding effort. William Hartung, a national security researcher at the World Policy Institute, points out that GAO auditors had a hard time figuring out just how much was being spent on security vs. reconstruction.

Mr. WILLIAM HARTUNG (World Policy Institute): Nobody in the government is really minding the store on this issue: not the State Department, not the Pentagon, not the Agency for International Development. So GAO's survey, which was of a limited number of companies, probably is an underestimate of the full cost.

BRAND: So, John, what is the White House saying to this?

DIMSDALE: Well, they acknowledge that the insurgents have been good at derailing progress and costing reconstruction crews extra money, not to mention making life miserable for average Iraqis. But they also point to some bright spots, that there have been improvements in electricity and oil production just recently. The GAO study doesn't reflect gains since last May. And the Pentagon says it's working on better ways of tracking costs and avoiding overspending.

Coming up later on "Marketplace," we've got an update on our investigation into lobbyist-funded travel by people in Congress. That series is called Power Trips.

BRAND: John Dimsdale of public radio's daily business show "Marketplace." And "Marketplace" is produced by American Public Media.

Thanks, John.

DIMSDALE: You're welcome.

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