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RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP, host:

And I'm Steve Inskeep. Good morning.

To be precise, the newest White House official is not going to be called a war czar. The White House says he is the full time manager for the wars in Iraq and Afghanistan. Try to fit that in a headline or on an office nameplate.

In any case, it's a tough job that several candidates turned down. And now President Bush has named Lieutenant General Douglas Lute. Up to now, he's the Pentagon's director of operations. In this new position, if confirmed by the Senate, he would try to coordinate war efforts.

MONTAGNE: Rebuilding in Iraq has consumed tens of billions of dollars. Tens of billions of dollars have been spent trying to improve everything from Iraq's dilapidated infrastructure to its health care and its education systems.

Today we begin a two-part series on the massive effort, which started with high hopes but is now mired in problems of corruption, waste and mismanagement.

NPR's national security correspondent Jackie Northam examines what the Bush administration hoped to accomplish and what went wrong.

JACKIE NORTHAM: In the earliest days of the occupation in 2003, it seemed that no effort or expense would be spared for the reconstruction of Iraq. Shortly after Baghdad fell, huge contracts were awarded to several U.S. companies. Some were no bid contracts, like the $1.4 billion dollar project handed to Halliburton to rebuild Iraq's oil industry.

In other contracts, there was limited competition. Steve Schooner, the co-director of the government procurement law program at George Washington Law School says the original large capital reconstruction contracts were, at best, vague.

Professor STEVE SCHOONER (George Washington University Law School): Basically, these were contracts that said to a contractor, I'm going to have hundreds of projects all over the country. I'm not quite sure what those projects are going to look like, but what I want you to do is move heaven and earth to get over there and start building now, and I'll give you guidance as it comes into my mind.

NORTHAM: The speed with which the reconstruction contracts were awarded inevitably led to some mistakes, says Ernie Robbins, a senior vice president with Parsons, a California construction firm which was awarded a roughly $1 billion contract for projects in Iraq.

Mr. ERNIE ROBBINS (Senior Vice President, Parsons): They actually issued us a site to build a facility that when we went to the GPS coordinates provided, or when we tried to, it was discovered that that site was actually not in Iraq. It was in Iran.

NORTHAM: Robbins says several other potential sites were situated in the middle of lakes or riverbeds. Another site was already occupied by a mosque. Still, the expectations for reconstructing Iraq were enormous; so too was the pressure from Congress and the administration to show tangible results demonstrating how the occupation would help Iraqis.

Ginger Cruz is a senior adviser to the special inspector general for Iraq reconstruction.

Ms. GINGER CRUZ (Deputy Inspector General for Iraq Reconstruction): Everybody felt that there was that need to win hearts and minds and make sure that the reconstruction program is moving forward. So the program moved forward despite the fact that everyone understood there were not enough contracting officers and there was not enough oversight to adequately manage the funds on the ground.

NORTHAM: Thousands of reconstruction contracts were awarded, and there was plenty of money to go around. Initially there was about $18 billion which had been appropriated by the U.S. Congress. Another $20 billion was available from the so-called development fund for Iraq, money derived from, among other things, Iraqi oil sales.

Federal investigations have found that the money was quickly spent, with little planning or accounting. This free-for-all climate was best demonstrated when Paul Bremer, the head of the Coalition Provisional Authority, successfully requested that $12 billion in cold, hard cash be shipped to Iraq. Congressman Henry Waxman, now chairman of the House Committee on Oversight and Government Reform, says he was astonished when he heard that.

Representative HENRY WAXMAN (Democrat, California): And it's hard, even now, to imagine $12 billion in $100 bills wrapped into brick-like bundles, then put on huge pallets and brought over by troop carrier airplanes to be dispersed in a war zone. And we had no idea where that money went. Of the $12 billion, $8.8 billion is unaccounted for.

