SPEAKERS CONTENTS INSERTS
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27–990PDF
2006
REVIEW OF IRAQ RECONSTRUCTION
HEARING
BEFORE THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
JUNE 8, 2006
Serial No. 109–213
Printed for the use of the Committee on International Relations
Available via the World Wide Web: http://www.house.gov/international—relations
COMMITTEE ON INTERNATIONAL RELATIONS
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HENRY J. HYDE, Illinois, Chairman
JAMES A. LEACH, Iowa
CHRISTOPHER H. SMITH, New Jersey,
Vice Chairman
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
DANA ROHRABACHER, California
EDWARD R. ROYCE, California
PETER T. KING, New York
STEVE CHABOT, Ohio
THOMAS G. TANCREDO, Colorado
RON PAUL, Texas
DARRELL ISSA, California
JEFF FLAKE, Arizona
JO ANN DAVIS, Virginia
MARK GREEN, Wisconsin
JERRY WELLER, Illinois
MIKE PENCE, Indiana
THADDEUS G. McCOTTER, Michigan
KATHERINE HARRIS, Florida
JOE WILSON, South Carolina
JOHN BOOZMAN, Arkansas
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J. GRESHAM BARRETT, South Carolina
CONNIE MACK, Florida
JEFF FORTENBERRY, Nebraska
MICHAEL McCAUL, Texas
TED POE, Texas
TOM LANTOS, California
HOWARD L. BERMAN, California
GARY L. ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
DONALD M. PAYNE, New Jersey
SHERROD BROWN, Ohio
BRAD SHERMAN, California
ROBERT WEXLER, Florida
ELIOT L. ENGEL, New York
WILLIAM D. DELAHUNT, Massachusetts
GREGORY W. MEEKS, New York
BARBARA LEE, California
JOSEPH CROWLEY, New York
EARL BLUMENAUER, Oregon
SHELLEY BERKLEY, Nevada
GRACE F. NAPOLITANO, California
ADAM B. SCHIFF, California
DIANE E. WATSON, California
ADAM SMITH, Washington
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BETTY McCOLLUM, Minnesota
BEN CHANDLER, Kentucky
DENNIS A. CARDOZA, California
RUSS CARNAHAN, Missouri
THOMAS E. MOONEY, SR., Staff Director/General Counsel
ROBERT R. KING, Democratic Staff Director
LARA ALAMEH, Professional Staff Member
JEAN CARROLL, Full Committee Hearing Coordinator
C O N T E N T S
WITNESSES
The Honorable James Jeffrey, Senior Advisor to Secretary Rice and Coordinator for Iraq, U.S. Department of State
Mr. Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction
The Honorable James R. Kunder, Assistant Administrator, Bureau for Asia and the Near East, U.S. Agency for International Development
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LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable James Jeffrey: Prepared statement
Mr. Stuart W. Bowen, Jr.: Prepared statement
The Honorable James R. Kunder: Prepared statement
APPENDIX
Mr. Stuart W. Bowen, Jr.: Material submitted for the record
The Honorable Sherrod Brown, a Representative in Congress from the State of Ohio: Prepared statement
REVIEW OF IRAQ RECONSTRUCTION
THURSDAY, JUNE 8, 2006
House of Representatives,
Committee on International Relations,
Washington, DC.
The Committee met, pursuant to notice, at 10:10 a.m. in room 2172, Rayburn House Office Building, Hon. Henry J. Hyde (Chairman of the Committee) presiding.
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Chairman HYDE. The Committee will come to order. Last night at 6:15 p.m. justice was delivered to Abu Musab al-Zarqawi, Iraq's most wanted terrorist. Although many challenges remain in Iraq, his death seriously undermines the mission of al-Qaeda.
As President Bush said this morning, Zarqawi's death has the potential to ''turn the tide in Iraq.'' His death is a victory in the Global War on Terror, and today we remember the innocent lives taken by Zarqawi and his terrorist network.
There is no doubt that the United States, with the cooperation of our allies, has engaged in dialogue and meaningful reconstructive efforts with the Iraqi people to help build a foundation for establishing a secure and sovereign Iraq.
The recent formation of the Iraqi Government by Prime Minister Nouri al-Maliki is a step in the right direction. The Iraqi people should be commended for their unforgettable sacrifices and commitment to rebuilding a nation from the ashes of tyranny, war, and sectarian strife.
The American people also have contributed to this process through their military and financial support to the fledgling Iraqi Government. Since the fall of Saddam Hussein, the American people have provided approximately $29 billion in United States assistance to Iraq for reconstruction programs.
Through USAID and other United States agencies operating in Iraq, the American people continue to assist in restoring important sectors of Iraq's government and economy. These reconstruction projects are an integral part of the President's strategy to build a democratic, stable and prosperous country.
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However, significant challenges to stabilize Iraq have resulted in important lessons learned that this Administration is internalizing and responding to. Nobody denies that mistakes were made. What is important is how the United States adjusts its strategy to serve the interests of the American people and to support the new Iraqi Government in implementing its agenda to bring security and stability to the Iraqi people. In other words, have we learned from our mistakes, and what are the lessons learned?
The war in Iraq has led to a divisive debate about the justification for the war's necessity. Regardless of where one stands on this issue, what is essential is identifying those elements necessary to build a functioning democracy in a part of the world that has never known that blessing.
One way the United States is contributing to Iraq's success is through improving the accountability and transparency of the Iraq reconstruction process through vigorous oversight provided by the Special Inspector General for Iraq Reconstruction.
Today we will hear from Mr. Stuart Bowen how this process is going. One thing we do know is that aggressive oversight works. A combination of audits, inspections and investigations have brought justice to criminals and have improved coordination and management of reconstruction projects.
We also welcome Ambassador Jeffrey back to the Committee to provide his views on these important issues, and additionally we will receive an update from Mr. Kunder on the U.S. Agency for International Development's role in the Iraqi reconstruction process.
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I now am pleased to yield to my friend and colleague, the Ranking Democratic Member, Tom Lantos, for any opening remarks he may wish to make.
Mr. LANTOS. Thank you very much, Mr. Chairman. Before I get to my opening remarks, I respectfully request, given the importance of today's hearing, that all Members have an opportunity to make brief opening statements.
Mr. Chairman, let me briefly comment on the death of the al-Qaeda leader in Iraq, Abu Musab al-Zarqawi. This dramatic news out of Iraq will hopefully send a strong political signal to all Iraqis that the insurgents will not prevail.
While Zarqawi's demise is likely to have a positive impact on the security situation in Iraq both symbolically and operationally, we must not lull ourselves into a false sense of complacency that the job of ensuring a safe and secure Iraq is now near completion.
Mr. Chairman, there are many debatable points about our policy toward Iraq, but the gross mismanagement of reconstruction efforts is not one of them. Due to the exceptional work of the Special Inspector General for Iraq Reconstruction, the facts are clear. Billions of United States taxpayer dollars have been used unwisely in Iraq. The Executive Branch must not allow such slipshod management, and the American people, I am convinced, will not tolerate it.
This is not just about money. The international coalition's ability to exit Iraq responsibly, leaving the Iraqi people in better shape than before the war, is directly related to the success of our reconstruction efforts there. These efforts have been severely undermined by waste, by fraud and by abuse, and our troops have been needlessly exposed to greater risk because of such failures.
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We therefore appreciate, Mr. Chairman, that you have convened today's hearing with our distinguished witnesses, particularly the Special Inspector General for Iraq Reconstruction, Mr. Stuart Bowen. The 23 Democrats on this Committee unanimously and formally requested this hearing because we believe that Congress has failed to conduct sufficient oversight over the Iraq reconstruction program. Without descending into the endless debate over the number of hearings held or resolutions raised, we can all agree on one thing: It is imperative that the Executive Branch learn from its mistakes in Iraq and make dramatic changes to our reconstruction efforts to ensure that we are improving the lives of the Iraqi people.
Thanks to the diligence of the Office of the Special Inspector General, we now know the scope of the problem. Here are the facts, Mr. Chairman. During the reign of the Coalition Provisional Authority almost $9 billion—that is $9 billion with a B—moved through Iraqi ministries.
In another shocking instance in south-central Iraq, with little or no accounting for results, managers of the Coalition Provisional Authority funds could not account for nearly $100 million in cash and receipts. Where did the rest of the money go? It is as if the CPA were dumping suitcases of taxpayer dollars into quicksand.
Recent court documents might indicate where some of the money went. One of two defendants arrested in connection with the waste and abuse pled guilty to accepting stolen CPA and United States property in Iraq and using it to operate a business. He secretly provided public officials things of value such as first-class airplane tickets, jewelry and prostitutes at a villa in Baghdad.
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Another defendant who was serving as a comptroller for the CPA stole at least $2 million in United States currency designated to be used for reconstruction in Iraq and conspired to transfer it to the bank accounts of others. One of these two thieves sent an email to the other in January 2004 that closed with the observation, I quote, ''I love to give you money.''
Mr. Chairman, the gross mismanagement of our Iraq reconstruction efforts has not ended with the demise of the CPA. In a recent report, the Special Inspector General found that the United States continued to fund the restoration of 16 oil pipelines under the Tigris River despite persistent warnings from geologists that the soil was not conducive to drilling. We allocated nearly $200 million for primary healthcare centers, but completed only six out of the 150 clinics intended to be built with these funds.
Unfortunately, Mr. Chairman, these are not isolated incidents. More than 75 percent of oil and gas reconstruction projects begun with U.S. assistance remain incomplete. More than 50 percent of electricity reconstruction projects are still unfinished, along with 40 percent of water and sanitation reconstruction projects.
Instead of ensuring that these vitally important projects are finished, the House has just approved a budget resolution on a totally partisan vote that slashed $1 billion from Iraq reconstruction.
Mr. Chairman, we all recognize that the reconstruction of Iraq cannot be achieved overnight, easily or on the cheap, but the alarmingly slow pace of Iraq reconstruction and the misuse of United States and Iraq funds have serious repercussions for our own national security.
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Insurgents have capitalized on popular resentment and anger toward the United States and the Iraqi Government to build their own political, financial and military support, and the faith of Iraqi citizens in the new government has been severely undermined.
The corruption and incompetence surrounding the rebuilding of Iraq has badly damaged our image abroad not just in Iraq, but throughout the world. Money wasted on reconstruction boondoggles could have also been better spent on protecting American and Iraqi troops from insurgents.
Mr. Chairman, unless we show the Iraqi people that their liberation has brought tangible benefits or at the very least the restoration of essential services to pre-war levels, key factions will continue to side with the insurgents and not with the forces of freedom.
Until we succeed in training enough Iraqi forces to secure their nation independently, we risk leaving a destabilized Iraq. Therefore, the Executive Branch must listen closely to the recommendations of the Special Inspector General and other expert voices on how to overhaul our reconstruction efforts, and we must simultaneously redouble our efforts to create a truly sustainable Iraqi army and police.
