Money runs out on U.S. projects in Iraq

WASHINGTON — The United States will halt construction work on some water and power plants in Iraq because it is running out of money for projects, officials said yesterday.

Security costs have cut into the funds 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 has had to pare back some projects to only those deemed essential by the Iraqi government.

While no overall figures are yet available, one contractor has stopped work on six of eight water-treatment plants it was assigned.

"We have scaled back our projects in many areas," James Jeffrey, a senior adviser on Iraq for the State Department, told lawmakers at a hearing of the House Appropriations Foreign Operations Subcommittee. "We do not have the money."

Bipartisan frustrations

More than two years after Congress approved funding for the rebuilding effort, electricity and oil production remain at or below pre-war levels; and unemployment remains high. 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 (Iraqi rebuilding) right. We see it in Katrina, the lack of leadership, the lack of coordination," said Rep. Nita M. Lowey, D-N.Y., the ranking Democrat on the subcommittee.

"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-Penn., 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 previously criticized 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.

Security diversions

U.S. officials said security costs — now estimated to account for 22 percent 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 now spending $150 million per week on reconstruction, and that more work was flowing directly to Iraqi contractors instead of U.S. multinational firms.

They also said 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 the Iraqis can't 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 Bowen, the special inspector general for Iraq reconstruction, said his office is conducting 58 criminal investigations in Iraq, including several that are close to prosecution. So far, a handful of U.S. contractors have faced criminal charges.