Fits and Starts

Despite innumerable challenges, reconstruction in Iraq is moving forward.

In the summer of 2003, Dean G. Popps boarded a flight bound for Baghdad, embarking on an uncertain journey he never would have imagined even a year earlier. During an eclectic and lucrative career as an attorney, high-tech entrepreneur and corporate executive, Popps had attained a quality of life others only dream of.

But the ambitious son of Greek immigrants felt a different kind of drive after the Sept. 11, 2001, terrorist attacks. Amid the confusion in the wake of the Pentagon strike, Popps and his wife rushed frantically to retrieve their two youngest children from their school near CIA headquarters in Northern Virginia. Then at their home in McLean, Va., the family watched stunned as the news unfolded on television. That morning Popps resolved that if there was a role he could play in improving national security, he wanted in.

He got his chance in 2003 when the Defense Department recruited him to serve with the Coalition Provisional Authority, established to govern Iraq until the country could set up its own government. Popps' job was to restructure 52 military industry companies previously controlled by Saddam Hussein's regime. When he thought of what lay ahead, Popps conjured images of Europe following World War II. Where others saw destruction and chaos, he saw economic potential.

During his stint in industrial conversion in Iraq, Popps helped create the Iraqi Ministry of Science and Technology. He also served as the Coalition Provisional Authority's deputy senior adviser to the ministry, where he helped supervise the restructuring of the former nuclear reactor site at Al Tuwaitha, re-directing the energies of thousands of Iraqi scientists. He then served on the CPA's transition planning team to transfer authority to the new Iraqi interim government in June 2004.

The gregarious entrepreneur-turned-civil servant is now the director of Iraq reconstruction and program management, and the principal deputy to Claude Bolton, the assistant secretary of the Army for acquisition, logistics and technology. While news from Iraq seems relentlessly grim in the face of a deadly and seemingly implacable insurgency, Popps sees significant progress. "If anything, my expectations have grown in enthusiasm. I'm as passionate today as I was 28 months ago."

That's not to say he is sanguine about Iraq: "They make nothing. They export nothing but oil. There is zero foreign investment." Truly rebuilding Iraq will take many years, and it will be done largely by Iraqis, he says, but the United States is laying a crucial foundation.

"As we used to say in Baghdad, it is what it is," says Popps. "Let's move forward."

Reconstruction Bureaucracy

The CPA administered the spending of Iraqi oil revenue and seized assets for reconstruction until the Iraqi interim government was established in June 2004, after which the Iraqis began managing oil revenue and the remaining seized assets. Since the CPA was dissolved that same month, U.S.-funded reconstruction has been managed jointly by the State and Defense departments. State's Iraq Reconstruction Management Office in Baghdad identifies requirements and sets priorities with Iraqi government officials, while Defense, through the Army's Project and Contracting Office, oversees the bulk of the projects on the ground.

Initially, U.S. officials focused on large-scale reconstruction projects aimed at refurbishing the country's antiquated infrastructure, but this was a mistake, according to Ambassador L. Paul Bremer, the former CPA administrator. In an op-ed in The New York Times Jan. 13, Bremer wrote, "While the urgent need for modern highways, electrical generating plants and the like was clear, we should have anticipated that building them would take a long time. Our earlier efforts should have been directed more tightly at meeting Iraqis' day-to-day needs."

Bremer said he also should have insisted on exemption from peacetime contracting rules. "This lesson was brought home to me in a dramatic fashion a few weeks after I arrived. We had learned that six major hospitals in Baghdad urgently needed new generators to run their operating rooms and air-conditioning plants. Our budget director told me I could use American funds, which were subject to United States federal contracting rules, or Iraqi government funds, which were not. Using American money, he told me, would mean waiting four to six months for the generators. We used Iraqi funds and got the equipment in eight days. In the future, Congress must make provisions for legitimate exemptions."

Reconstruction really didn't take off until mid-2005, says James Crum, director of the Army's Project and Contracting Office, from his cramped office in a high-rise building in Rosslyn, Va. He oversees the bulk of spending on Iraq reconstruction. "We had a lot of criticism in the first year that we weren't spending money fast enough, and in this town, a lot of measurement is in how much money you spend. If you haven't spent a lot of money, you must not be doing enough," he says.

But a program of such magnitude, especially one being executed under federal acquisition regulations, required enormous preparation-an entire bur-eaucracy had to be assembled to manage reconstruction, let contracts and oversee projects. Administrative processes had to be established, personnel hired and computer systems put in place for tracking and sharing cost and project data. Contractors had to be consulted and schedules established. Priorities had to be set, and then reset, as the security situation deteriorated in the summer of 2004 and Iraqi officials developed their own plans for the future.

