Violence Stalls Iraq’s Rebuilding

A group of 14 countries that gave international agencies almost $1 billion to meet emergency needs in Iraq was told Thursday that only 5% of the money had been spent because the swirl of violence was blocking the start of badly needed projects.

Dispensing reconstruction money is at the heart of a dispute between Iraqi authorities, eager for a rebuilding boom, and the United Nations and World Bank, which are responsible for the projects and argue that the country is not safe enough to enter.

The delays are also frustrating for the Bush administration, eager to show it has economic allies to share the burden -- and benefits -- of rebuilding Iraq. And the trust fund to which the 14 countries contributed is the easiest way nations can give.

Donor nations meeting in Tokyo heard that the World Bank had only two projects underway in Iraq from the trust fund created by foreign governments.

Money earmarked for seven other World Bank-funded projects, including water system repairs and school reconstruction, had not been spent, largely because the insurgency in central Iraq and the rampant criminal violence in other parts of the country had kept most foreign aid workers and contractors out of the country, officials said.

“We identified security as the biggest challenge to overcome,” said Japan’s Akio Shirota, who chaired the two-day conference called to assess the state of Iraq’s reconstruction programs.

There is no shortage of money to tackle Iraq’s numerous needs. The Tokyo conference was originally planned as a technical meeting to assess how more than $32 billion in international aid pledged a year ago -- including $21 billion of U.S. taxpayer money -- was being handled.

Aside from the trust fund, other direct donations from countries and agencies to Iraq have totaled about $4.3 billion, of which $3 billion came from Washington. Much of that money, however, has been diverted to unexpected security costs, U.S. officials said. Protection costs are “trending upwards” and can consume between 10% and 20% of the cost of any reconstruction project, a senior U.S. official said Thursday in Tokyo.

The inability to spend available funds turned the Tokyo meeting from an accounting exercise into a political one. The interim Iraqi government sent a large and vocal delegation, which used the occasion to accuse the international community of being overly cautious about spending donors’ money.

“I don’t want to underestimate the security problem,” said Mehdi Hafidh, Iraq’s planning minister. “But most parts of the country are secure. The violence is almost confined to three out of 18 provinces.”

Projects must be jump-started, Hafidh said, and he warned that timidity would stunt Iraq’s economic growth and the prospects for democracy and a free-market economy. The World Bank and U.N. should find “more innovative mechanisms to respond to the realities in Iraq,” he said, in an appeal to hire more Iraqi civilians and companies to carry out the rebuilding.

U.N. and World Bank officials said they were deeply frustrated to be sitting on mountains of cash while needs in Iraq went unattended. Yet they argued that there was no point repairing a water treatment plant, for example, unless it could be protected from sabotage.

“We feel badly because there are real needs, but we have a responsibility to our donors to be careful with their money,” said Tufan Kolan, the World Bank’s Iraq Trust Fund manager.

Neither the U.N. nor the World Bank is operating in Iraq; the latter conducts its business with the Iraqi interim government by video link from Jordan. “I tell my colleagues the best investment we’ve made so far was for videoconferencing,” said a World Bank official who asked to remain anonymous because of the sensitivities involved in the dispute.

Violence interferes with even the most routine business, the official said. “We’ve had to cancel videoconference calls with one minister three times because bombs had been placed outside his ministry building and he couldn’t get to work,” the official said. “And the education minister has had what, like seven assassination attempts? We can’t even get the guy.”

There have been other reasons for delays in spending, said Joe Saba, the World Bank director for Iraq, such as the need to train the interim Iraqi government bureaucrats in drawing up proper contracts. And he defended the bank’s activities in Iraq, noting that it had printed 69 million school textbooks for this year and saying that more spending from the trust fund was in the pipeline.

American officials said privately that reconstruction activity had picked up in recent days after the military push by Iraqi and U.S. forces to chase insurgents from towns and villages they control in the so-called Sunni Triangle.

Additionally, this year’s fighting in Najaf was followed by road paving, sewage repair and cleanup work, aimed at showing civilians that the Iraqi government was in charge and was providing jobs, the U.S. officials said.

Meanwhile, the Tokyo conference produced only one major new donor to the Iraqi trust fund. Iran paid the $10-million fee to secure a seat in the inner circle of donor countries.