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Iraq 'is facing shortfall in reconstruction'
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Financial Times - [10/19/2005]
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A dramatic increase in security spending in Iraq and a shift in reconstruction priorities have created a "reconstruction gap" that will leave many projects planned by the US "on the drawing board", a US government watchdog warned yesterday.
Stuart Bowen, special inspector general for Iraq reconstruction, also said that over the next few years, the money needed by the Iraqi government to carry out daily operations of its existing health, oil, water and electrical infrastructure would "outstrip" available revenue. The gap, he said, would need to be addressed by international donors and better budgeting practices by Iraqis.
"It will take time for the Iraqi economy to grow to generate revenues at levels needed to sustain the infrastructure. In this regard, the deck is currently stacked against Iraq," Mr Bowen said in congressional testimony ahead of a quarterly report which will be delivered to Congress on October 30.
While the chief US official charged with oversight of the $18.4bn (€15.4bn, £10.5bn) Iraq Reconstruction and Relief Fund said he was encouraged by reports of "steady, significant" progress in Iraq, he cautioned that the US and the world risked undermining, or even reversing, the value of investments made so far if they failed to "buy the necessary time for Iraq to be able to shoulder their own infrastructure".
Although an improvement in the productivity of the Iraq oil sector would be "key" to jump-starting the rest of the nation's economy, the country's lack of refining capacity was forcing it to spend $300m a month to import refined fuels.
A recently completed audit by Mr Bowen's office on sustainability estimates concluded that the government would also require $650m-$750m annually to operate and maintain current reconstruction projects. Another 20-25 per cent would be needed for security, salaries and fuel.
The emergence of the reconstruction gap was linked, in part, to the onslaught of the Iraqi insurgency in 2004, which was not taken into account when the World Bank estimated in 2003 that it would cost $56bn to rebuild Iraqi infrastructure.
Of the $29bn the US has appropriated to be used in Iraq, only 7 per cent remains to be committed for programmes and projects.
The funds have been further eroded by security needs, which Mr Bowen said had taken as much as 26 per cent of the funds, according to some estimates.
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