Violence and bureaucratic red tape have hindered reconstruction efforts on the ground in Iraq (search), leaving most of the cash approved last year by Congress for infrastructure projects unspent.
Some analysts say the slow pace of progress is taking its toll.
“Basically, the biggest problem the Americans have had is when the reality fails to live up to the rhetoric,” said Michael Rubin, a foreign-policy scholar with the American Enterprise Institute (search) and former adviser to the Coalition Provisional Authority (search) in Iraq.
“In this case, when you brag on Iraqi radio and television that you have allocated $400 million for schools and then you look at the schools and see broken windows and badly needed paint jobs, you lose credibility,” he said.
The State Department released the Emergency Appropriations Act for Defense and for the Reconstruction of Iraq and Afghanistan 2004 quarterly report last week. It confirmed that only $1.2 billion of the $18.4 billion signed into law in November 2003 for Iraqi relief and reconstruction has been spent.
“An uncertain security situation affects all potential economic and political development, including private investment, foreign and domestic,” reads the report.
The report comes a week after State Department officials asked Congress to shift $1.8 billion from basic infrastructure needs into security and law enforcement funding. In a briefing with reporters and in testimony before Congress, officials said security is the greatest roadblock to repairing Iraq's infrastructure, boosting employment and holding free elections in January.
“The pace of the U.S. reconstruction spending in Iraq has been lamentably slow,” Rep. Jim Kolbe (search), R-Ariz., chairman of the House Foreign Operations Subcommittee in the House Appropriations Committee, said in a hearing on Sept. 24. “Without security, reconstruction of the infrastructure is either a physical impossibility or doomed to repeated sabotage and destruction.”
Some Democratic lawmakers, including those seeking to defeat President Bush on Nov. 2, say the fact that the State Department is now asking to take money from reconstruction projects to pay for security indicates that the mission is failing in Iraq.
“The administration needs to give us assurances that they can improve the situation, and finally come up with a plan that works,” Rep. Nita Lowey, D-N.Y., ranking member of the Foreign Operations Subcommittee, told FOXNews.com.
But officials with the Bush-Cheney '04 campaign say the numbers don't reveal all the news. A policy expert with the campaign pointed out that out of the $18.4 billion budget, nearly $8 billion has been obligated to projects that are now underway.
“That (money) has been bound under contract and they have been spending it for those purposes,” the official said. “Focusing on the amount of money that a contractor has received for the work completed isn’t the whole picture.”
U.S. military officials told reporters last week that despite security problems, some 700 construction projects — including 28 new water treatment plants and 13 new sewage plants — are underway. So far, 72 new health-care facilities have been built and 3,100 schools rehabilitated.
"I think everyone should be enormously proud of the great folks out there who have been running this office and managing these projects," said Acting Secretary of the Army Les Brownlee, referring to the U.S. Project and Contracting Office (search), which has oversight over the reconstruction budget.
"You need to put this in perspective when you start talking about how much money has been spent and what's been accomplished," Brownlee added. "It really has been very impressive, I believe."
According to the State Department’s report, 187 new schools and 37 electrical substations have been built or repaired. Iraqi National Airlines has resumed flights after 14 years, and 1.5 million people are now connected by phone and cell phone — a more than 90 percent increase over pre-war levels. Oil production, despite repeated attempts to sabotage the pipelines, has reached 2.5 million barrels a day, and the U.S. Agency for International Development (search) has succeeded in fixing breaks in the water network to increase capacity.
Nonetheless, the Center for Strategic and International Studies (search) has found that only 27 cents of every dollar being spent on Iraq reconstruction is going to projects that directly benefit the people — projects like school construction, roads, water, sewage, electricity and election planning. The balance pays for costs associated with U.S. embassy overhead, security, contractor profits, mismanagement, corruption and fraud, the CSIS report says.
“I think you could comfortably say that around three-quarters of every dollar that we are spending in Iraq does not reach the Iraqi people,” said Frederick Barton, co-director of the CSIS Post-Conflict Reconstruction Project, in a recent briefing to reporters. “That is obviously not going to have the kind of desired impact that I think a lot of us are expecting.”
Barton told FOXNews.com last week that "the awareness of the problems has grown. But that doesn't solve the problem. The security is the dominant issue and the way we are spending the money doesn’t hit the mark."
Rubin said he blames an errant bureaucracy. He said he has personally visited refugee camps outside Baghdad that have not seen a U.S. presence since funds were appropriated for aid there a year ago. He said this kind of human relations problem is getting in the way of securing the country.
“Unfortunately, it’s a 'Catch-22' — yes, you have to have security, but security diminishes when people on the ground don’t see that their sacrifices were worth it,” he said.
Much of the successes have come through the Commanders’ Emergency Response Program (search) that gives military commanders on the ground the discretion to pay immediately for necessary projects without the bureaucratic red tape.
As of September, local commanders had disbursed $528 million in CERP funds for 33,618 projects. Of that, about $55 million was from Department of Defense funds, the remaining from unfrozen Iraqi assets, the State Department's report says.
“The program has allowed the local population in various communities to see immediate improvements to quality of life,” the report states.