Official History Spotlights Iraq Rebuilding Blunders

Taken from The New York Times, December 13, 2008
By JAMES GLANZ and T. CHRISTIAN MILLER

BAGHDAD — An unpublished 513-page federal history of the American-led reconstruction of Iraq depicts an effort crippled before the invasion by Pentagon planners who were hostile to the idea of rebuilding a foreign country, and then molded into a $100 billion failure by bureaucratic turf wars, spiraling violence and ignorance of the basic elements of Iraqi society and infrastructure.

(for original PDF Document - Click here!)

The history, the first official account of its kind, is circulating in draft form here and in Washington among a tight circle of technical reviewers, policy experts and senior officials. It also concludes that when the reconstruction began to lag — particularly in the critical area of rebuilding the Iraqi police and army — the Pentagon simply put out inflated measures of progress to cover up the failures.

WATER Students used water from a faucet at the Khulafa al-Rashideen school in Baghdad in October. Access to potable water plummeted after the 2003 invasion.

In one passage, for example, former Secretary of State Colin L. Powell is quoted as saying that in the months after the 2003 invasion, the Defense Department “kept inventing numbers of Iraqi security forces — the number would jump 20,000 a week! ‘We now have 80,000, we now have 100,000, we now have 120,000.’ ”

Mr. Powell’s assertion that the Pentagon inflated the number of competent Iraqi security forces is backed up by Lt. Gen. Ricardo S. Sanchez, the former commander of ground troops in Iraq, and L. Paul Bremer III, the top civilian administrator until an Iraqi government took over in June 2004.

Among the overarching conclusions of the history is that five years after embarking on its largest foreign reconstruction project since the Marshall Plan in Europe after World War II, the United States government has in place neither the policies and technical capacity nor the organizational structure that would be needed to undertake such a program on anything approaching this scale.
The bitterest message of all for the reconstruction program may be the way the history ends. The hard figures on basic services and industrial production compiled for the report reveal that for all the money spent and promises made, the rebuilding effort never did much more than restore what was destroyed during the invasion and the convulsive looting that followed.

COMMUNICATION Landline phone service plunged after the invasion, forcing Iraqis to rely on cellphone companies, above.

By mid-2008, the history says, $117 billion had been spent on the reconstruction of Iraq, including some $50 billion in United States taxpayer money.

The history contains a catalog of revelations that show the chaotic and often poisonous atmosphere prevailing in the reconstruction effort.

When the Office of Management and Budget balked at the American occupation authority’s abrupt request for about $20 billion in new reconstruction money in August 2003, a veteran Republican lobbyist working for the authority made a bluntly partisan appeal to Joshua B. Bolten, then the O.M.B. director and now the White House chief of staff. “To delay getting our funds would be a political disaster for the President,” wrote the lobbyist, Tom C. Korologos. “His election will hang for a large part on show of progress in Iraq and without the funding this year, progress will grind to a halt.” With administration backing, Congress allocated the money later that year.

In an illustration of the hasty and haphazard planning, a civilian official at the United States Agency for International Development was at one point given four hours to determine how many miles of Iraqi roads would need to be reopened and repaired. The official searched through the agency’s reference library, and his estimate went directly into a master plan. Whatever the quality of the agency’s plan, it eventually began running what amounted to a parallel reconstruction effort in the provinces that had little relation with the rest of the American effort.

Money for many of the local construction projects still under way is divided up by a spoils system controlled by neighborhood politicians and tribal chiefs. “Our district council chairman has become the Tony Soprano of Rasheed, in terms of controlling resources,” said an American Embassy official working in a dangerous Baghdad neighborhood. “ ‘You will use my contractor or the work will not get done.’ ”

A Cautionary Tale
The United States could soon have reason to consult this cautionary tale of deception, waste and poor planning, as troop levels and reconstruction efforts in Afghanistan are likely to be stepped up under the new administration.