Finally, Mr. Chairman, given Mr. Bowen's success in uncovering waste and fraud and abuse, I find it shocking that this House is prematurely curtailing his mission. We should be increasing Mr. Bowen's capacity to do oversight, not weakening it.
We know these are not simple tasks, Mr. Chairman, but the goal we all seek—a stable Iraq at peace with its neighbors—will remain elusive until we improve both the security and the economic environment in Iraq. Although the Executive Branch is charged with this responsibility, we in Congress clearly need to ensure that the job is done right.
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Thank you, Mr. Chairman.
Chairman HYDE. Thank you, Mr. Lantos.
Because of the importance of the subject matter and this hearing, we are going to recognize everybody to make an opening statement that wishes to, stressing that making an opening statement is not mandatory.
We will limit the recognition to 3 minutes so everyone will have an opportunity to make a statement in 3 minutes. That saves us time, helps us get the witnesses' testimony, which I hope we are here to listen to, and get to the question period, which is very instructive.
With that in mind, Ms. Ros-Lehtinen is recognized for 3 minutes.
Ms. ROS-LEHTINEN. Thank you so much, Mr. Chairman. I want to thank you for holding this important hearing today. I want you to know that some of us were on the Floor honoring you, and it is great I hope for you to be receiving honors when you are still around and kicking every day. Don't even think about retiring 1 day sooner than you must.
Mr. Chairman, the men and women of our armed forces are coalition partners, and those Iraqis committed to a free, democratic and peaceful Iraq continue to rise to the challenges before them. They are to be commended especially today for dealing a major blow to Islamic terrorists in Iraq.
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What a headline, ''Al-Zarqawi Killed, al-Qaeda Leader in Iraq Dead After Air Strike.'' This article says al-Zarqawi himself is believed to have wielded the knife in the beheadings of two of the Americans, Nicholas Berg and Eugene Armstrong, and earned himself the title of the Slaughtering Sheikh among his supporters. What a great title for him.
Through their hard work and the dedication of our United States forces, our coalition forces and Iraqi personnel, there are now more than just the democratic alternative to the Middle East, but it has given hope to the people throughout the region that there can be a better life than the murderous dictatoring of Saddam Hussein and his ilk throughout the region.
By promoting a liberal democracy in place of a brutal autocracy, we have mobilized countless Iraqis and millions more throughout the region who have demonstrated the will to fight the jihadists. Every day we are making progress. Every day United States forces transfer more security responsibilities to the Iraqis, giving them a vested interest and the tools necessary to secure their nation.
This doesn't come from Administration talking points and fact sheets. This comes directly from the field. One of our Subcommittee staffers, Matt Zweig, is currently serving in Iraq, and my stepson, Dougie, just returned from 8 months of serving as a Marine officer there.
We are making progress. There is a lot that can be improved upon no doubt, but this headline today tells you about the progress that we are making. I look forward, Mr. Chairman, to hearing the insight from our witnesses, our panelists, on the lessons learned, on the progress achieved and on the challenges ahead.
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Thank you so much, Mr. Chairman.
Chairman HYDE. Thank you.
Mr. Ackerman is recognized for 3 minutes.
Mr. ACKERMAN. Mr. Chairman, thank you. The focus of today's hearing is reconstruction in Iraq, but I think we cannot talk about anything in Iraq without addressing the allegations surrounding the action of United States Marines in Haditha.
If these actions are true, we will be facing not just murder trials of United States soldiers, but an event as significant and detrimental to our efforts in Iraq as the Abu Ghraib abuses and as disastrous as MyLai was to our efforts and image in Vietnam.
Our success in Iraq depends on our ability to demonstrate to Iraqis that our efforts there will result in better lives for them. To date, that has not happened. No amount of electricity or clean water or oil production will convince them that we are a force for good and decency if our soldiers have murdered innocent Iraqi civilians and then we covered it up and lied about it. Regardless of all the good our troops have previously done in Iraq, Haditha will be the story that the Arab and Muslim world hears about us.
I associate myself with the remarks of Mr. Lantos. Many people believe that billions of dollars intended to protect our troops and help in the reconstruction effort have been misspent, possibly criminally, and then have been covered up by an Administration that doesn't even seem to care about investigating it. This Congress would be complacent in that coverup if we did not begin a criminal investigation.
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We cannot and should not allow the Haditha investigation simply to focus on the troops in the field. Too often our Administration has skated by blaming lower ranking officials for things decided at higher levels. If the investigation reveals that senior officers or civilians engage in a coverup, then those senior officers or civilians should be made to pay the price.
Fundamentally, Mr. Chairman, this is also about leadership, leadership from Washington, from the President, the Secretary of Defense on down. If the Administration wasn't so busy playing fast and loose with the Geneva Conventions, maybe the message to our soldiers would have been clearer.
Maybe the message to their commanders would have resulted in the reporting of this incident instead of waiting for Time Magazine to disclose it. Maybe the Iraqis would believe us when we finally give them the results of this investigation.
We are in this mess because of failure, failure by the Administration to think seriously and carefully about what it would take to invade, subdue, control and rebuild a nation the size of California. We remain in this mess because the same Administration officials refuse to acknowledge where they were wrong.
The investigation into the events at Haditha puts us in a position where we are unable to accomplish our objectives in Iraq, and we are in this position again because our leadership has failed us again.
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Chairman HYDE. The gentleman's time has expired.
Mr. Rohrabacher of California?
Mr. ROHRABACHER. Thank you very much, Mr. Chairman. Today I believe all Americans and all people who love freedom should be celebrating the departure of a blood soaked Islamo-fascist; who was responsible for the brutal murder of tens of thousands of fellow Muslims, whose only crime was to desire some modicum of democracy or freedom for their families.
Zarqawi was also responsible for the killing of a large number of American soldiers and Marines who came to free the Iraqi people from the secular dictatorship of Saddam Hussein, which also was responsible for the wholesale slaughter of hundreds of thousands of their fellow Iraqis.
Zarqawi led the effort to kill the American liberators of Iraq, yet Zarqawi himself was a Jordanian. The Muslims of the world should take note. The Western-hating gangster of Islam Zarqawi does not represent their faith, values or interests. It is totally out of touch and contrary to the values of a vast majority of Muslims who should now join with the people of Iraq along with non-Muslims in the West to build a peaceful and prosperous and tolerant world.
We can be proud. The American people have held firm even as we lost our young people, our young heroes who were there to liberate those people of Iraq, even as there has been criticism and nitpicking on the other side because there have been mistakes and shortcomings in every war that the United States has ever been in, but the American people have held firm even when we had to suffer savage attacks and we lost our children to these gangsters.
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This hearing opens the discussion about the successes and failures of the American effort to liberate the people of Iraq and some of the shortcomings and some of the shining examples of success.
We did this, of course, all of this was done in pursuing the effort to establish a democratic model in Iraq for the Muslim world and to liberate the people of Iraq from their monstrous dictatorship.
Yes, mistakes have been made in every noble endeavor. Yes, there have been shortcomings that need to be corrected, but that does not in any way besmirch the historic commitment that we have made or the moral basis of which we have decided to try to ensure that the people of the Muslim world have alternatives to this type of Islamo-fascism represented by Zarqawi.
Chairman HYDE. The gentleman's time has expired.
Mr. Delahunt of Massachusetts?
Mr. DELAHUNT. Thank you, Mr. Chairman. In your opening remarks you mentioned that aggressive oversight works. You were referring to the Special Inspector General for Iraq. I commend him for his obvious diligence and outstanding work.
Unfortunately, this Committee and this Congress have not conducted aggressive oversight. I serve on the Subcommittee that is entitled Oversight and Investigations. It is chaired by my friend and colleague from California who just spoke, Mr. Rohrabacher. It was interesting that he used the phrase that this ''opens the discussion.'' After how many years are we beginning to discuss the reconstruction phase in Iraq?
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I associate myself with the remarks of Mr. Lantos. I think they summed up the case. He referred to multiple examples of egregious fraud, abuse and mismanagement.
I would note that Mr. Bowen assumed his office in January 2004. I would suggest that that was late. That was very late, Mr. Chairman. Tragically, it has cost the American people billions of dollars in taxpayer dollars, as well as putting forth a perception, albeit unfair, that we didn't care. We made statements that didn't match the realities.
You know, the issue of contracting in Iraq could be the biggest corruption scandal in history, according to Transparency International. As a former prosecutor, my instincts tell me that that statement, given time and given hindsight of history, will prove to be accurate.
We have missed the boat. We have not exercised our responsibility as Congress. We have turned our back on our constitutional duty. I do hope, Mr. Chairman, that you authorize the Subcommittee on Oversight and Investigation into conducting a series of exhaustive and thorough investigations so that we may learn more about the mistakes so we don't make them again in the future.
Chairman HYDE. The gentleman's time has expired.
Mr. Paul of Texas?
Mr. PAUL. Thank you, Mr. Chairman. I too would like to associate myself with the comments made about the waste and the fraud and the corruption in the reconstruction in Iraq.
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Obviously it is there, but I am not very optimistic that it is going to get cleaned up because I think it is the nature of government largesse that you always have waste and corruption, especially under the conditions that exist on wartime and that exists in Iraq. I think we ought to understand that that is the nature of things, and tragically I don't see it coming to an end.
I would much rather see some interest in stopping the destruction rather than the pretense that we can reconstruct Iraq. We have already spent about $300 billion over there, and most of it has ended up in destruction of property. The taxpayers really get it. They get hit. They get hit. They pay for the destruction. Now everybody expects them to pay for the reconstruction. When is it going to end?
It will probably end when this country goes bankrupt because it does not make any sense. We are spending still $8 billion a day in the military affairs over there, which ends up in more and more destruction of property.
There seems to be rather good success in building one building in Iraq that is coming along quite nicely, which I think is a tragedy, but it really tell us about our policy, and that is the construction of the great Embassy, the greatest, biggest Embassy that people have ever known in history I have heard. It is going to probably be $1 billion before it is built.
To me and to the American people, I am sure they consider this an obscenity. It also symbolizes our permanency, which really defies our pretense of yes, we are getting ready to leave. Zarqawi is gone. We have had another milestone, which means why don't we use that as an excuse to getting out of that place?
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No, we are there permanently. We have permanent bases that we keep building and refurbishing. They go well, here we are building this Embassy as big as the Vatican City. To me, it dumbfounds me that the walls around this Embassy are going to be 15 foot thick. I mean, that sounds like ancient China or something. Don't they know about grenade launchers? I mean, how is that going to protect us?
What a pretense that this is going to provide safety and stability and send a good message to the Iraqis. It just doesn't make any sense whatsoever that that is our most successful building going up in Iraq.