"We kept saying, 'Look, any program like this-and we have World Bank figures that bear this out-when you do overseas construction your first year is ramp up, then you have heavy construction, and then you ramp down.' We're in the middle of the second year, and the numbers are astounding," Crum says. Last summer, in one 45-day period, the Army office spent a billion dollars, with 2,400 projects ongoing or completed. "I'm not sure that's ever been done before," he says. Last fall, the Army's spending on reconstruction averaged more than $100 million a week. By late December, more than 2,000 projects had been completed and another 1,000 were under way. Projects range from rehabilitating schools to building hospitals, power plants and sewage systems.

Reconstruction and relief programs in Iraq have been funded through three basic sources:

• n U.S. appropriated funds, which topped $30 billion in April 2003.
• n Iraqi funds, which include money from continuing oil sales, $926 million in cash and property seized by U.S. forces following the invasion of Iraq, and $1.7 billion in assets of the former regime of Saddam Hussein.
• n Foreign donations, which include $13.6 billion pledged to the United Nations World Bank Trust Fund.

Most funding for reconstruction projects was appropriated Nov. 6, 2003, when Congress passed P.L. 108-106 to provide $18.4 billion for the effort. The law stipulates how the money is to be apportioned across various sectors (i.e. construction of roads and bridges, health care, electricity, law enforcement, governance programs, etc.) and limits the amount that can be transferred between sectors without congressional approval. The Defense Department, with the Army acting as executive agent, manages the bulk of reconstruction programs ($13 billion), followed by the Agency for International Development ($3 billion), the State Department ($1 billion) and the Treasury Department ($390 million). About $200 million more was appropriated for administrative costs incurred by the CPA and the U.S. Institute of Peace, which conducts research on the U.S. experience in Iraq.

"Every week we get a report of completed projects. Seeing the pictures from those sites, it's very rewarding," Crum says. But in an operation where winning hearts and minds is a key priority, the project office and others involved in reconstruction face a unique challenge-they cannot publicize many of their projects in Iraq for fear of drawing insurgents' attention. "We're trying to be very sensitive about not putting Iraqis in harm's way," he says. "We do not announce projects that are being worked or completed because the insurgents would target those projects and the workers we're employing. We actually try to stay out of the limelight and out of the media on these projects as best we can."

The level of violence in Iraq, particularly in Baghdad and Al Anbar province, where the Sunni insurgency is strongest, is incomprehensible to most Americans. According to data compiled by The Brookings Institution in Washington, the average daily number of insurgent attacks in December 2005 was 75-down from an average of 100 in October.

Appalling Neglect

Much of the responsibility for overseeing construction contracts on the ground last year fell to hydro engineer Karen Durham-Aguilera. Raised in Kentucky by her Lebanese mother and American father, the 23-year veteran of the Army Corps of Engineers says her Middle Eastern heritage was an asset overseeing construction projects. Although she had forgotten most of the Arabic she learned as a young child, she opened and closed conversations with Iraqis in Arabic, a gesture that endeared her to them.

Besides managing a staff of more than 300, Durham-Aguilera traveled throughout Iraq meeting with engineers, contractors, government officials and Iraqi workers. "The situation changes enough that you have to constantly look at how you're doing things so you can adjust, such as the way you're doing contracting. What team members do you need to have involved to carry out the work? What is the situation on the ground?" she says. "You have to constantly adjust to that. I got around quite a bit, but you have to plan, you have to be smart. When we travel, it's a very orchestrated effort. You don't just get in your car and go."

Durham-Aguilera typically worked 12 to 14 hours a day, seven days a week during her assignment in Iraq. Such a workload at home in Portland, Ore., would have seemed unmanageable for months on end, but in adrenaline-fueled Iraq, it was a way of life.

Security is a constant issue, Durham-Aguilera says. Some projects have to be stopped because they become too dangerous to continue. For example, some of the 800 school rehabilitation projects had to be abandoned. "The security was so bad we just couldn't get people in there to finish," she says. "These were done largely by Iraqi firms. So we had to change the locations of schools." Sometimes the priorities of local government officials would change, and schedules would be revised to reflect that. "It's just part of construction management over there," she says.

Like her colleagues interviewed for this article, Durham-Aguilera is optimistic about Iraq, but she also is realistic about how much Americans can accomplish. "If you look at the World Bank and United Nations study, we were touching only one-fifth to one-quarter of the national need," she says. "So we're giving the Iraqis far more than they had before, but there are still large gaps.

"We were not prepared for the level of neglect that had gone on under Saddam. It was appalling," Durham-Aguilera says. "The way they had not taken care of water treatment plants, oil facilities, electrical plants-it was stunning. There was no capital investment. As far as technology goes, people there are literally 30 years behind. They did what they had to do to keep the country running as well as they could under Saddam."

