– Knight Ridder Newspapers

WASHINGTON – A State Department assessment of how the agency will direct almost $18 billion in unspent aid to rebuild Iraq is running about a month behind schedule, a delay frustrating at least one key member of Congress already upset by the slow pace of reconstruction spending.

The delay, acknowledged by senior officials last week, comes just two weeks after Secretary of State Colin Powell promised during a visit to Baghdad to speed up the roughly $18.4 billion Congress approved last year for Iraqi reconstruction.

A senior State Department official involved in the process said the delay in the review, which initially was to be completed by the end of last month, is understandable given the scope of the task and the continuing violence shaking the country. “You need to be real about this,” the senior official said, adding, “It’s better to do it right.”

The senior official, who spoke on the condition of anonymity, said the department hopes the review will be completed by month’s end.

But the holdup in completing even a plan points to myriad challenges for the State Department as it tries to invigorate the rebuilding process and help Powell keep his promise.

Powell took over reconstruction responsibilities when the Pentagon’s Coalition Provisional Authority dissolved with the transfer of authority to an interim Iraq government June 28.

“I’m frustrated,” Rep. Jim Kolbe, R-Ariz., chairman of the House subcommittee overseeing the $18.4 billion Iraq Relief and Reconstruction Fund, said. “This review is absolutely needed … and I am frustrated that they waited to get started with it until they took over in June.”

President Bush signed a directive May 11 that made the State Department “responsible for the continuous supervision and general direction of all assistance for Iraq” once the CPA ended. The directive superseded one Bush issued on Jan. 20, 2003, giving reconstruction authority to the Pentagon.

Kolbe said he and other lawmakers, aware of the impending shift, were “thumping the table” in late April to get the State Department review rolling. But State Department planners acknowledge they did not begin reviewing the CPA’s efforts to rebuild Iraq until they assumed authority June 28. Doing so earlier, they said, would not have been productive.

“It would have been extremely difficult when CPA was still there,” the senior State Department official said, adding that reconstruction was, at the time, the responsibility of Paul Bremer, the U.S. administrator in Iraq.

“It was (Bremer’s) program; it would have split the leadership in a way that was not wise,” the senior official said. “It would have given people two masters, which is never wise.”

Although Congress approved the $18.4 billion aid package on an emergency basis last year after the Bush administration said it was urgently needed, only about $600 million, or roughly 3 percent, has been spent so far.

“We should not be this far behind,” Kolbe said. “It is absolutely inexplicable to me, and fairly outrageous, that last fall we were told we needed this “now,’ that it was “desperately needed,’ and here we are, 10 months later, and we still have only spent a tiny fraction of the money.”

Powell, at a press conference July 30 inside Baghdad’s fortified Green Zone, said he promised Iraqi leaders during his one-day visit to “speed up the flow of money in order to get the job done, because reconstruction and security are two sides of the same coin.”

America’s faltering attempts to improve the day-to-day lives of ordinary Iraqis is one factor feeding the widespread discontent with the U.S.-led military occupation, according to U.S. officials and experts.

Although their review is still under way, State Department officials want to redirect funds to smaller-scale projects with quicker impacts, ones that will get more Iraqis, and fewer foreign contractors, employed. By the time it dissolved, the CPA reportedly had fallen short by more than 200,000 jobs from its original goal of creating 250,000 construction positions for Iraqis.

They also believe, according to the senior official, that funds will need to be redirected to support national elections planned for January. The election process, including supporting political parties, “is going to cost a bagful of money,” the senior official said.

But violence from Iraqi resistance fighters and insurgents has been, and remains, the primary impediment to overall rebuilding efforts, according to officials and recent government studies of stalled reconstruction efforts. It is difficult, these sources note, to rebuild Iraq when workers are being shot, when trucks delivering supplies are being attacked and truckers are being kidnapped.

Many contractors are suspending their work or pulling out. For those who remain, the bills of private security guards are swallowing a growing portion of reconstruction money, according to U.S. officials.

The percentage of contract dollars going toward security is “huge,” the senior State Department official involved in the effort said, and “it detracts from what we are actually able to accomplish.”

In addition to the security concerns, there are “other obstacles that we created ourselves,” said James Dobbins, a former veteran diplomat who oversaw U.S. reconstruction efforts in the Balkans and was the Bush administration’s special envoy to Afghanistan after the fall of the Taliban.

Dobbins says the biggest self-imposed obstacle was the Jan. 20, 2003, presidential directive that put authority for reconstruction in the hands of the Pentagon, “an agency that had no responsibility in any way for these kinds of activities since at least 1952.”

The move created “giant startup costs on the (reconstruction) operation, because you suddenly had to create a bureaucracy” within the Pentagon, said Dobbins, who is now at the Rand Corp. think tank.

“Everything had to be made up,” he said.

While Dobbins said he is optimistic the State Department’s experience in reconstruction will aid Powell’s effort to keep his pledge, others believe it will be difficult to speed reconstruction spending in meaningful ways.

“I don’t think there will be a dramatic change at this point in time,” said Johanna Mendelson Forman, a senior program officer at the United Nations Foundation in Washington.

She was on a five-member team of experts sent to Iraq by Defense Secretary Donald Rumsfeld in June 2003 to assess reconstruction needs and efforts.

“We felt, even when we were out there, that the CPA had about a month to really begin to get things right,” she said, calling the administration’s inability to capitalize on that opportunity “tragic.”

Reconstruction problems “can be reversed,” Mendelson Forman said, “but my sense is this is going to take very, very hard work and put many people at risk.”

The senior State Department official involved in the reconstruction effort said spending “is about poised to take off,” but won’t noticeably increase until the security situation improves.

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(c) 2004, Chicago Tribune.

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Distributed by Knight Ridder/Tribune Information Services.

AP-NY-08-18-04 0623EDT