There are going to be 619 one-bedroom flats, a recreation building, a beauty parlor, a gym, a swimming pool and even its own school in this Embassy, a lavish American club which will be the lavish club for hosting receptions in the midst of this tragic financial circumstance that we have.
Now if you add Afghanistan and Iraq together, we have now approached a half a trillion dollars. It is time our policies change.
I yield back.
Chairman HYDE. The gentleman's time has expired.
Ms. Lee of California?
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Ms. LEE. Thank you, Mr. Chairman. I want to also thank you for this hearing and to our Ranking Member, Mr. Lantos. It is, quite frankly, long overdue. I want to welcome and thank our witnesses for being here.
Now, as one who has from day one vehemently opposed this war because I did not believe it was necessary and we knew there were no weapons of mass destruction in Iraq, I believe, however, that given the fact that we bombed the heck out of that country and in many ways destroyed it, we have a duty and a responsibility to help rebuild it.
I also know we have a duty and responsibility to the American people, to taxpayers, to make sure that the resources and the billions of dollars that we put into Iraq are spent wisely and that there is oversight and some accountability.
Now, experts have reported on the reconstruction efforts. We have had reports. We are told that in this whole process of the no-bid contracts, the awarding of no-bid contracts and the well-connected defense contractors that billions of dollars have been lost. I remember $9 or $10 billion. We still can't figure out where that went.
The lack of accountability and oversight, I think that has to be reconciled. I am curious, and when we get into your testimony I hope you address what processes and mechanisms are in place to make sure that there from this day forward is some accountability, but also what happened to that $10 billion, if you found it yet. I think that we failed in our constitutional obligation to really protect the taxpayers in this process.
Finally let me just say yes, I agree with Mr. Paul. I think what I see taking place now is the final realization of the fact that we want a permanent presence of Iraq. This House passed, the Senate passed a resolution saying we did not want to authorize permanent military bases in Iraq. The American people don't want permanent bases there. The Iraqis don't, yet it is my understanding that now in the Conference Committee that for whatever reason that resolution or that amendment was taken out of the supplemental.
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That makes no sense, so I am curious to find out from you all if you believe that part of what we are doing in Iraq will lead to a permanent presence with establishment of permanent military bases, or if in fact that is not the case I hope you say that.
Thank you, Mr. Chairman, and I yield the balance of my time.
Chairman HYDE. Mr. Poe of Texas?
Mr. POE. Thank you, Mr. Chairman. Thank you for your leadership in the House of Representatives. You are a great role model for all of us, and I appreciate your chairmanship of this very important Committee.
I had the opportunity to view the first free elections in Iraq on January 30, 2005, along with Congressman Chris Shays, and I learned that the Iraqis, like the American people, love freedom. They have tasted it, and they are not going to let it go even though it costs lives of Americans and Iraqis. Our troops, by far, are the finest in the history of the military, and their voluntary service is unparalleled in world history.
Like the success of the Marshall Plan at the end of World War II, rebuilding of Iraq needs to be successful as well. However, as a former judge in Texas I am concerned about alleged corruption in the rebuilding efforts. Those that prey on the misfortunes of war and those that make unlawful profits by war, those that have stolen in Iraq, those that are the thieves of Baghdad are war criminals, and their corruption must be brought to justice.
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This country and the Iraqi Government must insist that justice rules the day, and we owe this to the American people and all freedom loving people in the world.
With that I yield back, Mr Chairman.
Chairman HYDE. Thank you, Judge.
Mr. Schiff of California?
Mr. SCHIFF. Thank you, Mr. Chairman. I want to thank you and the Ranking Member for having this hearing today. At the outset, I wanted to express my congratulations to the American troops and to the Iraqi people who successfully led us to Zarqawi and killed a murderous scum that no one will mourn the loss of.
As the positive news out of Iraq has been few and far between, I want to take a moment to acknowledge how grateful I am and how grateful we should all be that he has been eliminated from the face of the earth.
I think it is also a hopeful sign that Iraq has now filled a couple of the key ministries, and we hope that that can facilitate the strengthening of the Iraqi Government and also hasten the withdrawal of our own troops from Iraq.
Turning now to the focus of the hearing, there is a real cost to the malfeasance and the reconstruction program in Iraq. There is a cost in dollar terms to the taxpayers. There is a cost in terms of the mission in Iraq and our ability to withdraw our own forces from Iraq. There has been certainly a cost to the Iraqi people.
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There have been opportunity costs in the sense that the billions that we have put into reconstruction have not been wisely spent or have been syphoned off or corruptly used have meant that other areas, other needs have gone underserved.
I had lunch with a Guardsman who served in Iraq who told me about strapping plywood onto the door areas of his Humvee and putting sacks of sand or concrete in between them to create what has been known as the hillbilly armor. Those additional billions that have been wasted in reconstruction could have been put to better use protecting our troops.
There have been enormous costs, and not only I think is this the responsibility and fault of those that were administering the reconstruction in Iraq, but I think the Congress bears responsibility because we have not done oversight of this. We have been throwing money at Iraq reconstruction without adequate safeguards in place.
That we would now be beginning this process of oversight 3 years into the war is a blight on the reputation of this Congress and on our role as a co-equal branch of government.
I would like to see not only oversight. I would like to see accountability, the twin pillars. We have had no accountability for the failures of the reconstruction program. No one to my knowledge—no one, absolutely no one—has been held accountable for these failures.
I would like to see our Subcommittee on Oversight and Investigations become another Truman Commission. If we had half as many hearings on the Iraq reconstruction as we have had on overseeing the UN's finances we would be saving the American taxpayers a ton of money.
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Chairman HYDE. The gentleman's time has expired.
Mr. SCHIFF. Thank you, Mr Chairman.
Chairman HYDE. Don't forget to put the big dig in there too.
Mr. McCotter?
Mr. MCCOTTER. Thank you, Mr. Chairman.
First, gentlemen, thank you for your service to our country in these difficult times.
Off the bat, I would like to associate myself with the remarks of my colleagues who have indicated that they believe the congressional oversight over the reconstruction process in Iraq has been insufficient. I think it is inherently necessary for elected officials within this Congress to responsibly fulfill our duty to the public, to engage actively and personally in oversight over the reconstruction process.
Secondly, I am very eager to hear your reports today because to a large degree what we are going to hear from you is the consequence of having an absolutely backward reconstruction policy for 3 years.
I will be more specific. We have concentrated reconstruction in Iraq on a top down basis where we would start with the National Government that hopefully would have elections, that would hopefully filter down to the provincial level, that would hopefully filter down to the local level.
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This was done in spite of all evidence that societies tend to evolve from the family, through the community, to the provincial level and then to a National Government, which was our own experience here in the United States.
We also did it contrary to the understanding that the Sunnis, who had run a strong Central Government for a long period of time, would be very, very chary of a strong Federal Government in Iraq run by the people they had oppressed for all those years.
I believe that we should have run a reconstruction from the grassroots up, which is what I believe the Ambassador is trying to do now, and I applaud him for that. I would hope that in the investigations that we do over what has gone wrong from our initial backwards approach, I would hope that investigations and oversights would also reveal why the United States of America held that top down position in the first place;
Why do we continue to hold to that position despite all evidence that it was not being particularly successful in the reconstruction of Iraq and whether or not we have learned our lesson and will avoid that mistake in the future, and should reconstruction occur in other countries, God forbid, that we then try to apply the principles that we ourselves used to develop into the nation we are today.
I yield back.
Chairman HYDE. Thank you.
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Mr. Adam Smith of Washington?
Mr. SMITH OF WASHINGTON. Thank you, Mr. Chairman. I will be brief.
I just want to first of all echo the comments of my colleagues who congratulated our troops and the people of Iraq in the killing of Mr. Zarqawi today. That is a significant triumph, and I think we certainly should be happy about that and move forward.
Second of all, I just want to say that it is great that we are having this hearing. I wish that we had done things like this sooner and more often.
My concern in all of this is the oversight of the Iraq reconstruction. I think it was not planned well. It seems like there was a great deal of thought given to how to knock Saddam Hussein out, not as much thought, planning and action given to what to do then, and I think that is the great tragedy of this war at this point.
There has been very insufficient oversight with the exception of course of Mr. Bowen and the job that he is doing, which, as I understand it, is now in jeopardy, so we need to do more oversight on how this money is being spent and what is happening with the reconstruction.
This hearing is long overdue, and I don't think that we will be able to solve all of the problems once you folks start talking, but I am glad we are doing it, and I think that is what I want to learn today.
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With that, I look forward to hearing from the people who are here to testify. Thank you.
Chairman HYDE. Mr. Wilson of South Carolina?
Mr. WILSON. Thank you, Mr. Chairman. Mr. Chairman, as you get closer to the conclusion of your term, I just want you to know I am reminded daily of how significant you have been to people serving in Congress. We just appreciate so much your leadership.
As we proceed today on Iraq reconstruction, I have just returned from visiting Iraq on my sixth visit. I am very grateful I have the perspective that my oldest served for a year there, and I received daily reports from him on the reconstruction efforts.
I am so pleased again with the success that I knew would be coming. In fact, the killing of the mass murderer, Zarqawi, yesterday was an achievement that actually was done even before I thought could be done because of his ability to evade the American coalition and Iraqi forces.
I believe there is more progress than has been apparent. Every time I go I am so impressed by the young troops I visit with. I am just grateful, and with the United States Agency for International Development I hope the message comes out about the tremendous projects that are underway that have made such a difference in building a civil society in Iraq which protect American families at home.
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Thank you for your service.
Chairman HYDE. Thank you, Mr. Wilson.
Mr. Chandler of Kentucky? Mr. Chandler waives.
Ms. MCCOLLUM. Thank you, Mr. Chairman. I want to thank you and the Ranking Member for having this hearing. I reflect the remarks of many others that this is long overdue.
I have been to Iraq several times, and every time that I have been I have heard about all the reconstruction going on and then talking to either members of our military who have returned home or to other people out in the field or looking at international reports, and by that I mean even listening to the BBC News quite often I was hearing an erratically different story from what we were being told in classified briefings without the opportunity to have this move forward.
This hearing is giving us the opportunity to examine the challenges, the problems, the things that we have not done well. That is the only way we can move forward in confidence. If we aren't able to move forward with hope and opportunity on some of these reconstruction issues we have in front of us then the Iraqi people will once again wonder where is the United States' commitment because that is what I have heard from average citizens in Iraq, ''What are you doing?''
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Mr. Chair, thank you for holding this. I look forward to this just being the beginning of a discussion. We do need to find out how we are going to make all the missing dollars, U.S. taxpayer dollars, in this reconstruction, including the $8.8 that has been talked about earlier today, how we are going to find out what happened to that and what kind of investigation we are going to have on that.
We need to have the same robust investigation on U.S. taxpayers' dollars as we did on the World for Food program.
Thank you, Mr. Chair.
Chairman HYDE. Thank you.
