By James Glanz and Erik Eckholm
New York Times
30 June 2004
The four big smokestacks at the Doura power plant in Baghdad have always served as subversive truth-tellers. No matter what Saddam Hussein's propagandists said about electricity supplies, people knew they could get a better idea of the coming day's power by counting how many stacks at Doura were spewing smoke.
Mr. Hussein is vanquished and a new Iraqi government has just gained formal sovereignty, but those smokestacks remain potent markers — not only of sporadic electricity service but of the agonizingly slow pace of Iraq's promised economic renewal.
More than a year into an aid effort that American officials likened to the Marshall Plan, occupation authorities acknowledge that fewer than 140 of 2,300 promised construction projects are under way. Only three months after L. Paul Bremer III, the American administrator who departed Monday, pledged that 50,000 Iraqis would find jobs at construction sites before the formal transfer of sovereignty, fewer than 20,000 local workers are employed.
Inside the high-profile Doura plant, American-financed repairs, originally scheduled to be completed by June 1, have dragged into the summer even as the demand for electricity soars and residents suffer through nightly power failures.
At the same time, an economy that is supposed to become a beacon of free enterprise remains warped by central controls and huge subsidies for energy and food, leaving politically explosive policy choices for the fledgling Iraqi government.
While the interim government has formally taken office, the reconstruction effort — involving everything from building electric and sewage plants to training police officers and judges — is only beginning.
Scrambling to speed up the process, the Pentagon has recently begun pumping out long-awaited money and work orders, committing $1.4 billion in just the last week even as a spreading insurgency cripples the ability of Western contractors to oversee their projects and has made targets of Iraqi workers.
American authorities, while admitting to a slow start and more aware than anyone of the security threat, insist that the rebuilding will proceed. "Some of the power plants may get blown up," David J. Nash, the retired rear admiral who directs the American building program, said in an interview last week. "But we're not going to stop."
Of the $9 billion in contracts the Pentagon has issued so far, only $5.2 billion has actually been nailed down for defined tasks. Most of those projects are still in planning stages, though officials insist that the rebuilding effort will soon flower.
From the outset the designing of projects and awarding of billions of dollars in contracts proved slower than some officials had imagined.
Among other things, planning, oversight and competitive procedures were tightened after some of the earliest postwar contracts, awarded without competition to companies including Halliburton, were tainted by evidence of waste and overcharging.
But even more, the glowing economic promises met the realities of Iraq. Decades of neglect, sanctions and war left the country's physical infrastructure in far worse condition than many expected. And as an anti-American uprising gained force, the reconstruction effort became a prime target, with oil pipes and power lines blown up as soon as they were repaired and Iraqi workers put in fear of retribution.
From the start, refurbishing Iraq's dismal infrastructure and creating a thriving market economy were promoted by Bush administration officials as pillars of the American-led invasion — "the perfect complement to Iraq's political transformation," in the words of Mr. Bremer.
But more than a year later, supplies of electricity and water are no better for most Iraqis, and in some cases are worse, than they were before the invasion in the spring of 2003.
Repairs of three giant wastewater treatment plants in Baghdad, for example, are weeks or months behind, while water supply systems in the south of the country are months or even years away from functioning properly. Unrepaired bridges continue to create monstrous bottlenecks in many parts of the country.
For Iraqis, the delays have bred frustration and anger. Recent interviews in the upscale Baghdad neighborhood of Harethiya suggest that the electricity woes have, among other things, created a nation of insomniacs, sweltering in their apartments through oppressive nights.
"We are so tired because of the electricity," said Abdul Razzaq, owner of a sundries shop, who said that to top it off, business was down so much that it was hard to pay for private generators.
Just down the street, Samir Ibraheem said security problems forced him to close his shop, which has good air-conditioning, early each night. "The problem is at my house, when I sleep at night," he said.
In less prosperous areas, sorry infrastructure is even more dispiriting. On Sunday a local paper reported that new sewage flooding in five poorer neighborhoods of eastern and western Baghdad was raising serious fears of disease.
Mais Khalid, 20, a student at Baghdad University who lives with her family in Al Elfain, a neighborhood in the southwestern part of the city, said a river of sewage entered her home whenever the door was opened. She traces the problem to a lack of electricity to run the pumps that keep sewer lines clear.
In perhaps the greatest technical success, oil exports have been restored to their prewar levels, bringing in money that will pay the national budget. But attacks shut down pipelines in the last two weeks, and exports are only partly restored.
One clear improvement is in telephone service, but an annoying patchwork system does not allow mobile phones from one part of the country to communicate easily with those in other parts.
