Some Iraq Projects Running Out of Money, U.S. Says

The U.S. will halt construction work on some water and power plants in Iraq because it is running out of money for projects, officials said Wednesday.

Security costs have cut into the money available to complete some major infrastructure projects that were started under the $18.4-billion U.S. plan to rebuild Iraq. As a result, the United States is funding only those projects deemed essential by the Iraqi government.

Although no overall figures are available, one contractor has stopped work on six of eight water treatment plants to which it was assigned.

“We have scaled back our projects in many areas,” James Jeffrey, a senior advisor on Iraq for the State Department, told lawmakers at a hearing of the House Appropriations subcommittee on foreign operations. “We do not have the money.”

More than two years after Congress approved funding for the rebuilding effort, electricity and oil production in Iraq are at or below prewar levels; and unemployment remains high. Less than half of the U.S. reconstruction money has been spent, but in some sectors, such as electricity and water, security costs have eaten up much of the budget.

The slow pace of progress appeared to exasperate both Democratic and Republican lawmakers, who compared the situation with the Bush administration’s handling of damage from Hurricane Katrina.

Both situations reflected a lack of planning, poor execution and a failure by senior White House officials to follow through on commitments, Democrats said.

“We can’t seem to get [the Iraq rebuilding] right. We see it in Katrina, the lack of leadership, the lack of coordination,” said Rep. Nita M. Lowey of New York, the ranking Democrat on the subcommittee.

Republican criticism of the U.S. reconstruction effort in Iraq had been rare, a sign that bipartisan discontent with the White House response to Katrina may be spreading to other areas.

“It seems sort of almost incomprehensible to me that we haven’t been able to do better on” restoring power to Iraq, said Rep. Don Sherwood (R-Pa.), who recently visited areas damaged by Katrina. “Coming back up through Mississippi and Louisiana after being down on some relief effort, you know, when power shuts down, everything shuts down.”

Rep. Jim Kolbe (R-Ariz.), who has been critical of the Iraq rebuilding effort, said the Bush administration’s vision for using reconstruction funds to stabilize Iraq “was largely a chimera, a castle built of sand.”

“Reconstruction in Iraq has been slower, more painful, more complex, more fragmented and more inefficient than anyone in Washington or Baghdad could have imagined a couple of years ago,” said Kolbe, chairman of the subcommittee.

U.S. officials said security costs, now estimated to account for 22% of all reconstruction contracts, had forced them to redirect money to pay for weapons and training of Iraqi troops.

They said that the United States was spending $150 million a week on reconstruction, and that more work was flowing directly to Iraqi contractors instead of U.S. multinational firms.

They also said that some infrastructure projects handed over to the Iraqis had suffered because of Iraqi government funding shortfalls. As a result, U.S. funds have been directed to simply maintaining electricity and water plants that the Iraqis cannot afford to operate.

“The last thing we wanted to do ... is to put hundreds of millions of dollars in power generating plants and into water plants and then have them simply not work, or simply have them run down,” Jeffrey said.

Another concern is corruption. Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, said his office was conducting 58 criminal investigations in Iraq, including several that were close to prosecution. A few U.S. contractors have faced criminal charges.

“We need to lean forward and support, emphasize, do everything we can to stand up the anti-corruption structures within Iraq in an effective way,” Bowen said. “I just think that without inculcating an ethic of integrity at the core of this democracy -- this fledgling democracy -- that it will founder very soon.”