Mr. Flake of Arizona? Mr. Flake passes.
Mr. CARNAHAN. Thank you, Mr. Chairman and Ranking Member Lantos, for this vital hearing on reconstruction in Iraq.
I think it goes without saying that this Congress has not exercised sufficient oversight over reconstruction. It is our responsibility and duty to provide serious and meaningful oversight over the Administration's efforts to rebuild Iraq.
I had the opportunity to travel to Iraq in March 2005. In the year since, the progress has been too little and too slow. The billions of dollars have been wasted without questioning the Administration at a time when our country spends less than $2 billion a year on alternative energy research, while spending $7 billion a month in Iraq, is grossly irresponsible for this Administration to be wasting any money, let alone the billions it has in Iraq.
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In addition to the immense cost of reconstruction, one of my main concerns is where we are in terms of Iraqi self-governance. Moreover, the basic infrastructure construction that they need is quite insufficient, and I question whether the Administration has a clear plan to complete this essential project.
I am also interested in looking at the model and learning from the model of the Truman Commission during World War II. Truman took this on as his patriotic duty in a way that was pro troop and pro taxpayer, and it was one of the most bipartisan Committees in this Congress.
I hope we can learn from that model and this Congress can join behind these efforts in a bipartisan way in a pro troop, pro taxpayer way to really turn this around.
Thank you, Mr. Chairman.
Chairman HYDE. Mr. Tancredo of Colorado? Mr. Tancredo waives.
Has everyone who wishes to make an opening statement fulfilled their urge? Good.
I would like to welcome Ambassador James Jeffrey. On August 10, 2005, Secretary of State Rice appointed Ambassador Jeffrey as Senior Advisor to the Secretary and Coordinator for Iraq. Ambassador Jeffrey is a career member of the U.S. Foreign Service, previously serving as Deputy Chief of Mission in Baghdad from June 2004 to March 2005.
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Mr. Stuart Bowen is Special Inspector General for Iraq Reconstruction. He previously served as the Inspector General for the Coalition Provisional Authority. Mr. Bowen has served President George W. Bush as Deputy Assistant to the President and Deputy Staff Secretary and Special Assistant to the President and Associate Counsel.
Mr. James Kunder is Assistant Administrator of the Bureau of Asia and the Near East at the U.S. Agency for International Development. From July 2002 to 2004, he served as Deputy Assistant Administrator for Asia and the Near East. Mr. Kunder has extensive government and private sector experience in assistance and international development.
Ambassador Jeffrey, if you would proceed with a 5-minute, give or take, summary of your prepared statement? The full statement will be made a part of the record.
STATEMENT OF THE HONORABLE JAMES JEFFREY, SENIOR ADVISOR TO SECRETARY RICE AND COORDINATOR FOR IRAQ, U.S. DEPARTMENT OF STATE
Mr. JEFFREY. Chairman Hyde, Mr. Lantos, Members of the Committee, it is an honor to be again here today to discuss our strategy for victory in Iraq and the important role of reconstruction in that effort.
What I would like to do is, as the Chairman said, submit my written comments to the record for the sake of brevity, but also to address I think head on the core issues that were raised in the comments by Members of the Committee.
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I will spend a couple of minutes in a general sense, and then we can get into some of this in the question and answer period if that is all right with you, sir.
Chairman HYDE. Sure.
Mr. JEFFREY. As one who has been involved in reconstruction, I cannot underline too much how important oversight is on our part and that of USAID and the others working on the part of my friend Mr. Bowen, the Special Inspector General, other Inspector General agencies and of you, the Congress, and, frankly, of the media and the Iraqis.
In a huge endeavor like this being carried out in the midst of horrific combat, many errors will be made. Many decisions will be made that in hindsight were the wrong decisions, and we need to get to the bottom and do better. We think we are doing that, but we have to justify ourselves to you, and that is why we are here today.
There is one thing I would urge, however. There is a basic element of fairness at play here, and some of the comments I have heard I cannot associate myself with, to be very blunt. Hundreds of diplomatic personnel and civilian contractors, Americans and others, have died in action trying to carry out this program. They are also serving.
In honor of them and the people who serve with me, I want to say that most of these people are honorably doing their best under conditions that most Americans could not possibly imagine. They are honest, reliable people. Many of them are making mistakes.
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There are differences, for example, between the $9 billion that has been mentioned, and that is a concern to us, but that was not United States taxpayer money. For the record, we should point out that this was money from the Iraqi oil account that the UN and the Iraqis asked us in the immediate period after the fall of Saddam to rush into reconstruction at a time when all infrastructure was on its back, when there was no oil whatsoever being produced, let alone exported, when electricity was basically down.
It was urgent that we get a great deal of money out into the field. The Iraqis supported us, and, frankly, accounting measures by the standards that we use here today with United States funds were not applied. We have to explain that, and we will do our best to.
The same thing with some of the corruption cases that also flowed from that. These must be and they have been investigated, and we are here today to commit to doing that.
In other areas such as those mentioned by Mr. Lantos, the pipelines laid under the Tigris River, that was a huge mistake on our part, but I would like to say today, sir, those pipelines are under the Tigris because we went back, found out what we were doing wrong, got another contract with another company that did it right.
The same thing with the schools project. We are quite unhappy with the work of a major American contractor, and we are working with the U.S. military and looking at other funds. We have over $100 million in medical equipment that we are planning on providing to those schools. Many of them have been partially done, and we are going to find ways to fix many, if not all, of these schools and proceed on. That has been the record.
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As has been mentioned here with Ambassador Khalilzad's efforts, we started from the top up. Now we are doing it from the bottom up. We appreciate and we try to respond to your suggestions and your criticisms, but let me assure you that the vast majority of people who are working on these programs, whether they are making mistakes or not, are trying to do their best for their country and for our effort in Iraq.
Thank you very much, sir.
[The prepared statement of Mr. Jeffrey follows:]
PREPARED STATEMENT OF THE HONORABLE JAMES JEFFREY, SENIOR ADVISOR TO SECRETARY RICE AND COORDINATOR FOR IRAQ, U.S. DEPARTMENT OF STATE
Chairman Hyde, Mr. Lantos, members of the Committee, it is an honor to be here today to discuss our Strategy for Victory in Iraq and the important role of reconstruction in that effort.
The U.S. objective in Iraq is a federal, democratic, pluralistic and united Iraq, stable, at peace with its neighbors, prosperous, and an ally in the Global War on Terrorism. To accomplish this, all our efforts support the President's three strategic tracks—security, political, and economic—with the intent of having the Iraqis eventually take complete responsibility for these tracks. Our experience has demonstrated that this transition cannot be sustained without integrated progress on all three tracks. This must not only be in full consultation with the Iraqis, but increasingly with them in the lead. We are dealing with a highly political struggle for power, which is at the heart of the insurgency, and only Iraqis can determine the path ahead—the compromises, the critical issues, and the shape of their politics
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We have seen significant progress in recent weeks along the political track. Following a series of major electoral events, the Iraqi Council of Representatives recently approved the formation of a new government under Prime Minister Maliki. The delay in the appointment of the Ministers of Interior and Defense reveal legitimate divergences of opinion among the Iraqi political parties. We are encouraging the Iraqis to resolve these differences sooner rather than later. We are now at a turning point where political progress must be measured by significant steps taken by the democratically elected Iraqi leaders, rather than the successful accomplishment of well identified events laid out by U.N. Security Council resolutions or Iraq's Transitional Administrative Law. Success in these tasks will require determination and the ability to execute a myriad of small decisions correctly that will have a positive cumulative effect, rather than pulling off the big, spectacular event, such as a national election. Participation by all communities in Iraq will be important both to a successful outcome and the fostering of a sense of national reconciliation, along the lines of the Prime Minister's well received statement Tuesday. As discussed above, forward movement on the political track helps to advance efforts in the economic and security tracks as well.
One area in particular where we are committed, with the Iraqis, to seeing an immediate reversal is in the recent rise in sectarian violence. This is a top priority with both governments. Our joint security, political and economic initiatives are intended to help cement national unity.
Similarly, foreign assistance, led by the flagship U.S. programs, IRRF I and II, totaling $20.9 billion, is essential to progress on all tracks. Supporting only the security track is not enough. Progress on the economic and political tracks is equally critical to victory, and this progress requires U.S., other international, and Iraqi funding, to augment the IRRF, whose new obligations authority expires this year. In particular, funding our teams that work closely with key Iraqi institutions, such as the Council of Representatives, the provincial governments and national ministries will be critical to our success in ensuring the democratic and effective character of these institutions.
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In 2003, the World Bank estimated that rebuilding Iraq's dilapidated infrastructure would require over $50 billion. The IRRF II $18.4 billion program was designed by the Administration and Congress, not to take on that entire burden, but, rather, to quickly respond to the most pressing needs, including repairing an infrastructure neglected for over 20 years, increasing oil production and export, providing key essential services, developing Iraqi security forces, and strengthening democratic institutions and the private sector development. To a considerable degree IRRF II, supplementing the initial $2.5 billion in IRRF I, is accomplishing that mission.
Reconstruction, generally speaking, can be described as a series of successes and some setbacks. We have been successful in rehabilitating water and sewage services and immunizing nearly all children against childhood diseases but face problems with capacity in the service delivery ministries. While efforts in the oil and electricity sectors have been hampered by years of mismanagement, neglect, smuggling, corruption and decay during the Saddam era, and targeted attacks on critical infrastructure, we have increased Iraq's total potential electrical generation capability by 30 percent. The dramatic increases in income in post-conflict Iraq (income per capita has nearly doubled from 2003 to 2005) has resulted in new vehicle and appliance purchases as well as increasing demand for fuel and electricity, but without a corresponding rationalization in pricing for these goods and services.
We are making progress. Almost all of the large infrastructure projects currently funded by the IRRF are expected to be completed by the end of the year. These projects are already having a significant impact on daily life in Iraq. IRRF projects have added, rehabilitated, or maintained more than 2700 megawatts of electricity. IRRF projects have increased access to potable drinking water for 3.1 million Iraqis and improved access to sewage systems for 5.1 million Iraqis. Success can be seen beyond the large infrastructure projects as well. Approximately 32 percent of Iraq's more than 14,000 schools have been rehabilitated or refurbished, including the provision of 8.7 million new textbooks. We have helped Iraq launch a stable new currency and stock exchange, develop more transparent budget procedures, and make millions of dollars in job-creating loans to micro, small, and medium-sized enterprises. Our technical assistance programs and diplomatic engagement have facilitated Iraq's reintegration into the global economic community, including an IMF reform program, its WTO accessions process, and a hugely successful Paris Club debt relief program. These are all admirable achievements, particularly when one considers the environment in which they were achieved.