The rebuilding effort is supposed to receive a total of some $24 billion in American grants and eventually some $13 billion in international loans. The United States military has already dispensed several additional billions, from oil revenue and seized Iraqi assets, for emergency repairs and small community projects such as renovating schools.
The bulk of the aid was provided in a special Congressional appropriation last fall of $18.4 billion in grant money. Three months ago, mindful of rising Iraqi frustration over the slow pace of change, Mr. Bremer made lavish promises that have only partly been met.
"Now the contracts are signed, and in the coming weeks the dirt will begin to fly on construction jobs all over Iraq," he announced on March 29. By the end of June, he said, "50,000 Iraqis will be working on jobs funded by the partnership for prosperity. But this is just the beginning."
But by this week, only about half of the $18.4 billion had been allocated to contractors, and little of the work was visible.
Construction has been debilitated by bombings and shootings of Western contractors and Iraqi workers, shortages of materials and poor planning. Many contractors have recently had to devote 20 percent or more of their money to armed security instead of building materials and to curb their oversight of subcontractors in the field, even evacuating workers for long stretches.
Because of safety fears, the last Western engineers fled the Doura plant a week ago, leaving disassembled machines on the enormous plant floor. The engineers were from the Siemens Company of Germany, working on a subcontract with American financing.
"They didn't contact me," said Bashir Khalif Omir, the plant's director. "They took their luggage at midnight and they left."
But the transfer of sovereignty has given Mr. Omir new hopes. Because Iraqis now ultimately call the shots on the work, Mr. Omir said, insurgents will no longer have so much reason to attack building projects and their workers.
Whether the rebels will make this distinction remains to be seen. In the meantime, the transfer opens new uncertainties. Will the new Iraqi government alter spending priorities, and how much power will it exert over American money? Will corruption rise as Iraqi ministries assert more influence on the subcontracting of American billions?
Will American decision-making be crippled by bureaucratic rivalries as the State Department takes over many functions from the Pentagon?
The construction office that Admiral Nash heads, until now a strictly Pentagon operation, has been split into two entities, a strategy office reporting to State and an implementing one reporting to the Defense Department. Admiral Nash has been appointed head of both.
"We're still a little unclear about who we will have to interface with on a daily basis," said James Cartner, vice president for Iraq operations for Fluor, a major contractor.
On the broader question of reshaping Iraq's economy, the occupation made limited progress but left some of the most politically tough decisions to the Iraqis.
The new government will inherit a new currency, a renewed banking system and, in measures that were pushed hard by a conservative Republican administration, low taxes and tariffs and a law permitting unhindered foreign investment in non-oil sectors of the economy.
But American officials, fearful of fanning more unrest, put off what economists say are crucial steps toward a functioning market economy and an end to rampant smuggling. They have not carried out plans to phase out Iraq's huge subsidies for fuel and electricity and to end the dependency of a majority of Iraqis on handouts of imported food.
"It's hard to make the economy start working with such irrational prices," said Keith Crane, an economist at the RAND Corporation who advised the Coalition Provisional Authority last year. "And in the long run it doesn't make sense to build refineries so they can sell gas for three cents a liter."
The insurgency has been an obvious source of construction delays. But critics, including some Americans who spent frustrating months in Baghdad, also say the Pentagon's approach to economic restoration was flawed from the outset — seen too much as a bricks and mortar task and in isolation from the country's political and social wounds.
In the initial months of the American occupation, the hard-earned lessons of earlier nation-building campaigns by the United States and the United Nations in places like Bosnia, Afghanistan and East Timor were ignored by Pentagon planners, who tried to rush ahead with showcase infrastructure projects before securing public safety and a sense of participation, critics say.
"We mostly did what we know how to do, instead of what needed to be done," said James Dobbins, a retired diplomat who led American recovery efforts in Afghanistan, Kosovo, Bosnia and elsewhere and said it was a mistake to put the Pentagon in charge of Iraq's economy. "That's what the Army Corps of Engineers does: it hires multinational corporations to build infrastructure."
Critics like Mr. Dobbins, who has not worked in Iraq but was President Bush's envoy to Afghanistan after the American invasion there, say many of the problems should have been foreseen.
"What the Iraqis needed was security, and with that they could get their electricity back on themselves," said Mr. Dobbins, who is now with the Rand Corporation and is chief author of a 2003 study, "America's Role in Nation-Building From Germany to Iraq."
James Glanz reported from Baghdad for this article, and Erik Eckholm from Washington and New York.
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Citation: James Glanz, "Reality Intrudes on Promises in Rebuilding of Iraq," New York Times, 30 June 2004.
Original URL: http://www.nytimes.com/2004/06/30/international/middleeast/30RECO.html?ex=1089564748&ei=1&en=0e4047eb9f4c89ef
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