The High Cost of Nation Building

IG for Iraqi reconstruction says better planning will help avoid waste

March 27, 2013

Major changes are required at the Department of Defense and State Department before taxpayer money is spent on future reconstruction projects in nations such as Syria and Yemen, according to a new report.

Of the $60 billion in aid for reconstruction projects in Iraq, more than $8 billion is simply unaccounted for or lost, special inspector general for Iraqi reconstruction (SIGIR) Stuart Bowen said at a discussion of the report hosted by the Center for Strategic and International Studies (CSIS).

Bowen also said that $800 million is laundered out of Iraqi banks every week, which amounts to $40 billion a year, according to Iraqi officials. Money laundering has gone unenforced in the last 10 years, with "corruption occurring at the highest level."

Bowen interviewed current Iraqi Prime Minister Nouri al-Maliki and Sen. John McCain (R., Ariz.) along with more than 40 others about the effects and lessons learned from Iraqi reconstruction.

Iraqi leaders said "a crucial element" in wasteful spending was the United States not consulting with Iraqi leadership before picking large and wasteful projects, a point lawmakers on Capitol Hill agreed with and a lesson Bowen highlighted in his report.

"We didn’t consult enough," he said, stressing the need to develop a reconstruction plan with the host country in the lead. Bowen gave the example of the Falluja water plant, which was one of the most extensive projects in Iraq.

U.S contractors built the plant with the U.S government only to find later that it was operating at 20 percent capacity because the local tribe that ran the plant was illiterate and received no training, a fact that could have been discovered with proper consultation.

Bowen was also critical with the lack of U.S planning on Iraqi reconstruction at its onset.

U.S aid quickly went from $2 billion to over $60 billion, with no set plans and objectives in place.

Bowen listed several lessons agencies should adopt with help from Congress. Bowen stressed the need for agencies to act in an "integrated way," saying each agency responded in an effective way on its own but did not communicate with one another.

Bowen also said that if an area is insecure "then you shouldn’t be reconstructing." Bowen listed estimates that projects are not only more dangerous but cost 10 times more to implement.

Additionally, there is no universal system for contracting projects in Iraq. "Every agency did its own contracting," Bowen said, with each agency having a separate system for its contractors.

Anthony Cordesman, an expert at CSIS, stressed that blame shouldn’t rest solely on mismanagement of host countries and federal agencies. Members of Congress passing large sums of money with no specific plan also share some of the blame.

"It’s not corruption when the key metric for success [for the U.S.] was speed of spending," Cordesman said. "Especially when the host government couldn’t absorb the inflow of money to spend wisely."

Published under: Iraq , Middle East