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Meanwhile, with the end of IRRF availability approaching, closeout of the IRRF has begun. As of May 30, of the $18.4 billion appropriated in IRRF II, $16.6 billion has already been obligated and $12.3 billion has been disbursed, in addition to the $2.5 billion from IRRF I. Our proposed FY 06 supplemental and FY 07 base budget assistance programs totaling almost $2.4 billion will help Iraq in its transition to self-reliance in the civilian realm by focusing on building Iraqi capacity at the national and provincial levels and supporting emergency stabilization programs.
To ensure that the benefits of this progress reach the entire Iraqi population, we have initiated five Provincial Reconstruction Teams, with more to come, to strengthen provincial and regional governments as previously described by Secretary Rice.
I am also delighted to be here today with my colleague, Mr. Stuart Bowen. His organization, the Special Inspector General for Iraq Reconstruction (SIGIR), and other organizations within the Iraq IG working group that monitor our activities have done an incredible job under the austere and dangerous conditions with which we operate in Iraq. The Secretary has, on numerous occasions, reiterated her support to his agency's on-going activities in every way possible. I know Ambassador Zal Khalilzad echoes these sentiments.
What we do recognize is that the IRRF alone will not complete our work, as Mr. Bowen has suggested. But right now, our priority will be to complete the IRRF program's projects that are vital to boosting the Iraqi economy and capacity. At the same time, we will continue to work to convince our friends and allies to disburse the remainder of the $13.5 billion pledged at the Madrid Conference and consider additional funding. As SIGIR reported at the end of April, our international partners have made more than $800 million in new pledges since Madrid. The UN and the World Bank Trust Funds have made notable progress in implementing their projects as well. The UN has signed contracts for $602 million and disbursed more than $465 million of the $910 million in its trust fund, and the Bank has contracted for $172 million and disbursed $55 million of the $458 million in its trust fund. We are also looking at new modalities, possibly including an ''international compact,'' to better link the global community with Iraq.
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We continue to work actively with our international partners, including the IMF and World Bank, to increase support for the new Iraqi government. It will be important to build on existing coordination structures, like the IRRFI and the SBA. It will be critical that future assistance efforts also reinforce Iraqi commitments to undertake economic, political, and security reforms. We are consulting now with the Iraqi government on the best way forward. Our FY 2006 supplemental request of $1.6 billion and our FY 2007 base assistance submission of $771 million represent a shift away from the large infrastructure projects the IRRF funded to a focused capacity-building program that will help enable Iraqis to build and sustain a democratic society and healthy economy. Some of the programs funded will include infrastructure sustainment, capacity building at core Iraqi ministries, banking reform, agricultural development, rule of law, and democracy and civil society programs. As the House moves today to consider the FY 2007 foreign operations appropriations bill, we will look to your support for our continued activities in Iraq, including the State Department and USAID operating budgets.
Finally, let me again today commit the Department of State and our Mission in Baghdad to the most efficient, transparent, cost-conscious execution of funds entrusted to us, in the service of extraordinary national objectives, and to the best possible working relationship with those organizations such as SIGIR and GAO who provide valuable oversight.
STATEMENT OF MR. STUART W. BOWEN, JR., SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION
Mr. BOWEN. Thank you, Mr. Chairman. I am Stuart Bowen, the Special Inspector General for Iraq Reconstruction. Thank you, Ranking Member Lantos and Members of the Committee, for having me here this morning to report on SIGIR's work in Iraq providing oversight.
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I will provide a brief summary of my written statement. I also want to draw attention to the fact that our quarterly report, which details the work that we continue to perform in Iraq, is available at our Web site, www.sigir.mil.
I just returned from my twelfth trip to Iraq since my appointment a little over 2 years ago. I have spent approximately a total of a year in Iraq overseeing the efforts of SIGIR in-country to account for what the taxpayers are getting for the investment in Iraq reconstruction.
Very simply, that is what I see that you, the Congress, have appointed me to do with my staff, and that is to deter fraud, waste and abuse and go out and visit the sites and see what has happened, see what we have, and to help promote the success of the overall reconstruction endeavor.
My philosophy as an Inspector General is a little bit different than a traditional mold, and this is what I tell my auditors. When you go out and perform an audit and you find a problem, you immediately bring it to management's attention, and you work with them right then to resolve that issue.
My goal is that when an audit is finally produced that we are able to say at the end that issue has been addressed and is being resolved or has been resolved. I am happy to report that frequently we have been able to achieve that goal.
You asked in your letter, Mr. Chairman, how oversight has improved the reconstruction efforts. First, I want to say that you are right, as you said in your opening statement, that aggressive oversight works. That aggressive oversight has been present on the ground and is present today in Iraq through the Special Inspector General for Iraq Reconstruction.
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I have 55 individuals serving over there—25 auditors, 10 investigators, 10 inspectors and support staff—undergoing the same rigors that everyone who has to operate in a lethal environment does. I am proud of their work.
We have also achieved results in the 2 years that we have been there. SIGIR Audit has completed 55 audits since inception with 165 recommendations. Most of them have been concurred with and responded to, $10 million in direct savings and almost $400 million in indirect and direct financial benefits.
SIGIR Inspections. Their job is to travel across Iraq and visit the sites. I traveled to Nasiriyah 2 weeks ago and visited a prison facility that is 40 percent done—it is being built by parsons—with our inspectors.
Sure, it was emblematic of the experience in Iraq. I think it is going to be a good project, but it is behind schedule. The scope has had to be revised because of cost issues related to security. That encapsulates, is a certain microcosm of the reconstruction experience, but eventually it will be a very modern prison operating in south-central Iraq.
My inspectors do that every day over there. They have completed 42 inspections and 97 limited reviews. We have also been using overhead imagery to look at project sites that no one can get to to make some assessment of how they are doing. We have done 112 of those with benefits through engineering suggestions that have been in the tens of millions of dollars.
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Investigations. We have had 177 cases opened. One hundred and five are closed. Seventy-two are ongoing. We have had five arrests, two convictions. I think you know that Philip Bloom and Robert Stein have gone to prison for a long time, indeed probably for the rest of their lives, and they are ordered to pay restitution.
We have 20 cases already referred to the Department of Justice and at least $13 million in recovered assets right now, so the answer is do we have oversight in Iraq? Yes. Is it aggressive? Yes. Is it making a difference? I believe it is.
The latest quarterly report updated what we said in the January report; that we are in the middle-of-the-year transition. We identified five critical issues that need to be addressed—improve infrastructure security, close the reconstruction gap, energize the oil and gas industry, fight corruption, a huge issue that Prime Minister Maliki has taken on, and engage the donor community.
Indeed, multilateralizing the effort to support Iraq's fledgling democracy and growing economy is essential at this stage, and I see that beginning to happen right now.
With that, I thank you for this opportunity to deliver brief remarks and look forward to answering your questions. Thank you, Mr. Chairman.
[The prepared statement of Mr. Bowen follows:]
PREPARED STATEMENT OF MR. STUART W. BOWEN, JR., SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION
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INTRODUCTION
Mr. Chairman, Ranking Member Lantos, and members of the Committee—thank you for the opportunity to address you today on important matters regarding the United States' role in the reconstruction of Iraq. The Congress has tasked my office, the Special Inspector General for Iraq Reconstruction (SIGIR), to provide oversight of this substantial and challenging endeavor. I am here today to provide you with the most current reporting on SIGIR's oversight efforts in Iraq. I hope for a productive exchange of views and ideas in this hearing regarding Iraq reconstruction.
A few days after submitting our April 30, 2006 Quarterly Report to Congress, I returned to Iraq for my 12th tour, to work in Baghdad and across Iraq with SIGIR's 50 staff members currently stationed in Baghdad. I also had numerous meetings with those managing the operational and contracting components of the US reconstruction effort in Iraq. I returned from Iraq a week ago and I am pleased to provide you my observations garnered from my recent weeks of work in Iraq. I also want to update you on the critical issues raised in SIGIR's April 30, 2006 Quarterly Report to Congress.
As SIGIR noted in its January 2006 Quarterly Report, this is the Year of Transition in Iraq reconstruction. By the end of 2006, most programs and projects funded by the IRRF will be turned over to Iraqi authorities. With that prospect on the horizon, reconstruction planning and operations are increasingly becoming a joint enterprise, with U.S. and Iraqi officials coordinating more and more on the planning of key reconstruction initiatives.
With approximately 67% of the $18.4 billion in Iraq Relief and Reconstruction Funds (IRRF) now expended and just under $2 billion left to obligate, the U.S. reconstruction program in Iraq is fully engaged in project execution and sustainment, contract close-out, and program transition. Effectively advancing the progress of reconstruction and development in Iraq at this critical juncture requires the U.S. government to work closely with the Iraqi government and international donors to sustain the substantial U.S. investment in Iraq's infrastructure.
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In its April 2006 Quarterly Report, SIGIR identified five critical issues confronting the reconstruction program at this watershed moment in the Iraq endeavor:
Improve Infrastructure Security: critical nodes must be protected
Close the Reconstruction Gap: fund the Secretary of State's initiative to build capacity at the local level
Energize the Oil and Gas Industry: 94% of Iraq's national income is derived from this industry but only 9% of the IRRF was spent on it
Fight Corruption: Iraq continues to lose capital to widespread corrupt practices
Engage the Donor Community: the reconstruction program must be multilateralized
Improve Infrastructure Security—SIGIR continues to review the critical issue of infrastructure security. Insurgent activity impedes ongoing reconstruction projects and interrupts the transition of these projects to Iraqi control. Attacks on Iraq's oil and gas and electrical infrastructures have limited progress in the past within these key sectors. Early U.S. efforts to address this issue did not succeed as SIGIR auditors discovered in a review of a $147 million program called Task Force Shield, which was established in September 2003 to build Iraq's capacity to protect its oil and gas and electrical infrastructure. Task Force Shield sought to cover 340 key installations, 7,000 kilometers of oil pipeline, and 14,000 kilometers of electrical transmission lines. The audit found that the program failed to meet its goals.
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SIGIR is now executing a significant current review of this issue and will provide a classified report on it during this quarter. I addressed the infrastructure security issue with U.S. leadership in Baghdad during my recent trip to Iraq. Recognizing its importance, the U.S. Ambassador to Iraq has made infrastructure security an essential element of the Embassy Joint Blueprint for Success. Of note, significant progress has been made on infrastructure security over the past quarter. For example, the Department of Defense dispatched a team of experts to Iraq last quarter to assess the protection of oil and gas facilities. They examined the sector's infrastructure protection programs, seeking to identify current security challenges. The team is now drafting a strategy that will help the Iraqis more effectively protect their energy infrastructure.
