State Department seeks to shift $3.5 billion in Iraq funds

On Tuesday, the State Department submitted a proposal to Congress to shift $3.46 billion in fiscal 2004 supplemental funds to security and law enforcement needs in Iraq. Congress last fall appropriated $18.4 billion for reconstruction in Iraq and Afghanistan as part of the $87.5 billion supplemental. Under that law, only $800 million could be reprogrammed without congressional consent.

The State Department plan would shift money from refined oil purchases as well as water, sewage and electrical projects. In addition to security, some funds would go to oil capacity enhancement, economic development, debt reduction and democracy assistance.

The House Foreign Operations Appropriations Subcommittee plans to hold a hearing on the request Sept. 24, with testimony from Deputy Secretary of State Richard Armitage. Appropriations aides said lawmakers were generally supportive. They said the continuing resolution that Congress will consider after Sept. 30, in the absence of completed appropriations work, could be a vehicle to carry the administration's reprogramming request.

If the request goes through, Robin Raphel, the State Department's coordinator for Iraq reconstruction, will be a key player in the process of distributing the money.

State took over nation-building from the Coalition Provisional Authority when it dissolved in June. Even with the naming of an interim Iraqi government, the motivation for reconstruction hasn't changed, Raphel says: If the United States can leave a better Iraq than it invaded, America will be embraced by Iraqi citizens. But the insurgency has slowed efforts to reconstruct the electric grid, water system, oil pipelines and other infrastructure. And bureaucratic intransigence has bogged down the spending of the multibillion-dollar U.S. rebuilding pool.

Under the plan to shift $3.46 billion in funds, the State Department team will focus on small-scale projects that show visible results quickly. Military relief programs will be beefed up, giving U.S. troops more cash to dole out to Iraqis to make improvements to their neighborhoods. About half the realigned funds will pay for fielding and training Iraqi police, military personnel and guards to protect borders and facilities.

Arguing that "history will judge [reconstruction] reasonably well," Raphel laid out the plan in a roundtable interview with journalists in Washington earlier this month. Here is an edited transcript of her remarks.

On how plans for rebuilding Iraq have changed: The original philosophy was to restore the infrastructure to some reasonable pre-war level, and then the Iraqis would be able to take off. Their economy would get stimulated. And the capacity to support economic development and job creation would be there.

That philosophy turned out to be only part of the bigger picture. With the changes that are contemplated for the [$18.4 billion reconstruction fund], we're planning on putting more money into short-term employment generation. More people to clean the irrigation, the canals, to pick up the garbage, to paint the schools, to do the simple things a community needs to put its people back to work. It also has the added effect of people at the community level seeing something concrete happening to them.

The statistics that we have, which are based on average number of Iraqis employed in a given week, is over 100,000. That might be for a one-month job. That might be for a six-month job. So, that's not bad.

On the new emphasis on short-term projects: There's what the Iraqis see in terms of the benefits of assistance from the coalition versus what the coalition might do that they can't see -- repairing a power plant or a dam. We need for the Iraqis to believe that this assistance is really doing something for them.

There was a trail of planned projects, some of which wouldn't come on board until 2006 or later. So, as we were looking at what you do to increase the visible impact of our assistance over the next six months to a year, you look for stuff that wasn't going to come onboard anyway, bring that money forward for more quick dispersing. This review has not stalled any ongoing projects.

You can walk around Baghdad and interview individuals who have different stories. Some of them are going to be negative and frustrated [about the occupation and reconstruction], and some of them are going to be very positive and enthusiastic. The polling still shows there are far more in the latter category.

The obvious stimulus that the events of the past year have brought about is clear to anyone who walks the streets of any Iraqi city. It's bustling; people are hustling. Whether it's small traders or people working with the coalition, there is activity. You can see it. You can feel it, however difficult it might be.

On the effect of continued attacks on coalition troops, as well as kidnappings and killings of contractors and journalists: Conditions have slowed things down. They've slowed down employment of the big infrastructure firms, because they had to hire more security. But there's a command center within the big project office in Baghdad, which gives information to all the firms about security: which routes are good and so on. What people basically do is, if there's a problem in one area, they work on a project somewhere else.

Security is a huge priority and a huge challenge. The coalition and all of our people who are serving in Iraq deserve very high marks for being able to adjust to a changing situation. It was expected that there wouldn't be as much resistance as there ultimately was to the occupation, such a resurgence from the Baathists and so on. But this happened and we reacted, and a huge amount of progress has been made toward getting the Iraqis to take responsibility for their own security. The contemplated shift in resources [to spend more on Iraqi forces] is exactly to support that goal.

In terms of Iraqis that have had some kind of training and experience with security, whether it was military or police, they are in high demand now. For the mid-level military people, a lot of them are joining the police or the Iraq armed forces again. [They] have an opportunity, should they choose now to rejoin a profession that takes advantage of some of their experience. The object of the exercise is to get a credible Iraqi security presence, whether it's army, police, border, facilities protection, in place and able to take increasingly more responsibility as fast as possible.

On the use of Iraq's oil revenues: One of the unknowns here is when the Iraqi oil revenues will kick in. There's a case to be made for spending a certain amount of money now on oil infrastructure to get a boost in oil production with a few strategic investments. Should we spend U.S. taxpayer dollars on this? Some argue, "Absolutely, because that will hasten the day when [Iraqis are] able to increase their revenues from oil exports." Other people say, "That's outrageous to spend U.S. taxpayer dollars on the oil sector, because that's [Iraq's] real source of wealth, and they should be able to do that for themselves." That's a debate we're having.

The staff of CongressDaily contributed to this report.