U.S. Budget for Iraq Reconstruction Gutted

President Bush plans to strip funding from the 2007 fiscal budget for reconstruction in Iraq. Administration officials insist the move won't end the reconstruction effort, but many other observers disagree.

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And after three years of promising to rebuild Iraq, President Bush has decided to strip reconstruction funding from his fiscal 2007 budget request. Congressional and academic critics say, that will mean that much of the ambitious U.S. reconstruction plan for Iraq will never be finished.

NPR's Corey Flintoff reports.

COREY FLINTOFF reporting:

In August of 2003, President Bush said the U.S. aim in Iraq was to make the country's infrastructure the best in the region.

President GEORGE W. BUSH: We're keeping our word to the Iraqi people by helping them to make their country an example of democracy and prosperity throughout the region. This long term undertaking is vital to peace in that region and to the security of the United States. Our coalition and the people of Iraq have made remarkable progress in a short time. And we will complete the great work we have begun.

FLINTOFF: After nearly three years and more than $20 billion, though, much of what the administration sought to accomplish in Iraq is still undone. Congressman Henry Waxman, a California Democrat, is a long time critic of the reconstruction effort.

Representative HENRY WAXMAN (California, Democrat): The reconstruction that we've done so far has exceeded $20 billion and the whole effort has produced minimal benefits for the Iraqi people. Oil and electricity are at levels that are pre-war in Iraq at the present time, so a great deal of that money has been squandered.

FLINTOFF: A State department status report for Iraq shows that in the first week of January, people in Baghdad were getting an average of less than four hours a day of electricity. The figure was somewhat better in the rest of the country, but there, the average was still only ten hours a day.

The report says crude oil production was around 1.8 million barrels a day, down from a peak of 2.5 million barrels before the war. A special Inspector General's report found that about 25 percent of every reconstruction contract is siphoned off to pay for protection against insurgent attacks. Billions of dollars more may have been lost to corruption.

James Jeffrey is Secretary of State, Condoleezza Rice's special advisor for Iraq. He says there's been no final decision on how much overall assistance the administration will seek for Iraq in the coming years, but that the nature of the projects and the responsibility for them may be changing.

Mr. JAMES JEFFREY (Ambassador, Senior Advisor to Secretary Rice and Coordinator for Iraq policy): We don't really see new projects funded by the American taxpayer, large infrastructure, concrete and steel projects, after 2006. Partially, because we think the Iraqis, who have a capital budget this year of six billion can start picking up some of the responsibilities, but also international donors, who have promised 13.5 billion, need to do more.

FLINTOFF: State Department officials site, an internal accounting showing that, so far, international donors have made good on only about 30 percent of the pledges they made at a 2003 donor conference in Madrid. Jeffrey also says that for the past year or so, the U.S. has been shifting from big infrastructure projects to smaller, more visible efforts at the local level.

Mr. JEFFREY: Getting the Iraqis to do more and to use their skills, and to reduce some of the high overhead we get with international contractors. So, yes, we've moved very much away from mortar and bricks and more towards Iraqi participation.

FLINTOFF: Senator Jack Reed, a Rhode Island Democrat, says he would support additional funding for Iraq reconstruction, if the administration asked for it. But Reed, who recently returned from a visit to Iraq, says the U.S. still needs to focus on basic services that Iraqis can appreciate.

Senator JACK REED (Rhode Island, Democrat): To provide consistent power for 24 hours a day would, I think, represent a real achievement. I think, also, with respect to water systems, in terms of potable water for all of Iraq on a consistent basis, sewage systems, the basic nitty gritty of economic infrastructure of any country.

FLINTOFF: The major problem in delivering electricity, or for that matter, realizing the potential of Iraq's oil well, is the insurgency. The State Department's James Jeffrey, says the key is to feeding the insurgency because it's impossible to defend the hundreds of miles of electric transmission lines and oil pipelines from insurgent sabotage.

Mr. JEFFREY: That's what's killing us. Once we've stabilized the economic, political, and particularly, security situations, we can deal with these problems, we think, in a relatively quick fashion.

FLINTOFF: This week, U.S. officials in Baghdad announced that they were awarding contracts to rehabilitate more of Iraq's oil wells, as a step toward building the country's oil revenues. Unless the U.S. appropriates more money, those contracts may be among the last from the major phase of U.S. reconstruction. And Iraq will need big oil revenues to finish the job.

Corey Flintoff, NPR News, Washington.

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