Iraq reconstruction

The LA Times and New York Times both have articles showing that the reconstruction of Iraq is not proceeding as planned. The LA Times reports that oil production in Iraq (which was intended by the US to help fund reconstruction) has decreased:

Iraqi oil production fell by 8 percent last year, with a sharp decline near year's end that left average daily production at half the 3 million barrels envisioned by U.S. officials at the outset of the war in 2003.

Prospects for improvement this year are slim, according to many experts, calling into question Iraq's ability to support itself and fund reconstruction efforts as U.S. assistance is scaled back. Reasons for the shortfall include the poor state of the nation's oil fields, a creaky infrastructure, poor management and ongoing insurgent attacks, particularly to pipelines in the north-central region meant to export oil through Turkey.

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Oil revenues contribute 94 percent of the fledgling government's budget and a drop in oil global prices from current high levels could wreak havoc if output remains depressed.

The New York Times reports on an audit by the military's Special Inspector General for Iraq Reconstruction (SIGIR) into use of Iraq reconstruction funds:

A new audit of American financial practices in Iraq has uncovered irregularities including millions of reconstruction dollars stuffed casually into footlockers and filing cabinets, an American soldier in the Philippines who gambled away cash belonging to Iraq, and three Iraqis who plunged to their deaths in a rebuilt hospital elevator that had been improperly certified as safe.

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Agents from the inspector general's office found that the living and working quarters of American occupation officials were awash in shrink-wrapped stacks of $100 bills, colloquially known as bricks.

One official kept $2 million in a bathroom safe, another more than half a million dollars in an unlocked footlocker. One contractor received more than $100,000 to completely refurbish an Olympic pool but only polished the pumps; even so, local American officials certified the work as completed. More than 2,000 contracts ranging in value from a few thousand dollars to more than half a million, some $88 million in all, were examined by agents from the inspector general's office. The report says that in some cases the agents found clear indications of potential fraud and that investigations into those cases are continuing.

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[T]he portrait it [the audit] paints of abandoned rebuilding projects, nonexistent paperwork and cash routinely taken from the main vault in Hilla without even a log to keep track of the transactions is likely to raise major new questions about how the provisional authority did its business and accounted for huge expenditures of Iraqi and American money.

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Sometimes the consequences of such loose controls were deadly. A contract for $662,800 in civil, electrical, and mechanical work to rehabilitate the Hilla General Hospital was paid in full by an American official in June 2004 even though the work was not finished, the report says. But instead of replacing a central elevator bank, as called for in the scope of work, the contractor tinkered with an unsuccessful rehabilitation.

For the full-text of the SIGIR audit mentioned in this article, as well as many other SIGIR audits, see this page.