The incoming Obama administration’s rebuilding experts are expected to focus on smaller-scale projects and emphasize political and economic reform. Still, such programs do not address one of the history’s main contentions: that the reconstruction effort has failed because no single agency in the United States government has responsibility for the job.

Five years after the invasion of Iraq, the history concludes, “the government as a whole has never developed a legislatively sanctioned doctrine or framework for planning, preparing and executing contingency operations in which diplomacy, development and military action all figure.”

ELECTRICITY A new generator in Baghdad in 2007. Electricity output is now only slightly higher than it was before the war.

Titled “Hard Lessons: The Iraq Reconstruction Experience,” the new history was compiled by the Office of the Special Inspector General for Iraq Reconstruction, led by Stuart W. Bowen Jr., a Republican lawyer who regularly travels to Iraq and has a staff of engineers and auditors based here. Copies of several drafts of the history were provided to reporters at The New York Times and ProPublica by two people outside the inspector general’s office who have read the draft, but are not authorized to comment publicly.


OIL The production of oil at Iraqi fields, like the one above, 370 miles southeast of Baghdad, has been below prewar levels.

Mr. Bowen’s deputy, Ginger Cruz, declined to comment for publication on the substance of the history. But she said it would be presented on Feb. 2 at the first hearing of the Commission on Wartime Contracting, which was created this year as a result of legislation sponsored by Senators Jim Webb of Virginia and Claire McCaskill of Missouri, both Democrats.

The manuscript is based on approximately 500 new interviews, as well as more than 600 audits, inspections and investigations on which Mr. Bowen’s office has reported over the years. Laid out for the first time in a connected history, the material forms the basis for broad judgments on the rebuilding program.

In the preface, Mr. Bowen gives a searing critique of what he calls the “blinkered and disjointed prewar planning for Iraq’s reconstruction” and the botched expansion of the program from a modest initiative to improve Iraqi services to a multibillion-dollar enterprise.

Mr. Bowen also swipes at the endless revisions and reversals of the program, which at various times gyrated from a focus on giant construction projects led by large Western contractors to modest community-based initiatives carried out by local Iraqis. While Mr. Bowen concedes that deteriorating security had a hand in spoiling the program’s hopes, he suggests, as he has in the past, that the program did not need much outside help to do itself in.

Despite years of studying the program, Mr. Bowen writes that he still has not found a good answer to the question of why the program was even pursued as soaring violence made it untenable. “Others will have to provide that answer,” Mr. Bowen writes.

“But beyond the security issue stands another compelling and unavoidable answer: the U.S. government was not adequately prepared to carry out the reconstruction mission it took on in mid-2003,” he concludes.

The history cites some projects as successes. The review praises community outreach efforts by the Agency for International Development, the Treasury Department’s plan to stabilize the Iraqi dinar after the invasion and a joint effort by the Departments of State and Defense to create local rebuilding teams.

But the portrait that emerges over all is one of a program’s officials operating by the seat of their pants in the middle of a critical enterprise abroad, where the reconstruction was supposed to convince the Iraqi citizenry of American good will and support the new democracy with lights that turned on and taps that flowed with clean water. Mostly, it is a portrait of a program that seemed to grow exponentially as even those involved from the inception of the effort watched in surprise.

Early Miscalculations
On the eve of the invasion, as it began to dawn on a few officials that the price for rebuilding Iraq would be vastly greater than they had been told, the degree of miscalculation was illustrated in an encounter between Donald H. Rumsfeld, then the defense secretary, and Jay Garner, a retired lieutenant general who had hastily been named the chief of what would be a short-lived civilian authority called the Office of Reconstruction and Humanitarian Assistance.

The history records how Mr. Garner presented Mr. Rumsfeld with several rebuilding plans, including one that would include projects across Iraq.

“What do you think that’ll cost?” Mr. Rumsfeld asked of the more expansive plan.