Close the Reconstruction Gap—SIGIR's October 2005 Quarterly Report identified a ''reconstruction gap,'' which acknowledged that—for a variety of reasons, security being the most salient—the U.S. relief and reconstruction program will accomplish less than originally planned. The shortfall in various sectors was caused by more than 250 reprogramming actions, delays driven by security and administrative problems, poorly managed cost-to-complete schedules, and shifting emphases in contracting and program management. Of note, another reprogramming of the IRRF occurred this quarter: $353 million was shifted from the electricity and health care construction sectors into non-construction programs. The reconstruction gap, however, comprises more than simply the notion that fewer projects will be completed than expected; it also addresses the shortfall's impact on outputs and outcomes.
Fewer projects completed axiomatically affects infrastructure outputs in Iraq—that is, fewer electrical projects means fewer megawatts on the grid, and fewer oil and gas projects means fewer barrels of oil produced per day. These constrictions have the cumulative effect of slowing improvement in the daily lives of Iraqis.
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Ambassador Khalilzad's initiative to devolve more project decision-making to Iraqis at the local governorate level should help remediate the perceived effects of the reconstruction gap by giving Iraqis more of a say in reconstruction priorities that can be implemented close to home. Iraqis are now exerting a formative influence over project choices. Their management of the process through the Provincial Reconstruction Development Councils, assisted by coalition-staffed Provincial Reconstruction Teams, is building local government capacity in Iraq. The aim of the Ambassador's initiative is to produce more immediate, perceptible benefits for Iraqis in every governorate. The success of the Ambassador's initiative depends, in part, on new funding. Thus, SIGIR strongly supports the President's FY 2006 supplemental and FY 2007 budget requests, which propose an additional $3.2 billion to help secure and sustain Iraq's critical infrastructure, to build the capacities of national and local governments, and to stimulate economic growth, increased employment, and private-sector development.
Energize the Oil and Gas Industry—Iraq has the second-largest oil and gas deposits in the world, with revenue from this sector providing 94% of Iraq's national income. Several factors, however, have limited progress in the oil and gas sector: breakdowns in the sector's deteriorated infrastructure, delays in forming the new Iraqi government, uncertainties regarding the legal framework governing Iraq's petroleum industry, and attacks on the sector's critical nodes.
Despite U.S. allocations of $1.7 billion (9% of IRRF II) and supplemental Iraqi expenditures, the sector is struggling to return to pre-war oil production levels. Consequently, Iraq's national income has yet to achieve its great potential, which will be necessary if the country is to fully shoulder its primary role in recovery and reconstruction. Before the war, three assumptions were made about the oil and gas sector in Iraq:
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that oil and gas revenues in post-war Iraq would pay for much of the reconstruction
that foreign private investment in the oil and gas sector would quickly flow into Iraq after the fall of the Saddam regime
that post-war Iraq would be sufficiently secure to allow the development of oil and gas without hostile impediment.
To varying degrees, each of these assumptions has proved to be incorrect. Attacks on the oil infrastructure and a dilapidated system have slowed production and reduced potential revenue. Moreover, outside investors have been unwilling to commit capital to this sector until the insurgency abates and a permanent government takes power and articulates the rules of the game. Accordingly, the new Iraqi government, which is now forming, can provide necessary certainty by quickly drafting, approving and implementing laws that govern foreign investment in the oil and gas sector.
Fight Corruption—Corruption is another form of insurgency in Iraq. This second insurgency can be defeated only through the development of democratic values and systems, including the evolution of effective anticorruption institutions in Iraq. The primary players in this effort are the Commission on Public Integrity, the Board of Supreme Audit, and the 29 inspectors general in the Iraqi ministries.
SIGIR worked at generating support for these institutions early on and continues to highlight the need to support them financially. Iraq, the United States, and other donors should sustain and increase funding for these essential institutions. New funding will bolster their effectiveness, while raising general awareness of the new Iraqi government's commitment to fighting corruption. Better anti-corruption practices would help improve the overall investment climate.
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SIGIR previously reported that the Department of State developed an initiative to strengthen anticorruption efforts in Iraq. Now, at the request of U.S. Embassy-Baghdad, SIGIR and the DoS Office of Inspector General are finishing up a coordinated survey of the $365 million supporting U.S. anticorruption programs in Iraq. The survey is intended to assess the initiatives and establish metrics to gauge progress. The next step should be to coordinate further with other donors on anti-corruption activities.
Engage the International Donor Community—As the year of transition in Iraq unfolds and IRRF funds concomitantly draw down, the role of international donor nations will become increasingly important. The next phase of Iraq's reconstruction will require a broader international effort. U.S. reconstruction officials should begin now to engage more directly and intensively with their international counterparts—the World Bank, in particular—to help ensure that donors implement pledges and develop, in close coordination with the Iraqis, the way forward for the next phase of reconstruction.
Funding is particularly needed to stimulate the oil and gas sector, which has thus far underperformed for a variety of reasons (noted above). SIGIR applauds the promising development of an integrated donor database to aid coordinating and de-conflicting donor activities, but the system needs more comprehensive inputs from all donors before it can become an effective management tool.
SIGIR is now in its third year of providing oversight for reconstruction and relief in Iraq, detecting and preventing waste, fraud and abuse in the lethal operating environment that is Iraq today. Moreover, we continually seek to help improve the controls, processes and accountability measures of those managing Iraq reconstruction. I instruct every SIGIR auditor and inspector to focus on achieving real-time real time results by reporting problems immediately upon their discovery, which allows for improved operational guidance within the reconstruction program. We do not wait for our reports to be released to apprise those concerned of our concerns.
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This philosophy diverges from traditional IG oversight mechanisms, but it is essential in Iraq because there is no time for lengthy critiques. Thus, along with its oversight role, SIGIR also performs a consultative role, seeking to achieve real, money-saving results by applying relief and reconstruction lessons learned in real time.
In Iraq, SIGIR staff works side-by-side with the leaders of the reconstruction program: Ambassador Zalmay Khalilzad; General George Casey, Commander, Multi-National Force, Iraq; Ambassador Dan Speckhard, the Director of the Iraq Reconstruction Management Office; Major General Bill McCoy, who is about to complete his tour as Commanding General, Gulf Regional Division, U.S. Army Corps of Engineers; Major General Darryl Scott, Commander, Joint Contracting Command—Iraq/Afghanistan; and Ms. Dawn Liberi, the USAID Mission Director.
In the course of performing our oversight functions during this reporting period, we found that the U.S. Ambassador to Iraq, the Commander of the U.S. Army Corps of Engineers Gulf Region Division, and the Mission Director of the U.S. Agency for International Development have continued to improve management coordination of the Iraq reconstruction program.
To facilitate coordination and collaboration among U.S. oversight bodies covering Iraq, SIGIR created and chairs the Iraq Inspectors General Council, to ensure that all oversight organizations keep one another informed of current and planned work on overseeing Iraq reconstruction programs.
The April 30, 2006, SIGIR Quarterly Report to Congress provides SIGIR's latest series of new audit and inspection reports, which, taken together, detail the current challenges, issues and concerns confronting the Iraq reconstruction effort.
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More specifically, SIGIR issued 29 audits and inspections this quarter, which contain 58 new recommendations. Although these audits and inspections raise a variety of concerns, SIGIR generally found many instances of effective reconstruction projects and the overall picture, though mixed, nevertheless conveys a sense of gradual progress. SIGIR concluded that the likelihood of a project's success was high if quality control had been integrated actively into the project's management and if government oversight was consistent and disciplined.
SIGIR's audit work this quarter included a performance review of the contract to construct primary health care centers, an audit of reconstruction management information systems, and an examination of the planning and processes for transferring reconstruction assets to the new Iraqi government. The primary health care center report presents a difficult story.
Our comprehensive look found shortfalls: only 6 of 150 clinics have been completed, although 75% of the funding had been spent. In addition, 14 more clinics are being completed under the original contract, each with construction issues yet to be resolved. The Iraq Reconstruction Management Office estimates that approximately $36 million will be required to complete 121 partially constructed clinics that were terminated for convenience.
The 13 inspections completed this quarter continued SIGIR's mission to provide on-site assessments of projects in every sector across Iraq. Most of the projects reviewed are still in progress; thus, SIGIR's recommendations allow for money-saving course-corrections. SIGIR also inspected 55 additional projects through its rapid-review program, using local hires to visit sites that SIGIR inspectors cannot reach.
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Overall, SIGIR inspectors found that, where management and quality assurance programs were active in the on-site construction process, the quality of work usually met or exceeded contract standards. Moreover, we believe that the expansive coverage of its inspections teams provides a highly visible deterrent to those who might be inclined to commit acts of fraud, waste, and abuse.
SIGIR criminal investigators are currently working on 72 open cases involving fraud, theft, bribery, and other alleged crimes. As outlined in our quarterly report, contractor Philip Bloom and former Coalition Provisional Authority (CPA) regional comptroller Robert Stein pleaded guilty to conspiracy, bribery, and money laundering in connection with a scheme to defraud the CPA.
Bloom now faces up to 40 years in prison and a fine of $750,000. Under the terms of his plea agreement, he must pay $3.6 million in restitution and forfeit $3.6 million in assets. Bloom admitted that from December 2003 through December 2005, he, Stein (who faces 30 years in prison), and other officials conspired to rig bids to ensure that the contracts were awarded to Bloom. The total value of the contracts exceeded $8.6 million. Bloom admitted paying Stein and other public officials more than $2 million in bribes.
Earlier this year, SIGIR investigators conducted a sting operation involving an alleged criminal conspiracy. The sting resulted in the arrest of a contractor who offered a bribe to a SIGIR undercover agent. The case is currently being managed by the U.S. Department of Justice.
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During this quarter, the third forum of SIGIR's Lessons Learned Initiative was conducted, focusing on program and project management in Iraq reconstruction. It brought a number of the leading experts on Iraq reconstruction together for a day-long review of the research that SIGIR had compiled on this critical issue. In the next few weeks, SIGIR will release its second Lessons Learned report, addressing contracting in Iraq reconstruction. The report examines the establishment and evolution of the contracting policies, procedures, and systems used by U.S. government agencies to address the challenges associated with strategy and planning, policies and processes, and staffing during the U.S. reconstruction effort in Iraq. This report is the result of extensive research and a formal, collaborative process involving a panel of experts from inside and outside government. Our recommendations include:
Creating a Contingency Federal Acquisition Regulation
Institutionalizing special contracting programs for federal agencies
Including contracting staff from the beginning of any reconstruction effort's pre-deployment planning process
Creating a ready-to-deploy reserve corps of contracting personnel who are trained to execute relief and reconstruction contracting for contingency operations
Developing a system for formulating better contracting and procurement requirements in contingency operations
Pre-competing and pre-qualifying a diverse pool of contractors with expertise in specialized reconstruction areas
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The program and project management report will be released in late summer of 2006. It will examine the issues associated with initiating, planning, executing, controlling, and closing/hand-off of the Iraq reconstruction program. The report will examine a variety of execution challenges within the key project management issues: scope, time, cost, quality, people, communication, risk, and procurement (subcontractors).
