State Dept. eyes realignment of Iraq reconstruction funds

The request to shift more than $3 billion highlights the challenges of keeping order and rebuilding the economy.

When Congress approved $18 billion for Iraq reconstruction last November, the idea was to provide the long-neglected infrastructure - the roads, water and sewer services, and health facilities - that would get the country working again and secure it on the path to becoming a democratic showcase. But that was before America's largest foray into democracy-building since the Marshall Plan met up with the Iraqi insurgency.

Now with the rebels' attacks wreaking havoc on security and holding progress on the big-ticket expenditures to a trickle, the US Embassy in Baghdad is calling on Washington to reorient a chunk of the allocation toward addressing the insurgency.

In effect, US officials in Baghdad want more money to create jobs - including in security - that might make Iraq's idle young men too busy to rebel. But the reordering would take money from restoring water, sewer, and electrical services - the lack of which has Iraqis frustrated and in some cases turning on the US presence.

"Security is turning out to be a much larger problem, and you can't spend money on infrastructure if the security isn't there," says Henri Barkey, a former State Department analyst on Iraq who is now at Lehigh University in Bethlehem, Pa. "But spending money where you didn't think you'd have to also means you won't be providing what you led people to believe would be coming."

John Negroponte, US ambassador to Iraq, wants Washington to shift more than $3 billion in reconstruction funds to creating more security forces. In addition, the ambassador wants to accelerate jobs programs and focus more on repairing Iraq's oil-production facilities so the country can pump more oil - and earn more money. The proposed revisions are under review by the administration and would be taken to Congress at least for consultation before moving forward, officials say.

Ambassador Negroponte's initiative reflects frustration over the slow pace of spending: As of the end of August, less than $1 billion of the $18.4 billion allocation had been spent. Regular attacks on existing infrastructure and an ongoing insurgency campaign to discourage contractors from taking part in Iraq's reconstruction are two prime culprits.

Some observers - pointing to earlier tensions between a sidelined State Department and an in-charge Pentagon over Iraq's postwar plans - say Negroponte's recommendations also reflect a State Department desire to place its imprimatur on reconstruction. The recommendations could also demonstrate that, when it comes to US-Iraqi relations, new kids are in charge on the block.

But State officials say the proposed revisions are part of a normal reassessment of needs nearly a year after the funds were approved. They would also reflect the situation on the ground as Negroponte has assessed it since arriving earlier this summer. "The important thing to remember is Ambassador Negroponte, when he went to Iraq, made clear that one of his first priorities was to conduct a comprehensive review of construction priorities, of aid priorities," said State Department spokesman Richard Boucher last week. "We ... want to spend money on the major priorities, which are improving security, increasing Iraqi employment, and improving quality of life for all Iraqis."

Others say there is more going on here than a mere reassessment of needs. The passing of the reconstruction baton from the Department of Defense to State means a shift to a more traditional nation-building program, says James Dobbins, director of the International Security and Defense Policy Center at the RAND Corp. in Arlington, Va. Expect emphasis to shift from large infrastructure projects to programs with a quick impact among the population, like jobs creation.

"Iraq's reconstruction was influenced by who was doing it, and with a change in who's in charge we'll see a shift in institutional perspective," says Mr. Dobbins, who has worked with the past four administrations on nation-building projects. "With the State Department running the show, it's back to a more traditional scenario where the big international financing institutions ... come in on the big, long-term infrastructure projects, while the US focuses on other priorities with shorter-term impact."

The proposal calls for redirecting nearly $1 billion to create additional Iraqi National Guard units and other security forces. But that proposal comes as evidence mounts of money squandered on poorly trained and motivated units: Reports have mounted of Iraqi security forces being overrun by insurgents or standing aside as antigovernment forces have taken over towns.

Lehigh's Mr. Barkey says much of what Negroponte suggests is an attempt to correct what was done wrong earlier. "The mistakes of the occupation are haunting us," he says. He cites the proposal for a jobs program, after months of favoring foreign workers. "The administration may have had very good reasons for doing what it did, but it still created problems."