“I think it’s going to cost billions of dollars,” Mr. Garner said.

“My friend,” Mr. Rumsfeld replied, “if you think we’re going to spend a billion dollars of our money over there, you are sadly mistaken.”

In a way he never anticipated, Mr. Rumsfeld turned out to be correct: before that year was out, the United States had appropriated more than $20 billion for the reconstruction, which would indeed involve projects across the entire country.

Mr. Rumsfeld declined to comment on the history, but a spokesman, Keith Urbahn, said that quotes attributed to Mr. Rumsfeld in the document “appear to be accurate.” Mr. Powell also declined to comment.

The secondary effects of the invasion and its aftermath were among the most important factors that radically changed the outlook. Tables in the history show that measures of things like the national production of electricity and oil, public access to potable water, mobile and landline telephone service and the presence of Iraqi security forces all plummeted by at least 70 percent, and in some cases all the way to zero, in the weeks after the invasion.

Subsequent tables in the history give a fast-forward view of what happened as the avalanche of money tumbled into Iraq over the next five years.

Dashed Expectations
By the time a sovereign Iraqi government took over from the Americans in June 2004, none of those services — with a single exception, mobile phones — had returned to prewar levels.

And by the time of the security improvements in 2007 and 2008, electricity output had, at best, a precarious 10 percent lead on its levels under Saddam Hussein; oil production was still below prewar levels; and access to potable water had increased by about 30 percent, although with Iraq’s ruined piping system it was unclear how much reached people’s homes uncontaminated.

Whether the rebuilding effort could have succeeded in a less violent setting will never be known. In April 2004, thousands of the Iraqi security forces that had been oversold by the Pentagon were overrun, abruptly mutinied or simply abandoned their posts as the insurgency broke out, sending Iraq down a violent path from which it has never completely recovered.

At the end of his narrative, Mr. Bowen chooses a line from “Great Expectations” by Dickens as the epitaph of the American-led attempt to rebuild Iraq: “We spent as much money as we could, and got as little for it as people could make up their minds to give us.”

Oil giants return to Iraq

Shell, BP, Exxon Mobil and Total set to sign deal with Baghdad

Taken from The Independent, UK, Friday 20 June 2008
By Patrick Cockburn

Nearly four decades after the four biggest Western oil companies were expelled from Iraq by Saddam Hussein, they are negotiating their return. By the end of the month, Royal Dutch Shell, BP, Exxon Mobil and Total will sign agreements with the Baghdad government, Iraq's first with big Western oil firms since the US-led invasion in 2003.

The deals are for repair and technical support in some of the country's largest oilfields, the Oil Ministry in Baghdad said yesterday. The return of "Big Oil" will add to the suspicions of those in the Middle East who claimed that the overthrow of Saddam was secretly driven by the West's desire to gain control of Iraq's oil. It will also be greeted with dismay by many Iraqis who fear losing control of their vast oil reserves.

Iraq's reserves are believed to be second only to Saudi Arabia in the Middle East, but their exploitation has long been hampered by UN sanctions, imposed on Iraq after Saddam Hussein invaded Kuwait in 1990.

The major oil companies have been eager to go back to Iraq, but are concerned about their own security and the long-term stability of the country. The two-year no-bid agreements are service agreements that should add another 500,000 barrels of crude a day of output to Iraq's present production of 2.5 million barrels a day (b/d).

The companies have the option of being paid in cash or crude oil for the deals, each of which will reportedly be worth $500m (£250m). For Iraq, the agreements are a way of accessing foreign expertise immediately, before the Iraqi parliament passes a controversial new hydrocarbons law.

But they mean that the four oil companies, which originally formed the Iraq Petroleum Company to exploit Iraqi oil from the 1920s until the industry's nationalisation in 1972, will be well-placed to bid for contracts for the long-term development of these fields. The oilfields affected are some of the largest in Iraq, from Kirkuk in the north to Rumaila, on the border with Kuwait. Although there is oil in northern Iraq, most of the reserves are close to Basra, in the far south.