SIGIR's first Lessons Learned report, which examined human capital management, was released in January. SIGIR will release a comprehensive capping report on all of our lessons learned in the Iraq reconstruction process during the first quarter of 2007.
As SIGIR looks to it next Quarterly Report, it is working on audits and inspections that address developing critical issues. For example, SIGIR is now conducting a review of ministry capacity building efforts. Iraq's new government is now re-staffing the 28 ministries responsible for managing government operations. For transition to succeed, Iraq must ensure that its ministries are ready to receive and capably manage completed projects. U.S. transition plans anticipate this structural development to occur within Iraq's government this year. SIGIR's review will provide an update on this issue.
In conclusion, let me say that SIGIR remains committed to supporting the reconstruction efforts in Iraq by identifying ways to accomplish the mission more effectively and efficiently, and by deterring fraud waste and abuse of US taxpayer dollars. SIGIR's 55 auditors, inspectors and investigators will continue to carry out the duties and responsibilities assigned by the Congress in the highly hazardous environment that is Iraq today.
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I remain proud of my staff's commitment and willingness to serve in harm's way, far from their families, and in very fluid circumstances. I will continue to do my best to ensure effective oversight and timely reporting, and to thereby advance the success of the Iraq reconstruction plan. Thank you for the opportunity to participate in this important hearing, and I look forward to answering any questions that the Committee may have.
Chairman HYDE. Thank you, Mr. Bowen.
Before we get to you, Mr. Kunder, I would just like to state for the record we have heard some sharp criticism of this Committee that we haven't been diligent enough in oversight, and that statement has been repeated by several Members.
I was able to get the record from the staff, and we had a Full Committee hearing on Iraq April 26, 2006. We had a Full Committee hearing on May 15, 2003; June 4, 2003; May 13, 2004. We had a Full Committee meeting, Members only, with the Prime Minister. We have had many Subcommittee hearings on Iraq.
The Middle East and Central Asia Subcommittee held a hearing on Iraq's Transition to Democracy. The Oversight and Investigations Subcommittee held a hearing on The Iraqi Documents: A Glimpse Into the Regime of Saddam Hussein. We have had one, two, three, four, five, six classified briefings. Not all the Members see fit to attend those classified briefings, but we have had them.
We have had many unclassified briefings with government and non-government officials. Yesterday the Committee held a briefing with Special Inspector General for Iraq Reconstruction. We have dealt with nine resolutions of inquiry that get filed and they get sent to us and that we have a full court press on those. Everybody piles on. Nine of those we have had.
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I think we have been an active Committee on one of the most important issues facing this Congress and this country, and I just wanted to get a little balance into the record.
Now, Mr. Kunder?
Mr. ACKERMAN. Would the Chair yield?
Chairman HYDE. Who is seeking?
Mr. ACKERMAN. Who else?
Chairman HYDE. Mr. Ackerman, of all people. Go ahead.
Mr. ACKERMAN. I don't mean to surprise you, Mr. Chairman, but most of those hearings really were not oversight hearings.
I would call your attention to the fact that from May 2004 to April 2006—and that is when everything started to go to hell in a hand basket—there has been no Full Committee hearing on Iraq.
Chairman HYDE. Well, I have May 13, Full Committee hearing, The Imminent Transfer, Sovereignty in Iraq. You must have missed that one.
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Mr. ACKERMAN. Not reconstruction, Mr. Chairman.
Mr. DELAHUNT. Mr. Chairman?
Chairman HYDE. Yes?
Mr. DELAHUNT. I have missed almost no hearings, Mr. Chairman. Mr. Chairman?
Chairman HYDE. Yes?
Mr. DELAHUNT. Would the Chair recognize me?
Chairman HYDE. I do recognize you. That was an informal recognition.
Mr. DELAHUNT. Thank you, Mr. Chairman. You made reference to the fact that the Subcommittee that is tasked with oversight and investigations has had a hearing on Iraq.
I hold the Chair of the Full Committee in high regard, but that was not an oversight investigation, Mr. Chairman. That was a glimpse into the mind of Saddam Hussein. To in any way suggest that the Subcommittee tasked with oversight and inquiry into reconstruction or any aspect of the Iraq issue is simply not based in reality.
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Now, if you want to talk about whether we did an investigation and inquiry into the Oil-for-Food Program, I can tell you, Mr. Chairman, we sent staff all over the world. We sent them to Cyprus. We sent them to the Middle East. We sent them all over the world.
I think I am not overstating it. We had 16 hearings as far as the Oil-for-Food Program, but not one legitimate hearing on an issue that impacts the American people in a profound way. I would stand in profound disagreement with your statement.
We have not met our constitutional responsibility, and I hope that you will take it upon yourself to authorize Mr. Rohrabacher to expend the same effort and the same resources and the same number of hearings and to follow up today's hearing with actual investigative work that can hopefully help us as we move forward.
I thank my friend, the Chairman, for the time.
Chairman HYDE. Well, you are more than welcome.
At last, Mr. Kunder, we get to you.
Mr. KUNDER. Thank you, Mr. Chairman.
Mr. ROHRABACHER. Mr. Chairman, could I ask just as a point of personal privilege whereas I was just referred to?
Chairman HYDE. I am sorry. Yes.
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Mr. ROHRABACHER. I would just like to note that I am not sure if my colleague and friend understands—I am sure he must—that the Oil-for-Food scandal had something to do with Iraq as well. You know, Oil-for-Food wasn't just about the United Nations. The other half of the Oil-for-Food scandal was Iraq.
Let me note that as we have heard today, this long-touted charge of $9 billion that we are missing, it has nothing to do with American money. It is Iraqi money that was probably involved, oil money that probably was involved in the Oil-for-Food system.
Our investigation into the United Nations Oil-for-Food scandal was not just an overall view of the United Nations. It also dealt specifically with Middle East and Iraqi policy and was important to the people of the United States.
As far as our other hearing on the documents that have been captured during the war in Iraq and the translation of those documents, it had a lot to do with some aspects of the Iraqi war. It had everything to do with, of course, charges made by the people on the other side of the aisle during the war about what our motives were and what was going on in Iraq prior to the decision of the United States to initiate this military action against Saddam Hussein.
That had everything to do with Iraq, everything to do with whether or not we were justified in the expenditures that we have made and the loss of life that we have suffered in order to liberate that country from that dictatorship of Saddam Hussein. These things were very relevant.
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Mr. ACKERMAN. Would the gentleman yield?
Mr. ROHRABACHER. I can't because I believe it is time for us to get onto the witness. Thank you.
Chairman HYDE. The Chair would really like to get our witness' testimony before us, and then we can have a discussion.
With your permission, Mr. Kunder?
STATEMENT OF THE HONORABLE JAMES R. KUNDER, ASSISTANT ADMINISTRATOR, BUREAU FOR ASIA AND THE NEAR EAST, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
Mr. KUNDER. Thank you, Mr. Chairman. I would just like to summarize my statement and try to answer all the questions the Committee asked us in a number of slides. If we can put the first slide up?
[Slide.]
Mr. KUNDER. What this slide attempts to show, Mr. Chairman, since one of the issues that has been raised repeatedly in questions is what the overall structure of our reconstruction program is, moving from Stage 1 in the early years of the Iraq Relief and Reconstruction Fund down in what we call Stage 1 at the bottom, we have done a broad range of activities, as the Committee knows, in essential services like electricity and water, health and education and so forth.
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Where we want to ultimately end up, of course, all of us, is up in Stage 3 where the Government of Iraq, with its extensive oil resources, can provide for a secure and stable society, a market-based economy, an effective and legitimate government.
Where we are right now in our reconstruction program is what we are calling the transitional stage where we are trying to build and sustain Iraqi systems, and what we have divided that program into is four areas that I have listed in Stage 2—community stabilization, expanding economic opportunities, strengthening local governments and strengthening national capacity.
The point here is, we are trying to get Iraqi capacity and Iraqi resources linked to this reconstruction effort. That is the specific goal of the stage we are in right now and the specific objectives we have set.
The next slide, please?
In each of these areas, taking for example community stabilization, we have established concrete and quantifiable objectives. For example, in the area of business development 10,000 small or medium businesses expanded, 55,000 microenterprises, that is small-level businesses started, creating 100,000 jobs and providing non-formal education opportunities for young men and women between 16 and 25, those who might otherwise be recruits for the insurgency.
What I am trying to show in these first couple slides and to answer as many detailed questions as you would like, we have a very concrete plan to build Iraqi capacity during this period of the reconstruction effort and concrete and quantifiable goals we are trying to achieve.
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Next slide, please?
The next couple slides just have to do with some other kinds of reconstruction programs that are going on. I am not going to try to suggest that everything happening in Iraq is a success story. That is obviously not the case, but we see so few slides, so few pictures of actual successes taking place on the ground that I wanted to share with the Committee at least some of these success stories as well.
This first slide is taking place near Dohuk. One of the things we are trying to do is focus on agricultural revitalization. While oil is the lifeblood of the Iraqi economy, agriculture is where jobs are created. Many, many more jobs are created in the agricultural sectors, so what we have been doing is improving the wheat economy in Iraq, getting the date palm economy, which was destroyed under Saddam's regime, back in business and doing this kind of agricultural work so we keep more young men down on the farms and create more of an agricultural economy in the countryside.
Next slide, please?
One of the impediments we have discovered to rebuilding that agricultural economy is simply no infrastructure left to restore farm implements, to repair farm implements, so U.S. taxpayer dollars have gone to create 14 tractor repair workshops around the country where we are repairing thousands of pieces of agriculture equipment that had gone to rust and weren't working because of lack of imports of spare parts and lack of skilled technicians to repair them. These are the kinds of things that are going on behind the scenes that are not making the front pages.
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Third slide, please?
This is a typical one of thousands of a microenterprise training program. This one happens to be an attempt to teach tailoring to Iraqi women. There are thousands of these kind of projects going on.
Ambassador Jeffrey, in his statement, talks about the growth of the Iraqi economy, the increases in GNP that have taken place despite the attacks of the last couple of years. These are the kind of microenterprise projects that have taken place.
In the last couple of years, the U.S. taxpayers have supported a business registry at the Ministry of Commerce. More than 30,000—30,000—new Iraqi businesses have been started in the last couple of years since United States military forces arrived.
Next slide, please?
Business reconstruction in Iraq won't just take place at the microenterprise level. It has to take place at the macro level as well. These sessions displayed in the lower right of this slide shows a group of Iraqi business and government leaders working on World Trade Organization accession.
We have built and put in place the kinds of macroeconomic reforms that will allow the Iraqis to get debt forgiveness through the International Monetary Fund, so there is work taking place at the macroeconomic level, invisible work, not front page work, but critically important work to get Iraqi oil revenues linked to the reconstruction effort in Iraq.
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Next slide, please?
