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January 09, 2007

The Bush Reconstruction "Surge"
Posted by Gordon Adams

In addition to the escalation of US forces in Iraq that President will announce on Wednesday evening, the administration is said to be preparing a “surge” in reconstruction assistance, announcing a program, described as “significant,” by the Wall Street Journal on Friday, January 5, 2007.

This assistance package may consist of roughly $1.5 b. in reconstruction funds assistance through traditional foreign assistance channels (State/USAID) and another $1 b. in additional funding for the Pentagon’s Commander’s Emergency Response Program (CERP).

If Congress endorses this package, they should beware.  It is not significant, either in size or in potential impact in Iraq.

First, as to the size.  Way back in 2003, the World Bank and the US government estimated that Iraq reconstruction required roughly $55 b. in funds.  Paul Wolfowitz opined that these funds would largely come from oil revenues to the new Iraqi government.   Both estimates were wrong.

According to the office of the Special Inspector General for Iraq Reconstruction (Quarterly Report of 30 October 2006), the US, the Iraqis and the world community have already raised and largely spent nearly $95 b. on Iraqi reconstruction.  Of that total $38.3 b. is US appropriated funds; $41.2 b. is Iraqi funds (either administered by the US or capital budget funds in the Iraqi budget), and the remaining $15 b. has been pledged or spent by international organizations and other donors.  The new funds are a drop in the bucket.

And as to impact?  The results of this spending to date have been far from promising.  Substantial parts of the US funds (perhaps 30%) have been diverted to security costs, given the growing civil war.  Iraqi funds have been largely wasted, or, some of them, stolen.  The international funds have been slow to arrive, as many donors search for ways around the security problem.

Moreover, the flood of SIGIR reports is full of evidence of systematic failures to complete projects in the health, education, and energy sectors.  Data on Iraqi electricity and oil production remain show that both are below pre-war levels.  Unemployment rates are estimated to be in the 60% range; new, sustained employment has not been generated by this assistance.  By any standard, the reconstruction program for Iraq, already substantially larger than the initial estimate, must be rated a failure.

Adding another 1.5% to this investment (the rumored $1.5 b. in economic assistance), is not likely to alter this judgment.  Even if it means assigning new Provisional Reconstruction Teams (PRTs) around Iraq, the sum itself is now a drop in a very dry bucket.  It is risible to assume that these funds can somehow generate long-term employment for Iraqi youth as an alternative to participating in sectarian violence.  And given the security situation in which most Iraqis live, this small sum is unlikely to be implemented in a meaningful way.   

Even if one adds another one percent, by increasing the CERP program by $1 b., the outcome is unlikely to change. CERP is a temporary, short-term fix for local problems a force commander encounters, not a long-term reconstruction or development program.  Moreover, there is little performance data on the more than $800 m. the CERP program has already spent, as of the end of last October.   And there is another $1.1 b. of CERP funds already in the pipeline with no reporting on whether it has yet been spent.  More CERP funds now would probably not be spent for many months, and are too small to make a long-term difference to the Iraqis.

If the administration wanted to make a difference, the Iraq reconstruction funds would have to be much larger.  Even then, given the chaos in Iraq, a large package of support would probably also be wasted.  It is not clear to most Americans that our $400 b. military investment has paid off; the $95 b. we and others have put into reconstruction as been a great disappointment, as well.  It is neither compelling nor wise to pour more resources into this enterprise before some kind of stability has been achieved.


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