Since the US invasion, Iraqis have been wary of foreign involvement in their oil industry. Many are convinced that the hidden purpose of the US invasion was to take over Iraqi oil, but the Iraqi Oil Minister, Hussein Shahristani, has said that Iraq will hold on to its natural resources. "If Iraq needs help from international oil companies, they will be invited to co-operate with the Iraqi National Oil Company [Inoc], on terms and conditions acceptable to Iraq, to generate the highest revenue for Iraq".

Inoc's technical expertise has deteriorated sharply during the long years of sanctions. Iraq is currently exporting 2.1 million b/d and is expecting to have oil revenues of $70bn this year, but its government administration is too dysfunctional and corrupt to rebuild the electricity or water supply systems. The government has $50bn in the Federal Bank of New York.

Mr Shahristani has been highly critical of the Kurdistan Regional Government (KRG) for auctioning off oil concessions in Iraqi Kurdistan without reference to the oil ministry in Baghdad.

In an interview with The Independent last year, he said Inoc would never do business with any oil company that signed up with the KRG, and he also doubted if the oil could be exported without pipelines. "Are they going to carry it out in buckets?" he asked.

Several of the small oil companies who have signed contracts in Kurdistan are hoping that in the long term there will be an agreement between the Kurds and the central government and they will then sell out to the majors at a large profit.

The technical support agreements, as the service agreements are known, may open the door to Iraq for the majors. Mr Shahristani has said that Iraq will open up the same fields for bidding for long-term development projects soon. "We're going to announce the first licensing round by the end of this month or early next month," he said.

The high price of oil means that Iraq is not under immediate pressure to maximise its oil revenues. The Iraqi parliament has suspected anything which looks like giving foreign companies ownership of Iraq's oil through a production sharing agreement.

The nationalisation of Iraq's oil is one the few acts of Saddam Hussein's long years in power which is still highly popular, and Iraqi members of parliament are fearful of anything that looks like back-door privatisation in the interests of foreigners.

Big four have history of control
For the four oil giants, the new agreements will bring them back to a country where they have a long history. BP, Exxon Mobil, Total and Shell were co-owners of a British, American and French consortium that kept Iraq's oil reserves in foreign control for more than 40 years.

The Iraq Petroleum Company (once the Turkish Petroleum Company) was formed in 1912 by oil companies eager to grab the resources in parts of the Ottoman Empire.

The company was formalised in 1928 and each of the four shareholders had a 23.75 per cent share of all the oil produced. The final 5 per cent went to Calouste Gulbenkian, an Armenian businessman.

In 1931, an agreement was signed with Iraq, giving the company complete control over the oi fields of Mosul in return for annual royalties. After Saddam's coup in 1958, nationalisation came in 1972.

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It's sad to see a country that was only a decade ago was one of the most advanced economies in the Arab world with women entitled freedoms like being able to work, go to school, being destroyed for the sake of oil and oil supply. Most people knew from the begining that the war in Iraq was about Oil and gaining control of the Middle East - in September 2007, Alan Greenspan a Republican whose 18-year tenure as head of the US Federal Reserve was widely admired, said in his view on the motive for the 2003 Iraq invasion “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil,” a few months earlier the Australian Defence Minister admitted his country's troops are in Iraq to secure oil interests. Brendan Nelson is believed to be the first government minister from any country with forces in Iraq to publicly admit oil was a key factor in their presence. 'Obviously the Middle itself, not only Iraq but the entire reason, is an important supplier of energy, oil in particulary, to the rest of the world,' he told a radio programme. He said Australian forces were there for 'resource security'. Yes, we depend on the oil from the Middle East, yet we spend billions of developing weapons or sending people to the moon when this money could be used to investigate alternative fuels. You have to ask why this has not happened.