There have been more than 3,000 schools built in Iraq. By this July, more than a third of Iraqi teachers will have gone through training programs to teach a new method, a more interactive, a more student participatory type of teaching and type of pedagogy. Is this going to solve the entire education problem in Iraq? Of course not, but these are the kinds of programs taking place.
One more slide perhaps because this is obviously a woman voting, but our new Administrator, Ambassador Tobias, just returned from Iraq. One of the things that most impressed him are the hundreds of Iraqi civil society organizations—lawyers associations, women's associations, business persons associations—that have sprung up.
One of the Members mentioned earlier the importance of getting grassroots democracy started in Iraq and not just starting from the top down. I can guarantee you that, again with United States taxpayer dollars, hundreds of these civil society organizations are starting a rebirth of democracy in Iraq.
There are other slides, but I think I will stop at that point in the interest of time.
Again in summary, Mr. Chairman, I don't want to pretend that no mistakes have been made. Mistakes have been made. We have had to reconfigure the reconstruction effort because of the violence of the insurgency.
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As I reported to the Committee in the past, somewhere between 16 and 22 percent, depending on the program, of the reconstruction dollars are going into security, paying for armed guards so that we can conduct immunization programs for children and so forth. Clearly there are problems. Clearly we have not made as much progress as we would like, but I clearly want to point out that there has been a great deal of work done.
One of the issues in electricity, one of the reasons we continue to hear of problems and complaints from Iraqi citizens about lack of supply, is that while the total production capacity has gone up in Iraq since United States forces arrived, demand has gone up twice as fast because of these 30,000 new businesses, because of the ability of people to buy air conditioning units and generators and so forth.
In closing, Mr. Chairman, I would just like to reiterate what Ambassador Jeffrey said about the issue of waste, fraud and abuse. We very much appreciate the work that Mr. Bowen has done. We appreciate the work of the Congress in giving us a Special Inspector General for Iraq Reconstruction, but when we come to the Congress for our annual appropriation we also ask for money for our own Inspector General.
Lest Members of the Committee think that we had not thought about reconstruction, I can guarantee you that before Mr. Bowen's position was created we had embedded in our USAID mission in Baghdad our own Inspector General staff who have conducted more than 90 financial and performance audits, so we take very, very seriously the issue of accountability.
Does that mean we have made no mistakes? Absolutely not. I have profound respect for all Members of the Committee, including the Ranking Minority Member. But I must politely categorically reject the statement that, if I took him correctly, that the reconstruction program has been significantly undermined by waste, fraud and abuse.
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Perhaps it is a definitional issue. Waste, fraud and abuse to me means malfeasance, misuse of the taxpayers' dollars. Have we made mistakes? Yes. Have we had to reconfigure our program? Yes. But, if the impression left with the Committee is that somehow the majority of our problems are caused by waste, fraud and abuse, that is simply not true.
I read very carefully the Inspector General's quarterly reports and other audits he does. I do not want to speak for Mr. Bowen. That is not how I read what he has said, and that is not the fundamental problem. Most of the taxpayer employees who are out there are, as Ambassador Jeffrey said, very dedicated, very honest individuals.
We take quite seriously in response to the Committee's questions the issue of accountability. We have built our own accountability before SIGIR was created, and simply the fundamental problem is not waste, fraud and abuse in appropriated funds entrusted to us by the Congress.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Kunder follows:]
PREPARED STATEMENT OF THE HONORABLE JAMES R. KUNDER, ASSISTANT ADMINISTRATOR, BUREAU FOR ASIA AND THE NEAR EAST, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
Mr. Chairman, members of the Committee, it is an honor to appear before you today. I welcome the opportunity to testify on behalf of the U.S. Agency for International Development (USAID). Today, I would like to describe to the committee USAID's contributions to the President's National Strategy for Victory in Iraq, as well as USAID's perspective on the work of the Special Inspector General for Iraq Reconstruction (SIGIR) and the USAID Inspector General.
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During Administrator Tobias' recent trip to Iraq, he remarked on the courage, skill and dedication of the Iraqis who, themselves, are actively involved in the reconstruction process. While visiting the Provincial Reconstruction Team (PRT) in Babil Province, south of Baghdad, Ambassador Tobias met with Iraqi civil society organizations—local non-governmental organizations—who are spurring grassroots democracy through community groups in the region, despite personal threats and personal dangers. These groups described how they were mobilizing public opinion to lobby provincial leaders on community needs and priorities—a new, but exhilarating process in south-central Iraq. Ambassador Tobias noted how impressed he was with the sophistication that these Iraqi groups displayed in understanding the dynamics of democracy, their ready grasp of information technology as a communications mechanism, and their total commitment to a new, democratic Iraq.
The Administration has a clearly defined plan of action in Iraq, and USAID's programs, including our goals and benchmarks, support the President's National Strategy for Victory in Iraq in all three tracks—security, political and economic. The goal of the Administration's strategy is to create a new Iraq with a constitutional, representative government that respects civil and human rights; is able to maintain domestic order; keep Iraq from becoming a safe haven for terrorists; is capable of proving essential and other services to Iraqi citizens; and is able to harness its economic potential to create jobs and other opportunities for its people. The fundamental operating principle of this strategy is that transition to Iraqi self-sustainment and responsibility cannot be made without integrated progress on all three tracks.
I would like to talk about what USAID is doing now as well as what we are planning for the future. The civilian U.S. government (USG) effort is crucial to our success in Iraq. It not only supports the Multi-National Force-Iraq (MNF–I), it advances the Government of Iraq's (GOI) security actions against the insurgency. We have all heard how Iraqi and Coalition forces have wrested control of many cities and areas from the terrorists. In most cases, Iraqi troops, with the help of the Coalition, are maintaining security. Their success in these post-conflict areas will allow our forces to come home. But these Iraqi units cannot be expected to maintain peace and stability without the help of Iraqi civilian institutions, and without assurances that Iraqis can depend upon essential services provided by their government and can look forward to political participation and economic opportunities. Specifically, the U.S. and international civilian effort helps to enable and consolidate gains made in the security situation in several ways:
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It strengthens Iraq's capacity at the local and national level to govern and provide essential services to Iraqi citizens.
It supports economic and social stabilization programs to minimize local support for the insurgency and foster support for the GOI.
It assists the public sector's sustainable economic development by creating the enabling environment that will allow the private sector to flourish and by providing the private sector with the resources for the economic growth necessary to create jobs.
Since March 2003, USAID has been allocated approximately $5.1 billion in Iraq Relief and Reconstruction Funds (IRRF). Of this amount, we have disbursed approximately $4 billion and we expect to disburse most of the remaining funds by this summer. Now, let me briefly summarize some of our accomplishments.
ACCOMPLISHMENTS
First USAID is working with U.S. multinational units to help cities recover from the effects of battle and to begin the revitalization process. Projects are funded with complementary USAID and military funds. These projects are aimed at a combination of small, rapid programs followed by more complex projects that operationalize public services, promote representative local government and help resuscitate the economy. USAID's implementing partners provide the majority of project monitoring with assistance from the military as needed. USAID is continuing this effort through our new Community Stabilization Project, which creates opportunities for disenfranchised people.
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Second, USAID-managed programs enable the democratic transformation in Iraq. USAID supported US goals and worked with the United Nations, the United Kingdom, Canada, and the European Community for a successful constitutional referendum in October 2005 and two national elections, in January and December 2005. Our programs have also provided expert assistance, drawing from the international community and Iraqi civil society to assist the Iraqi Constitutional Drafting Committee. USAID continues to support decentralization, empowering provincial and city authorities to provide essential services so that Iraq will be less likely to return an authoritarian centralized government. In the field, assistance teams work with the Provincial Councils to help them shoulder the burden of decentralized power
Third, on the economic front, USAID worked with the Treasury Department to provide assistance to the Central Bank of Iraq that helped stabilize the dinar, prevented hyperinflation, and enabled Iraq to qualify for International Monetary Fund (IMF) lending and Paris Club debt rescheduling. Our assistance to the Ministry of Finance, through the design and placement of a Financial Management Information System (FMIS) at 53 centers country wide, is providing the GOI with the ability to track its budget and expenses. Through increased statistical gathering and analysis provided by the new Government Public Distribution System, USAID is able to provide assistance to the Iraqis in the most need
Fourth, is working with the Project Contracting Office (PCO) to facilitate infrastructure repairs that are addressing gaps in power and water delivery. At present, USAID projects have added 1,292 MW of new or rehabilitated generation capacity to the national grid. This is a big portion of the over 2,700 MWs of new or rehabilitated capacity added in total by the USG. USAID partners provided operation and maintenance programs that will safeguard the investment of U.S. assistance. In telecommunications, USAID has installed 12 domestic switches and one international switch; installed a satellite gateway system and restored international calling service; and completed the installation of a consolidated fiber optic network which connects electricity and communications sectors and will allow Ministry of Electricity officials to monitor and control the electrical grid from three central locations, greatly improving the reliability of electric power service to Iraqis.
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USAID has refurbished or expanded 19 water treatment plants in five cities in Iraq increasing the supply of potable water from USAID projects to over 2.3 million Iraqis. USAID has also provided sewage treatment to over 5.1 million people. We have also been providing plant-level operations and maintenance support at major potable water and sewage treatment plants nationwide to ensure that these plants continue to function. In addition, USAID's rural water program is installing over 70 small water treatment systems in rural communities of less than 5,000 people throughout Iraq. The rural water program will help to supply clean water to almost 500,000 villagers each day.
Fifth, USAID is helping to build a long-term sustainable economy through our agricultural assistance programs. USAID's Agriculture Reconstruction and Development Program for Iraq (ARDI) is generating real jobs that sustain livelihoods—up to 28,000 jobs per day according to employment records in 2006. The program is managed by a small core of expatriate technical advisers and a larger team of 250–300 Iraqis through five offices across the country with less than 8 percent of project funds going towards security.
Thanks to canal and water infrastructure improvements made possible by small-scale grants, 445,000 Iraqi farmers now have improved efficiency of irrigation or access to water on 320,000 acres of farmland. ARDI has also established date palm nurseries in 13 governorates that will expand the true to type palm tree population by 410,000 new trees a year. Throughout the country ARDI planted 9,000 olive trees in 16 demonstration plots, which will produce high value oil.
Sixth, USAID is focused on providing a better future for Iraq and is investing in this future by focusing on the country's children and youth. A demographic youth bulge threatens Iraq's future. In 2004, half of all Iraqis were under the age of 20 years old. Given current population growth rates, the population will double by 2030. Despite vast oil reservoirs, Iraq currently has some of the lowest literacy rates and poorest health statistics in the region. USAID's education and health projects have partnered with the United Nations (UN) to improve education and health care for future generations through improving the quality of teaching and the learning environment for schoolchildren and improving the capacity of the Ministry of Health to provide quality essential services nationwide, including vaccinations against