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ROBERT SIEGEL, host:

Joining us is Stuart Bowen, who is the special inspector general for Iraq reconstruction. Welcome.

Mr. STUART BOWEN (Special Inspector General for Iraq Reconstruction): Thank you, Robert. Good to be with you.

SIEGEL: Our Tom Bowman has reported on the problems that you have turned up with weapons that have not adequately been tracked or registered when they've moved from the U.S. to Iraq. Do I understand it properly that that's not an issue of Iraqi performance or compliance with standards. That's a problem with American compliance with the standards that we expect in the reconstruction.

Mr. BOWEN: That's right, but let me bring some perspective to this issue. Our audit reveals that some of those weapons were not accounted for, but over 96 percent were. We looked at 370,000 weapons purchased with $133 million in taxpayer dollars. Fourteen thousand were missing, under four percent. A missing weapon is never a good thing.

SIEGEL: No, 14,000 weapons is not good, but you're saying it's a very small minority.

Mr. BOWEN: But as a percentage of the overall task, the shortfall is not significant in light of how difficult it is to operate in Iraq, period.

SIEGEL: Should Iraqis today look at their towns and cities and say from the standpoint of security/governance/infrastructure that the reconstruction of their country is going well?

Mr. BOWEN: That's a big question. Obviously there are many challenges facing the reconstruction program today. Today we released our 11th quarterly report and in it we highlight the fact that the reconstruction program has entered the fourth quarter of the year of transition, literally and figuratively in the football metaphor. That is, it's essential that we get this right now to prevail. Getting it right means ensuring that we listen carefully to what the Iraqis need and expect and meet those needs rapidly.

SIEGEL: The fact that that's still a challenge to do that makes me feel the short answer to the question is no, an Iraqi right now really could not be satisfied that that reconstruction has gone extremely well.

Mr. BOWEN: Well, the security overlay has inhibited everything in Iraq and it has driven costs up. Indeed, the reprogramming of $6 billion that was intended for bricks and mortar into security certainly caused what we identified as a reconstruction gap.

But as I note in this quarterly report, 70 percent of the projects that we visited across Iraq met expectations. Now, those that fell short sometimes fell dramatically short, such as the Baghdad Police College. But there are successes, there are shortfalls, and our reports thus provide a mixed story.

SIEGEL: How big a problem is corruption? You acknowledge it's a difficulty. How big a problem?

Mr. BOWEN: It's a serious and significant problem that affects most Iraqi ministries, but in particular the ministry of oil. The ministry of oil is the revenue generating ministry in Iraq. Ninety percent of the national income is derived from the sale of oil and gas. And smuggling is probably the most prevalent form of corruption that we see with respect to the oil sector.

SIEGEL: Low level, mid level, high level - who is corrupt in the ministry?

Mr. BOWEN: Well, every trip I always meet with the commissioner of public integrity. This last trip that I had, when I was there most of August and September, he told me he has 1,400 cases pending involving allegations of five billion dollars in fraud.

SIEGEL: Five billion dollars of fraud.

Mr. BOWEN: That is what he reported to me.

SIEGEL: There've been some disputes over just how much progress has been made in getting electricity and water, potable water, to people in Iraq. Right now, can you say that more people today have electricity to their dwelling and potable water than did before 2003, or is it still fewer Iraqis today than before the war?

Mr. BOWEN: With respect to water, it's difficult to get accurate figures from before 2003, but what I can say is that the U.S. development program in the water sector has evolved into a very effective reconstruction relief program. It moved away from very large water treatment facilities to small projects all over the country, and that provided more access to more Iraqis to clean water.

On the electricity front, October was a tough month. It's clear that saboteurs have developed a strategy to hit power lines bringing electricity to Baghdad, and on October 20, for example, there was less than four hours available because so many lines had been taken out, leaving Baghdad more often in the dark than not, averaging this last quarter between four and six hours of power a day.

SIEGEL: And four and six hours of power a day, it sounds like life would be pretty much constrained by that shortage of power.

Mr. BOWEN: It's much less than pre-war. Of course, pre-war, Baghdad was the beneficiary of power that was drawn from all over the country, and the rest of the country got limited power, less than 10 hours, whereas Baghdad had it 24/7. Today, somewhat the reverse is true. Baghdad now four to six hours, the rest of the country 12 to 14 hours.

SIEGEL: Well, Stuart Bowen, thank you very much for talking with us once again.

Mr. BOWEN: Robert, thank you.

SIEGEL: Stuart Bowen, who is the special inspector general for Iraq reconstruction.

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