Saudis reject Bush's appeal to ease oil prices

Taken from The Guardian, UK, May 16 2008

By Haroon Siddique and agencies

Saudi Arabia today rebuffed George Bush's appeal to increase production and help cut record oil prices, the White House said.

It was the second time this year that the pleas of the US president, who is visiting King Abdullah, have fallen on deaf ears.

Bush's latest request came as the price of crude oil hit a new high of more than $127 (£65) a barrel.

"What they're saying to us is ... Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy," the US national security adviser, Stephen Hadley, told reporters.

However, the oil minister, Ali Naimi, said later that Saudi Arabia had raised production by 300,000 barrels per day on May 10 in response to requests from its customers. He said the increase would push the kingdom's output to 9.45m barrels a day by June.

High petrol prices are a potential issue in November's US presidential election. When Bush made his first appeal in January the Saudi oil minister said that oil production was at normal levels and the kingdom would raise production only when the market justified it.

Bush has conceded that raising output is difficult because the demand for oil — particularly from China and India — is stretching supplies.

The price of crude oil has consistently traded at new highs this year since hitting $100 a barrel at the beginning of January.

UBS yesterday became the latest bank to predict the price of crude oil could hit $200, with its analysts saying that the figure could be reached by 2015.

The US Congress yesterday voted to halt daily shipments of 70,000 barrels of oil to the US's emergency reserve in a bid to push down prices.

Bush had argued that halting the shipments would have little or no impact on petrol or crude oil prices.

The US Energy Department said later it had cancelled shipments into the reserve, beginning in July. But the White House has indicated that he will sign the reserve measure.

Senate Democrats have introduced a resolution that would block $1.4bn in arms sales to Saudi Arabia — the world's biggest oil supplier — unless it agrees to increase its production by 1m barrels a day.

The Democrats said they proposed the measure to coincide with Bush's visit to send a message to Saudi Arabia that it should produce more oil to reduce the cost of petrol for Americans.

While demand has surged because of booming economies in developing countries, political tensions in Nigeria, Venezuela and Iran have threatened supplies.

Before Bush arrived in Saudi Arabia, the US said it had agreed to cooperate to protect Saudi Arabia's oil and to help it develop peaceful nuclear energy. Saudi Arabia accounts for more than a tenth of global oil output and severe damage to its infrastructure would have far-reaching effects.

Al-Qaida has threatened more strikes on Saudi oil facilities after a failed attack on the world's largest oil processing plant at Abqaiq in February 2006.

"The United States and Saudi Arabia have agreed to cooperate in safeguarding the kingdom's energy resources by protecting key infrastructure, enhancing Saudi border security, and meeting Saudi Arabia's expanding energy needs in an environmentally responsible manner," a White House statement said.

The two countries will also sign a memorandum of understanding to cooperate on a peaceful nuclear programme

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In short the demand from India and China have meant that there is greater demand for oil but the supply of oil should not be attributed to Saudi Arabia. What is the oil production of illegally occupied Iraq, or friends of the United States Iran and Venezuela? How come Bush is not requesting more output from these countries? Saudi Arabia have stated numerous times that they do not fix price or output for political gain, if the roles were reversed and Capitalist America had all the oil no doubt they would cream off as much money as possible from any would be customers - why is there so much hatred of the Saudis in the media?

One thing is for certain if the price is too high, the United States will drop it's capitalist philosophy and show it's facist face and invade Saudi Arabia like it planned in the early 1970's -(when Israel instigated and won the the 1973 Arab-Israeli war). So would the United States really invade? Thanks to the release of British records - we find that a British intelligence committee report from December 1973 said America was so angry over Arab nations' earlier decision to cut oil production and impose an embargo on the United States that seizing oil-producing areas in the region (Saudi Arabia, Kuwait and Abu Dhabi ) was "the possibility uppermost in American thinking." Click here for more info: usatoday.com - 01-01-2004 and SundayTimes 09-02-1975.