The Other Failure in Iraq: The Economy

February 22nd, 2006 - by admin

Eric Le Boucher / Le Monde – 2006-02-22 07:50:55,1-0@2-3232,36-742714,0.html

Eric Le Boucher / Le Monde

PARIS (February 18, 2006) — The confession came Thursday in Washington. As the Bush administration prepares to ask Congress for a supplementary expense budget to cover the wars in Iraq and Afghanistan, Secretary of State Condoleezza Rice came before the Senate Finance Committee to explain that the Iraqi situation was improving in spite of all the difficulties.

Ms. Rice was caught out in mid-flight by the Democratic Senator from North Dakota: “The Inspector General for Iraqi construction told us the opposite a few days ago,” declared Kent Conrad. “We have the Inspector General saying things are getting worse even though we have provided a lot of money. Who are we to believe?” The Secretary of State mumbled. Then she had to admit the facts.

The facts are terrible. Inspector General Stuart Bowen came before the Senate February 8. Nominated by Congress at the end of 2004 to put some order into the delays, the chaos, the fraud, and the seepage that characterized the first months after the American military victory, Mr. Bowen acknowledged that “changes which occurred, notably security conditions, have changed perspectives.” The gap between the reconstruction objectives settled upon after Saddam Hussein’s overthrow in 2003 and reality only continue to grow.

Of the 136 planned water projects, only 49, or 36%, have been completed. “Most of the purification, irrigation and damming projects have had to be abandoned.” A total of 2,200 megawatts of supplementary electric capacity have been built, while 3,400 megawatts were necessary.

Consequences: Infrastructure has deteriorated compared to the Saddam Hussein era and critical services offered to the population are inferior to what they were. Less electricity is produced and current is only available 3.7 hours a day in Baghdad, compared to 16-24 hours before the war. It’s a little better in the rest of the country: 10 hours compared to 4 to 8 hours. Only a third of the population has access to potable water (8.25 million) versus half under Saddam (12.9 million). Five million people have sewer access compared to 6.2 million before.

The heaviest failure involves oil: production has only reached 2 million barrels a day (other estimates suggest 1.7 million) although it was 2.58 million previously. Fortunately, with crude prices up to 60 dollars a barrel, revenues have followed.

Yet, at the same time, the state of insurrection ruins all reconstruction. Security costs now absorb 20 to 50% of project costs because of bombs, attacks, and sabotage, not counting the “permanent intimidation” to which personnel are subject. We know that 2,300 American soldiers have died, as have 467 civilian contractors. American forces, some 138,000 men, are unable to assure the security of oil installations! The 227,000 Iraqi soldiers, even if “their quality” is now improved, will not do any better.

The passage from political control to an Iraqi government and Parliament is a positive element. Concerning the effect on the recovery of the Iraqi economy, the Inspector has serious doubts: “It must be admitted that the Iraqi government is not in a position to take charge of the short- and medium-term management of the country’s reconstruction projects.”

For Team Bush, democracy was supposed to go hand in hand with economic revival. Saddam overthrown, Iraqis were supposed to elect their representatives and get down to work. Peace and prosperity were to return together, like twin sisters.

The insurgents’ guerilla war put down that hope. Three years after the victory, democracy is there – for what it’s worth – but the economy stagnates. No exacerbated destitution, but no development either. Last August, the IMF came to the same conclusion: violence has discouraged investment and atrophied trade and commerce.

Patent economic failure is the price for the American failure to control the country. But that’s not all. The cost of the war has exploded. The Bush administration had evaluated it at between 50 and 60 billion dollars in 2003. Meanwhile 251 billion dollars have already been spent according to a study by economists Laura Bilmes and (Nobel Prize winner) Joseph Stiglitz (le Prix Nobel), cited by the Financial Times’ Martin Wolf. If the Bush administration decides to maintain the troops for another five years (even at a lower troop strength level), it will cost another 200 to 270 billion dollars. Adding the cost of care for the wounded, pensions, and replacement of military materiel, the bill rises to 750 billion or 1.2 trillion dollars: ten times the annual net development aid paid out by all rich countries.

For good measure, add in that the failure to produce Iraqi oil contributes to supply constraint and pushes prices up. The authors estimate the impact at $5 extra per barrel. Finally, they confess to renouncing any attempt to calculate other consequences, like the price of having enraged Muslims the world over or of the stain of Guantanamo on the United States’ reputation.

Translation: t r u t h o u t French language correspondent Leslie Thatcher. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Iraq Economy Falls Below Pre-Invasion Levels

WASHINGTON (February 18, 2006) — The George W. Bush administration has conceded that key sectors of the Iraqi economy have fallen below pre-invasion levels due to the ongoing resistance in the occupied Arab country. During a Senate budget committee hearing, US Secretary of State Condoleezza Rice acknowledged that production of crude oil and electricity was down from three years ago.

According to the latest statistics, crude oil production this month is running at 1.7 million barrels a day, down from a post-invasion peak of 2.5 million in September 2004, which was close to pre-war levels. Rice initially claimed that “many more Iraqis” were now getting potable water and sewerage services, however, under intense questioning from Kent Conrad, a North Dakota Democrat, she conceded that although “capacity” had increased, fewer Iraqis were actually receiving those services.

The Financial Times reports that Senator Conrad, citing the special inspector general, said almost all economic indices showed Iraq was better off before the US had invaded. And according to the story in the Financial Times, Republicans are also skeptical of White House claims of progress. Senator Chuck Hagel, a Republican from Nebraska, told the secretary of state that he believed the situation was getting worse.

Donald Rumsfeld, the US defense secretary, told a separate House budget hearing on Thursday that political and economic progress was being made. He claimed that “for the most part, the country is functioning.” Acknowledging that it is not “a pretty picture”, Rumsfeld said that the US wasn’t there “to do nation-building.”

The insurgents were being “marginalized”, Rumsfeld insisted, noting that the US had turned over to Iraqis or closed a number of military bases. However, a veteran US official, speaking to the Financial Times on condition of anonymity, questioned these assertions. He spoke of growing concerns in the administration that the US and the UK were becoming embroiled in a civil war, and that the Shia-dominated government they were supporting, particularly the interior ministry, was fuelling that war through its use of death squads and secret prisons.

Questioned on a recent Pentagon-commissioned report that concluded the US could not sustain the number of troops required to defeat the insurgency, Defense Secretary Rumsfeld replied: “The Iraqi insurgency will be defeated by Iraqis… So the question posed is an inaccurate question.”