US runs out of reconstruction money in Iraq

The Los Angeles Times reports today that the US has suspended major reconstruction projects in Iraq because of our continuing inability to secure the country.

Although no overall figures are available, one contractor has stopped work on six of eight water treatment plants to which it was assigned.

“We have scaled back our projects in many areas,” James Jeffrey, a senior advisor on Iraq for the State Department, told lawmakers at a hearing of the House Appropriations subcommittee on foreign operations. “We do not have the money.”

More than two years after Congress approved funding for the rebuilding effort, electricity and oil production in Iraq are at or below prewar levels; and unemployment remains high. Less than half of the U.S. reconstruction money has been spent, but in some sectors, such as electricity and water, security costs have eaten up much of the budget.

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.

“Exasperate.” Passions are running high.

Meanwhile, the same Congress that supported the invasion of Iraq and has approved every Iraq-related supplemental budget request submitted by the administration has voted to hand $50 billion to FEMA head Michael Brown to pay for the Hurricane Katrina reconstruction effort.

Brown, who along with his boss, Homeland Security chief Michael Chertoff is almost universally recognized as having fatally botched the rescue effort following the storm, now stands accused of inflating his pathetically slender resumé.

Whether or not Brown survives in his position, much of that $50 billion will wind up in the hands of the same companies who have failed to restore essential services in Iraq to the levels enjoyed by Iraqis before the invasion. Contractors here won’t face the same level of threat as those in Iraq — although you wouldn’t guess that if you buy into the horror tales from New Orleans — but there is absolutely no reason to assume that the effort will be managed more efficiently here, and less than no reason if Brown remains in charge. In Iraq, it’s insurgents; here, it’s a Gulf Coast large chunks of which have been transformed into what is in effect the mother of all Superfund sites.

Lest we be accused of nuancing, here’s a simple summation: two years, $200 billion, tens of thousands (at least) dead, substandard services getting more sub every day, and no mo’ money.

And apparently the Iraqis are attempting to rein in the private armies who have operated outside both US and Iraqi law while bankrupting the reconstruction projects and, incidentally, siphoning experienced soldiers away from our military with high salaries paid for by our military from the funds appropriated for the reconstruction projects.

It’s all very symmetrical. And it isn’t going unnoticed by Republicans, particularly House Republicans facing reelection next year.

“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-Pa.), 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 been critical of 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.

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

22% of $150 million is $33 million, which isn’t a bad weekly haul even if you have to split more than a few ways.

Here’s another simple formulation: $50 billion — $60 billion counting the first installment — is probably not enough to clean up the environmental disaster that will become evident during the next weeks, let alone rebuild the Gulf Coast and address the needs of those who lost everything in the storm. Since we don’t have enough money to do the job, the obvious solution is to avoid the time-consuming and unphotogenic work of cleaning up the mess before we rebuild on top of it.

So we’ll be needing more tax cuts. And we should cut back drastically on funding for entitlement programs and regulatory agencies.

Aside from killing a great many people, both Iraq and Katrina will rank at the top of the boondoggle heap, possibly forever. It’s never safe to speculate about an upper limit to this administration’s corruption and incompetence, but surely other opportunities to blow the better part of a trillion bucks will be hard to come by in the few years Bush has left. Run through the list of great executive branch scandals in our history, and none of them compare. Teapot Dome wouldn’t make a ripple in this ocean.

Which makes this irony almost unbearably heavy:

Another concern is corruption. Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, said his office was conducting 58 criminal investigations in Iraq, including several that were close to prosecution. A few U.S. contractors have faced criminal charges.

“We need to lean forward and support, emphasize, do everything we can to stand up the anti-corruption structures within Iraq in an effective way,” Bowen said. “I just think that without inculcating an ethic of integrity at the core of this democracy — this fledgling democracy — that it will founder very soon.”

Well, Stuart, we’re not doing so well here either.