[lbo-talk] US to Iraq: rebuild yourself, loser

Michael Pollak mpollak at panix.com
Mon Jan 16 19:16:30 PST 2006



> Los Angeles Times - January 15, 2005
>
> THE CONFLICT IN IRAQ
> 'Marshall Plan' for Iraq Fades
> Once the $18.6 billion for reconstruction is spent, the nation might have to
> rely on private investment. 'No pain, no gain,' a U.S. official says.
>
> By Doug Smith and Borzou Daragahi
> Times Staff Writers
>
> BAGHDAD - After more than 2 1/2 years of sputtering reconstruction work, the
> United States' "Marshall Plan" to rebuild this war-torn country is drawing to
> a close this year with much of its promise unmet and no plans to extend its
> funding.
>
> The $18.6 billion approved by Congress in 2003 will be spent by the end of
> this year, officials here say.

And it gets worse. By the account of one large contractor, it won't take long for the astonishly little that we got done with 18 billion to get undone at current rates:

http://observer.guardian.co.uk/business/story/0,6903,1686489,00.html

Why the lights are dimmed in Baghdad

Insurgency could wipe out all our work, warns UK contractor Amec.

Oliver Morgan reports

Sunday January 15, 2006

Observer

Amec, the British infrastructure project manager, is warning that much

of the reconstruction work it has done in Iraq in the past 18 months

could be wiped out if funding for programmes is scaled back.

The prediction comes a week after reports indicated that the White

House would not seek additional funds for rebuilding the country once

the $18.4bn agreed by Congress in autumn 2003 has been spent.

In mid-term election year, the Bush administration is working on its

2007 budget and is seeking to cut spending against the background of a

growing deficit and the costs of hurricane relief and the Iraq

conflict. Reconstruction in the country appears to be a casualty.

Bush has boasted of leaving Iraqi infrastructure in a better state

than it was under Saddam. In March 2004 he talked of rebuilding the

country so that 'a free Iraq can quickly gain economic independence'.

He pointed to its oil wealth, saying it was producing 2 million

barrels a day and to pledges of international aid.

But while a White House spokesman tellingly talked of US funding in

the past tense - the officer overseeing reconstruction for the US Army

Corps of Engineers said the US had never intended to rebuild Iraq

completely. The $18bn was a springboard, he said.

Now, Amec, the biggest non-US operator in Iraq, warns that there is

great uncertainty for the future.

Amec, through a joint venture with US engineer Fluor, won several

major contracts in Iraq from the Coalition Provisional Authority, the

interim body that subsequently handed over to the Iraqi government. In

March 2004 the joint venture won a $500m deal to rebuild electricity

infrastructure and secured a $1.1bn contract to restore its water

system. Amec's share of these deals was $240m and $540m respectively.

It also has a smaller contract for environmental work.

Amec says the work under the main three contracts is largely

completed. It expects to finish what it was asked to do by the end of

March.

However, Amec says the work it has done may not last long. A spokesman

said: 'Recently, as much as 25 per cent of work completed has been

repairing infrastructure damaged by insurgents. If funding levels are

not maintained, insurgent activity could quickly [undo] much of our

work over the past 18 months.'

He added: 'Regarding future work, we would say that with uncertainty

in the region and the withdrawal of US funding, it is difficult to

predict levels of activity.'

The insurgency has bedevilled the reconstruction effort and added

massively to costs. Funds originally earmarked for rebuilding have

been diverted to pay for exigencies such as training a security force.

Amec, which has several hundred project managers in the country,

managing up to 10,000 contractors, has regularly had to stop projects

because of insurgent activity. For smaller operators, the environment

has often proved too much.

Graham Hand of the British Consultants and Contractors Bureau says

that of about 30 British contractors in Iraq two years ago, there are

now only half a dozen there. 'When companies first went out, they were

told by the government that it was difficult, but would get better. It

has got worse.'

Companies have to pay for the protection teams provided by outfits

such as Control Risks, which employ ex-servicemen in armoured 4x4

vehicles to escort civilian personnel around the country at a typical

cost of $5,000 to $8,000 a day.

Andy Bearpark, former head of operations at the Coalition Provisional

Authority and now a UK-based consultant, says: 'The experience of

reconstruction has been expensive, difficult and slow. People have not

seen the improvements they thought they were going to see. The result

is you get an Iraqi population that is disaffected.'

Despite Amec's claim that it has nearly finished what it was asked to

do, Iraq's infrastructure appears to be in a worse condition that it

was before the war. For example, the electricity supply is still

around 4,000 megawatts, about the pre-war level. On average, there is

12 hours of supply a day. Meanwhile, oil production is 1.1 million

barrels a day, below pre-war levels.

Lack of electricity causes civil unrest - there have been riots. And,

as the US made clear, oil production is vital if Iraq is to stand by

itself.

Bearpark says America has invested more than any other country, but it

has not seen the results. 'It is a tough position,' he said.

There is some light, however. Neil Quillian, an Iraq analyst with

Control Risks, says: 'Some contractors are saying they are optimistic

following December's elections.' He says the fact that disaffected

Sunni muslims participated in the vote suggests a more peaceful

future.

Does he believe this? He is unsure. Does Bearpark? No. And Amec? The

company will only repeat that the future remains uncertain.

Guardian Unlimited © Guardian Newspapers Limited 2006



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