NORTHAM: Bremer defended his action, suggesting it was naïve to try to impose Western-style accounting practices in Iraq during a war. A series of investigations led by Stewart Bowen, the special inspector general for Iraq reconstruction, has found the reconstruction effort riddled with widespread waste, fraud, corruption and just plain shoddy workmanship. Bowen told NPR's ALL THINGS CONSIDERED about one particularly bad construction site he investigated, a $75 million police training academy built by Parsons.

Mr. STEWART BOWEN (Special Inspector General for Iraq Reconstruction): And essentially when they put in the plumbing they had no fittings. So they just joined plumbing pipes, cemented them together, and the connections burst once they started to be used and the sewage thus leaked from the bathrooms down through the building and into light fixtures and through the ceilings.

NORTHAM: Bowen's reports also detail many projects that have been successfully completed, among them water treatment facilities, power plants, train stations, schools. But most of that work was done before the security situation deteriorated in Iraq. By mid-2004, major projects had ground to a halt because of the insurgency, sectarian warfare, and the soaring cost of security.

Clifford Mumm is a senior vice president of Bechtel, which received a $2.4 billion contract for infrastructure projects in Iraq. Mumm says the security situation forced Bechtel to abandon a $50 million hospital project is Basra.

Mr. CLIFFORD MUMM (Senior Vice President, Bechtel Corporation): At that time, total, there were 24 people who had died trying to do that children's hospital. We finished the structural part of it, and our recommendation was that no more people and no more money should be spent on it until the situation had settled.

NORTHAM: Many completed construction projects that haven't been sabotaged now stand idle because Iraqis are too afraid to work there or they can't get fuel to run equipment.

The violence has also sparked a brain drain. Professionals are fleeing Iraq, leaving many unskilled workers to try to carry on. Bechtel's Clifford Mumm says that's a long-term problem.

Mr. MUMM: You can build anything and if you just hand it to somebody and they don't know how to operate it, then you know, that you really didn't do very much. And we were cognizant of that all the way through. We spent over 600,000 hours of just training people and we did that training in Arabic.

NORTHAM: Many factories that were rebuilt around Iraq are now shuttered. Paul Brinkley, deputy under secretary of defense for business transformation has spent much of the past year traveling around Iraq trying to revitalize and spark international investment in those factories.

Mr. PAUL BRINKLEY (Department of Defense): All I'm asking American or other companies to do is to come to Iraq. I'll put a blanket of security around you, I'll go with you out into areas of the country with my team and we'll show you factories, and if there's a good being manufactured, all I'm asking you to do is to consider purchasing some of it from an Iraqi company.

NORTHAM: Now the reconstruction money has dried up. Nearly all of the U.S. commitment of $32 billion has been spoken for and large brick-and-mortar projects have given way to more local efforts.

The U.S. is trying to pressure the Iraqis to do more for themselves, including spending their own money. Iraq's proposed budget for 2007 is more than $40 billion. Max Boot, a senior fellow at the Council on Foreign Relations, says that some of that money should go to help rebuild places like Ramadi in Anbar province, which has been heavily damaged from fighting. Boot, who has just returned from that area, says that local troops and tribal leaders in Ramadi have been working with U.S. forces for the past few months. Boot says rebuilding the city would show the people in Anbar that there are benefits to cooperating with the U.S. and Iraqi governments. Boot says so far, no money has come from Baghdad.

Mr. MAX BOOT (Council on Foreign Relations): And it's hard to know whether it's because of issues of incapacity, because the Iraqi government can't get its act together enough to send some money to Anbar, or whether they don't want to get their act together and the Shiites in control don't want to help the Sunnis in Anbar.

NORTHAM: U.S. officials once described reconstruction aid for Iraq as a gift from the American people. But after four years and tens of billions of dollars towards reconstruction, Iraqis have less electricity, less clean water and fewer jobs than they did before the U.S. invasion.

Jackie Northam, NPR News, Washington.

MONTAGNE: Tomorrow Jackie goes on a trail of the billions spent in Iraq to try to track down who's responsible for the waste.

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