Iraq on own to rebuild on Yahoo! News

original
By Thomas Frank, USA TODAYFri Mar 24, 6:43 AM ET

The head of the U.S.-led program to rebuild Iraq said Thursday that the Iraqi government can no longer count on U.S. funds and must rely on its own revenues and other foreign aid, particularly from Gulf nations.

"The Iraqi government needs to build up its capability to do its own capital budget investment," Daniel Speckhard, director of the U.S. Iraq Reconstruction Management Office, told reporters.

The burden of funding reconstruction poses an extraordinary challenge for a country that needs tens of billions of dollars for repairing its infrastructure at the same time it's struggling to pay its bills. Iraq's main revenue source - oil - is hampered by insurgent attacks on production facilities and pipelines, forcing the country to spend $6 billion a year on oil imports.

Iraq's deputy finance minister, Kamal Field al-Basri, said it was "reasonable" for the United States to sharply cut back its reconstruction efforts after spending about $21 billion. "We should be very much dependent on ourselves," al-Basri said in an interview.

Anthony Cordesman, a Middle East expert at the Washington-based Center for Strategic and International Studies, called the U.S. reconstruction effort "a dismal failure. It hasn't met any of its goals. It's left a legacy of half-built projects, built to U.S. standards, which Iraq doesn't have the capability to maintain."

Al-Basri said Iraq needs to increase its capacity to produce oil, which generates 93% of government's revenues.

Insurgent attacks also have hampered efforts to rebuild electrical, sewer and water systems. A report last month by the U.S. inspector general overseeing reconstruction said so much money was being spent on security that most sewer, irrigation and drainage projects have been canceled.

Speckhard said 16% to 22% of each reconstruction dollar went to protect projects and contractors. He noted that Iraq was generating less electricity now than before the U.S.-led invasion in spring 2003 and acknowledged that "significant challenges remain" in rebuilding Iraq.

The total rebuilding cost is now $70 billion to $100 billion - up from a $60 billion World Bank estimate in 2003, Speckhard said.

Speckhard said the U.S. aid program sought to "kick-start the economy" and "lay a foundation" that Iraq could build on with its own money, private investment and other international donors, particularly from the Gulf region. "That kick-starting process has occurred," he said, noting that per capita income jumped to $1,200 a year from $500 before the war and that 30,000 new businesses had started in the last year.

Iraq must increase oil exports from their current level of about 1.6 million barrels a day to 2 million barrels a day, Speckhard said.

Al-Basri said Iraq needs foreign investment to lift exports to 3 million barrels - a level last reached by Iraq in the 1980s.