Report Finds Big Problems with Iraq Rebuilding

The Office of the Special Inspector General for Iraq Reconstruction says billions spent on security have had a limited effect, while waste and fraud have cost tens of millions. Special Inspector General Stuart Bowen says 2006 was the worst year yet.

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RENÉE MONTAGNE, host:

Just as President Bush requests extra rebuilding money for Iraq, we have an independent examination of how the money has been spent so far.

STEVE INSKEEP, host:

It comes from Stuart Bowen, an independent inspector general. His latest report offers stories that read like good news, bad news jokes.

MONTAGNE: The good news is the U.S. government spent $44 million on a camp for police trainers.

INSKEEP: The bad news is nobody ever used the camp.

MONTAGNE: The good news is the U.S. spent $36 million on vehicles and body armor.

INSKEEP: The bad news is it cannot be accounted for.

MONTAGNE: Not all the money was misspent. But when Stuart Bowen came by, he offered us a sober assessment.

INSKEEP: As you know, Mr. Bowen, President Bush has acknowledged that 2006 was not a good year. How was 2006 for reconstruction?

Mr. STUART BOWEN (Special Inspector General for Iraq reconstruction): It was an especially a bad year. Corruption within the Iraqi government is a endemic problem. Barham Salih pointed out last week, the deputy prime minister, that $1.5 billion was stolen from the Baiji Refinery in Northern Iraq, $1.5 billion in crude oil, smuggling and other corruption.

That's just one example. The commissioner on public integrity has just issued an indictment of the oil minister, Minister Sharastani, so there are some very deep problems within the Iraqi government regarding corruption today.

INSKEEP: Does that make it hard for you even to figure out what's going on in that you're getting information at dealing with Iraqi officials who may be the very people who are guilty of some of these offenses?

Mr. BOWEN: It's difficult to get reliable data from the Iraqi side of the ledger, there's no doubt about that. That's been a problem that has made my work difficult in Iraq since we started three years ago. I was appointed three years ago this week, and we've produced 12 reports now, our twelfth just coming out.

INSKEEP: When we say that 2006 was a bad year, would you draw any connection between that and some of the problems with reconstruction in earlier years?

Mr. BOWEN: Yes. In 2003-2004, the security problems were not overwhelming, and thus travel across Iraq was possible, certainly more possible than it is today. And also most of the reconstruction work was done with Development Fund for Iraq money in that phase, not U.S. money.

So we've seen a shift in the last four years - three years of the reconstruction program in earnest - from using primarily Iraqi money to using primarily U.S. money with an expectation that donor money would come in that hasn't. And there needs to be a shift now away from U.S. money and back to Iraqi money and funding the reconstruction program.

And that's why one of the issues that I focus on in this latest report is ministry capacity development. We have an audit out, looks at the capabilities the Iraqi ministries to function, to execute their capital budgets, and finds them to be weak and finds U.S. support for building those capabilities to be similarly weak.

INSKEEP: This is kind of what I meant, though: From the beginning we've been told that one reason to pay for reconstruction of Iraq is that it will help secure Iraq, that people will feel their needs are being met and that they will be more peaceful and more favorable toward the changes in Iraq.

You've come back periodically for the last several years and told us about delays in reconstruction, money that had to be diverted to security, any number of other problems. Would you draw connection between those problems over time and the fact that 2006 seems to have been one of the worse years yet, if not the worst year yet?

Mr. BOWEN: I think the reason why 2006 is the worst yet is the security problem. The reconstruction program on the whole has not achieved what it set out to achieve because more money has been moved to security and away from infrastructure, and that created what we called a reconstruction gap. And that meant Iraqis are less aware of the U.S. contribution to restoring their country's well being.

INSKEEP: Well, you point out in your report that electric lines were attacked regularly, northern pipelines are largely inoperable because of interdiction. What you're saying is the oil doesn't flow and people still don't have electricity on a regular basis.

Mr. BOWEN: Infrastructure security is a huge problem, something that we did an audit on a year ago. And as a result of that audit, funding for infrastructure security greatly increased funding for the strategic infrastructure battalions, which are Iraqi forces - they're supposed to protect it…

INSKEEP: Yeah.

Mr. BOWEN: …increased greatly. But clearly they haven't achieved their goal yet.

INSKEEP: As you look ahead to the rest of 2007, would you go so far as to say that if security issues aren't dealt with, that whatever money is spent on reconstruction is likely to be wasted money?

Mr. BOWEN: Well, certainly not highest and best use. There's no doubt that stabilization is the central precursor to good development programs. And we've yet to achieve stabilization in Iraq.

INSKEEP: Stuart Bowen, a special inspector general for Iraq reconstruction. Good to talk with you again.

Mr. BOWEN: Thank you, Steve. Good to be with you.

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