When Baghdad fell, only about 14 percent of the population in Iraq had treated water. "We've made something of a dent in it, but they have a long way to go," she says. "Electricity under Saddam [was dismal]: Baghdad had electricity 24 hours a day while the average for the rest of the country was four hours a day, or they had nothing at all. Treated sewage, when we got there, was about 6 percent, which is really shocking. They would bypass the treatment plants so sewage wouldn't back up. Some of the dams were deliberately sited in the wrong places because they put them where [Saddam] wanted them. I could go on and on. The construction techniques, with few exceptions, were 20 to 30 years behind the times. You had people trying real hard, but they didn't know how to do quality construction."

A major emphasis of reconstruction programs has been to build what U.S. officials call "capacity development"-giving Iraqis the skills they need to maintain projects after the American-sponsored contracting boom ends, likely at the close of this year, when the remaining funds authorized under P.L. 108-106 must be obligated. The project office has mentored Iraqi firms and developed a pilot program to help Iraqi government officials manage programs and hold firms accountable for results. In addition, the office has sponsored advanced education and training for many skilled Iraqis who will be needed to keep things running.

The challenge is much greater than simply providing technical training. After decades of Saddam's brutal oppression, few Iraqis had the fortitude to take the initiative in even the most mundane tasks. Popps recalls his frustration at seeing how a janitor working for CPA used to empty the trash in his office-by picking out each piece of trash individually from Popp's trash can and transferring it to another receptacle. When Popps asked why he didn't just take the more efficient path of upending the trash can, the janitor said he had not been "authorized" to operate that way. One military commander recounted for the U.S. Institute of Peace oral history project on Iraq how he became so frustrated by Iraqis' fear of making decisions without official orders that he began writing out instructions and sealing his "orders" with melted red crayons imprinted with his class ring.

"It's a lengthy process, but it's happening," says Durham-Aguilera. She says one of her most gratifying experiences was watching laboratory personnel in the Iraqi-government-owned oil sector develop the technical skills they needed to improve oil production in a U.S.-sponsored training program-and then initiate the necessary changes themselves.

"What we really need to do-and by 'we' I mean coalition forces and the U.S. government-is to work ourselves out of a job and get out of there," she says.

'Steady Progress'

President Bush, in a December speech, acknowledged that reconstruction in Iraq has played out in "fits and starts," but said significant progress is being made. The U.S. ambassador to Iraq, Zalmay Khalilzad, expressed similar confidence in a Jan. 9 op-ed in The Wall Street Journal and said the coming year will be decisive in Iraq. "After a number of setbacks, our reconstruction efforts are moving forward and the economy is growing. Seven in 10 Iraqis say their lives are going well and nearly two-thirds expect things to improve even more in the coming years. We will continue to support Iraq's reconstruction, and we also encourage countries of the region to do more to assist the new Iraq economically by forgiving debt and investing in reconstruction. We also expect the international community to live up to its pledges of aid and debt forgiveness to Iraq."

Bolton, the senior Army official responsible for the bulk of reconstruction programs in Iraq, believes things are going well. The number and scope of reconstruction projects is unprecedented in U.S. history, he says. "When I compare that against efforts of the Marshall Plan and [Gen. Douglas] MacArthur in Japan in WW II, I find that this group has done a very good job."

Despite his pointedly critical reports about the reconstruction program, the special inspector general for Iraq reconstruction also notes its accomplishments. Stuart W. Bowen's report to Congress on Oct. 30, 2005, stated, "The United States has made steady progress in its part of Iraq's reconstruction, despite the hazardous security environment, the fluid political situation and the harsh realities of working in a war zone. In light of these significant variables and limitations, the positive results achieved in the reconstruction program are impressive." Bowen, while advocating for more comprehensive data showing how much it will cost to complete projects, commended the State and Defense departments' efforts to manage reconstruction.

Many of the problems with estimating project costs have stemmed from the evolving security environment, says Col. Stephen B. Leisenring, director of procurement operations for the deputy assistant secretary of the Army for policy and procurement in Iraq. "Most folks that were bidding on contracts . . . did so when the projection for the security environment was much more lenient than [the one that now] exists." While Defense officials initially estimated that security costs would consume about 8 percent of contract costs, officials now estimate that security is consuming about 25 percent of contract costs in some areas.

"Did contractors have problems sticking with their initial estimates because of escalating security costs? Yes. Has the government had to reduce how much we get done because those dollars had to be devoted to additional security? Absolutely," Leisenring says.

Several trends have helped mitigate the escalating security costs. Contractors are finding ways to cut back, for example, by doing such things as housing employees with those from other companies and hiring more Iraqis who can return to their own homes at night. Building the Iraqi contractor community is essential to Iraq's long-term well-being, says Leisenring. "We must give the Iraqis the tools they need to take over the mission."