IRAQ - Grim Picture Of US Reconstruction Effort.

Stuart Bowen, the special inspector-general for Iraq's reconstruction, in his latest report says: "the ambitious US reconstruction effort in Iraq is likely to fall far short of its goals because soaring security costs and poor management...slashed the amount of American money available for rebuilding projects". Although the US has allocated $50 bn for the project, the money available for actual reconstruction has been significantly reduced by "mounting security expenses, rising costs for materials and delays, and repeated bureaucratic reshuffling".

Bowen says while steady progress had been made, the "reconstruction gap" presents a "significant and growing threat" to US efforts to rebuild Iraq. Bowen's report, released to Congress on Oct. 30, says the US has had "no comprehensive policy or regulatory guidelines". Lack of guidelines has been exacerbated by a "general lack of coordination" between US government agencies charged with rebuilding Iraq, in particular the State Department and the Pentagon. When planning began in mid-2002, Pentagon officials "were either unaware of or chose to ignore" State Department assessments, and drew up a plan on their own, which was not finished until late January 2003, less than two months before the war began, Bowen said, adding in his quarterly accounting to Congress of the reconstruction effort: "The lack of co-operation" in identifying qualified personnel before the invasion "significantly hampered the early management of Iraq reconstruction".

Bowen's assessment marks the first time a sitting inspector-general - in this case a former White House deputy assistant to President Bush - has formally criticised the pre-war planning process. Lack of planning hindered what was "a generally positive effort by the State Department and Army officials in Iraq to put in place the management systems necessary to minimize waste in the $30 billion allocated for rebuilding" Iraq. Corruption was a major problem in Iraq, according to Bowen. The Daily Times of Pakistan reports that corruption is costing Iraq billions of dollars each year, and that "Washington and Iraq" should be doing more to stop it. More than $2 bn a year is lost to stolen gasoline and fuel supplies, and Baghdad says up to $1.27 bn from 90 contracts were lost from June 2004 to February 2005 because deals were given to "favoured suppliers" and cash was given to third-party firms to work out contracts.

Bowen wrote in his seventh quarterly report to Congress: "Creating an effective anti-corruption structure within Iraq's government is essential to the long-term success of Iraq's fledgling democracy". It was released days after the UN concluded that 2,200 companies including DaimlerChrysler, Siemens and Volvo made illicit payments totalling $1.8 bn to Saddam's government under the UN oil-for-food programme.

Reuters reports that Bowen's office, which has 20 auditors and 10 investigators in Iraq, has made "significant progress" on cases involving US citizens and allegations of "bribery, fraud, and kickbacks." The report says investigators gathered "an enormous amount of evidence" but contained no details on any possible indictments. The New Zealand website Stuff.co.nz, a Fairfax media site, reports that Bowen has referred several cases from the south-central region of Iraq to the Justice Department. Bowen's spokeswoman Kristine Belisle said the Justice Department was looking at possible indictments linked to Iraqi reconstruction.

Bloomberg reports that Bowen criticised former Coalition Provisional Authority (CPA) head Paul Bremer for his decision to disband Iraq's army and defence ministry, and to pursue an "absolutist" policy of de-Ba'thification. Bowen said these decisions "exacerbated" reconstruction problems.