Special Inspector General For Iraq Reconstruction’s “Hard Lessons” Chapter 9 “Bremer’s Grand Vision”

Chapter 9 of the Special Inspector General for Iraq Reconstruction’s “Hard Lessons” book on the U.S. effort in Iraq covered the initial estimates for the costs of rebuilding the country immediately after the American invasion. During mid-2003, five different organizations traveled to the country, each coming up with its own plans. Unfortunately none of those reports were consulted by the Coalition Provisional Authority (CPA), which came up with its own budget for Iraq. In fact, it appeared to come up with their spending proposal in a bubble that didn’t even consider the situation in Iraq. That was just one of many mistakes made in the largest foreign rebuilding effort in U.S. history.

International engineering company Bechtel was the first group that did a survey of Iraq. That occurred from April to May 2003. At the time, the corporation had a $680 million contract with the United States Agency for International Development (USAID) to work on Iraq’s housing and transportation, which would quickly expand to over $1 billion in a few months for power, water, sanitation, airports, telephones, and the Um Qasr port. Bechtel looked at the country’s entire infrastructure situation, which had been degraded for over a decade due to the Gulf War and United Nations sanctions. Not surprisingly the business found that Iraq’s transportation, communication, water, power, etc. had all collapsed. They estimated the costs of repairing all that damage would be $16 billion. They also warned that there would be major barriers to doing the work including a lack of security, lack of coordination amongst U.S. agencies, limited information on Iraq, confusing contracting regulations, and leftover ordinance. It predicted that the growing insurgency would quickly escalate the costs of doing work in Iraq. It also recommended that the CPA come up with its own strategic plan for rebuilding Iraq.

In May 2003 the U.S. Army Corps of Engineers, working with the engineering and services company Kellogg, Brown & Root and the Iraqi Oil Ministry looked at the petroleum industry. They found that $457 million in damages had occurred during the U.S. invasion, and another $943 million had been incurred from the looting that broke out afterward. Altogether they estimated that it would cost $1.7 billion to revive Iraq’s oil business, with the possibility that costs could rise 40%. They too said that an integrated reconstruction plan needed to be formulated, that security was a major concern, that Iraqis needed to be involved in decision-making, and that they be trained to maintain any new equipment installed.

During the summer the United Nations and World Bank also did a study of Iraq. They found neglect and under investment due to sanctions. They believed that $56 billion would be necessary to rebuild Iraq, with $36 billion going towards health, education, agriculture, government and rule of law, and $20 billion would be for oil. That latter number came from a report by the CPA. Like the previous reports, they said that security was a main concern, but also that Iraq needed a competent government as well to manage and maintain the rebuilding.

In June 2003 Defense Secretary Donald Rumsfeld asked the Center for Strategic and International Studies to do a report on Iraq. They went to nine of Iraq’s 18 provinces, and predicted that it would take years to rebuild the country. Like everyone else they said that security was the number one issue in Iraq. They also recommended that Iraqis be included in decision making and be hired to do the work, and that power should be decentralized to the provinces to make sure that reconstruction was suited to the different regions of the nation.

Finally, the CPA issued its own “Vision for Iraq.” It stated that America’s goals in Iraq were to build a democracy, provide security, services, and develop the economy, government, and communication system. In July 2003 the report was sent to the Pentagon for review.

The more detailed CPA paper, “Achieving The Vision To Restore Full Sovereignty To The Iraqi People” followed. Two American officials wrote the document without any input from Iraqis, the Iraqi Governing Council, or consideration of the situation in Iraq and the previous reports. The authors would later say that they were afraid that the Americans were presenting a future for Iraq without the Iraqis. The report said that the CPA was going to put 30,000 police out into the field, rebuild the Border Guards to protect Iraq’s frontier, re-open its courts, build 11 prisons, reform all of the ministries, boost electricity to 4,000 megawatts, restore health care to prewar levels, rehabilitate 1,000 school, and have all the airports and railroads up and running again in a short matter of time. The Special Inspector General for Iraq Reconstruction would later say that those goals were completely unrealistic, especially in the middle of a war zone.

In July, the CPA began putting numbers behind these ideas. It proposed $6.1 billion for the Iraqi government for the rest of 2003. That would be partly funded by oil revenues, which they predicted would reach $3.46 billion in the last four months of 2003. The CPA also believed that tax revenues and state owned businesses would bring in an additional $432.7 million. That left a $2.2 billion deficit. Seized Iraqi funds, the United Nations’ created Development Fund for Iraq, and appropriations from Congress were supposed to cover the difference. To show how disconnected the CPA’s ideas continued to be, only $609.5 million of that budget was for reconstruction and investment in infrastructure.

Afterward CPA head Paul Bremer asked for a 2004 budget, which came to $35 billion. The CPA predicted that Iraq would earn $13 billion that year, leaving a $23 billion deficit. Bremer decided to ask Congress to cover most of that. At the end of the summer he sent a request for $20.3 billion to the White House, which was initially rejected. That’s because the administration had told Congress that they were not going to ask for any more funds for Iraq in 2003. A week after the U.S. invasion in March for example, Deputy Secretary of Defense Paul Wolfowitz told the Senate that Iraq could finance its own reconstruction. He reiterated his point on August 1 while being interviewed on a talk radio show stating that Iraq had plenty of resources. As more information flowed to Washington about the state of Iraq however, the White House eventually gave in and went to Congress in September asking for $87 billion for both Afghanistan and Iraq. 

As had been the norm since the beginning of U.S. planning for Iraq, the CPA did not coordinate with any other agency. When the USAID heard about the budgets, it objected because it wasn’t included. It said that capacity and democracy building, agriculture, and economic development should be the focus of the U.S. effort rather than large projects suggested by the CPA. USAID went to the White House asking them to reconsider the CPA’s proposal, but lost. Then USAID asked for an additional $5 billion to pursue its own goals, but the White House vetoed that idea as well. The USAID critique would prove prophetic, as many of the major reconstruction plans by the CPA proved to be a failure.

In October 2003 the U.S. put together the Madrid conference to drum up international support for Iraq reconstruction. 76 countries, 20 non-government organizations, and 20 international groups attended. Fewer than half of them ended up pledging money, which amounted to $13.5 billion in loans and grants. Japan was the largest donor with $1.5 billion in grants and $3.4 billion in loans. Many were scared off by the August 19 bombing of the United Nations building in Baghdad, while others were opposed to the U.S. invasion.

The next month Congress approved a spending bill for Iraq. It pledged $18.4 billion for the new Iraq Relief and Reconstruction Fund. That included $5.56 billion for electricity, $4.33 billion for water and sanitation, $3.24 billion for the security forces, $1.89 billion for oil, $1.32 billion for justice and civil society, $790 million for health, $500 million for transportation and communication, $370 million for transportation and construction, $280 million for education, refugees, human rights, and governance, and $150 million for private sector development. The money was supposed to last for two years, and was the start of the largest reconstruction effort in American history. In total, the U.S. ended up appropriating $56.81 billion for Iraq from 2003-2010. 

The first post-invasion American plans for rebuilding Iraq suffered from a lack of coordination and realism. Five different groups had given their assessments about Iraq, and warned about the problems, mainly security and Iraqi participation, in mid-2003. The CPA went last, and was the most important because it was in control of the country and money. It not only did not look at the earlier reports, but didn’t even consider the conditions in Iraq. It set grand goals for Iraq that were nearly impossible to achieve given the growing insurgency. In fact, the war would derail most of the CPA’s initial plans, and divert an increasingly large amount of money away from rebuilding to security. As the Special Inspector General noted, the Iraqi security forces was the one legitimate success of the U.S., while infrastructure and government are still underdeveloped to this day.

SOURCES

Baker, David, “Bechtel under siege,” San Francisco Chronicle, 9/21/03

Dickey, Christopher, “$1 Billion A Week,” Newsweek, 7/21/03

Laura Ingraham Show, “Deputy Secretary Wolfowitz Interview with The Laura Ingraham Show,” U.S. Department of Defense, 8/1/03

Sandalow, Marc, “Bush asks $87 billion for war,” San Francisco Chronicle, 9/8/03

Special Inspector General for Iraq Reconstruction, “Hard Lessons,” 1/22/09
- “Quarterly Report to the United States Congress,” 10/30/10