Corruption, poverty, violence, and archaic systems are just a few of the challenges facing the Army Corps of Engineers in the effort to rebuild Iraq.

By Tom Philpott

Navy Lt. Joel McMillan, a 29-year-old engineer, uses an analogy to explain Iraq reconstruction. After six weeks overseeing scores of Army Corps of Engineer projects near Taji, north of Baghdad, McMillan likens Iraq to a starving man seated at a buffet of contracting dollars.

“His metabolism isn’t ready, but here it all is. And he cannot eat it all. And some of the food becomes rotten and has to be thrown out,” he says. “That’s what we’re doing. We’re giving Iraq so many new buildings, so many new projects that, yes, we’re giving a hungry man a meal — but it is too much at once.”

To illustrate, McMillan notes that the U.S. Army Corps of Engineers (USACE) recently supervised the building of two health clinics for the Iraqi Army. “There is definitely a need for clinics; people are getting hurt and wounded daily,” McMillan says. Yet only one clinic can be opened “because there are just not enough doctors to fully staff both.”

Perhaps in four or five years, McMillan estimates, the health ministry will staff the new clinic. But what happens in the meantime — to the building, its X-ray machine, and other equipment?

“The worse thing that can happen is [locals] eyeball it,” McMillan says. “And then take the generator, and then the windows and the doors, and kind of pick it apart. We’ve had to build fences around some of these facilities and lock them up, put barbed wire up.”

A year of transition

The day of his phone interview with MOAA from his Baghdad office, Brig. Gen. William H. McCoy, USACE’s Gulf Region Division commander, had on his desk the latest report to Congress from Stuart W. Bowen Jr., special inspector general for Iraq reconstruction (SIGIR). Bowen provides a comprehensive quarterly analysis of the reconstruction efforts.

Bowen’s January 2006 report raised many concerns. It confirmed a major bribery and kickback scheme involving millions of dollars. SIGIR’s investigation led to the arrest of four Americans. The report described how at least $5.8 billion in assets and oil money seized from Saddam Hussein’s government was doled out to contractors by the Coalition Provisional Authority (CPA) with minimal record-keeping or accountability.

“Anytime you have huge sums of money, largely uncontrolled, and humans, you run the risk of having a problem,” says McCoy.

Most of the report, however, examined the handling of the Iraq Relief and Reconstruction Fund, money Congress appropriated to rebuild Iraq from the war’s damage and years of economic sanctions and government neglect.

From October 2003 to June 2004, the CPA controlled billions of dollars for rebuilding. Responsibility then shifted to the U.S. Embassy and the Multi-National Force-Iraq when Iraqi interim leaders took over and the CPA was dismantled.

Last December, responsibility for the remaining construction funds shifted to McCoy’s division. Previously, his office handled construction management only. But now it has the Project and Contracting Office, from which funds are dispersed. McCoy says he has “a very rigorous auditing capability and control mechanism ... that is as close to absolutely honest as we can make it.”

If that’s not enough, McCoy says, he knows Bowen has “about 32 audits” under way to ensure reconstruction dollars are spent properly.

The report said U.S. reconstruction dollars have “supplied the new Iraqi government with a significant start toward establishing an effective infrastructure and eventual prosperity.” But it also said the dollars won’t go nearly as far as expected to rebuild electrical and water systems and oil and gas industries. “Deteriorating security conditions,” suggested the report, forced officials to spend 40 percent of the $18.4 billion — more than $7 billion — on protecting contractors and infrastructure.

McCoy indicates that 40 percent figure is misleading. Some of that, in fact, was a “diversion of funds to stand up Iraq Security Forces.”

The shift of funds to meet security demands and the added time contractors need to complete jobs in a dangerous environment have created a gap between what was originally planned for reconstruction and what will actually be delivered. Among initiatives not completed will be 87 of 136 planned water projects and 125 of 425 electrical projects.

Although there was a modest request for reconstruction dollars this year, U.S. officials don’t expect any more significant funding to be cleared by Congress. Indeed, the push now is to shift more projects onto the Iraqi government and ministries. “This will be the year
of transition,” Bowen predicts.

The SIGIR report raised new questions, such as whether plans are in place for agencies like USACE to move their part of the reconstruction effort smoothly to Iraq, whether Iraq will have money even to maintain the completed projects, and whether the United States is ready to “sustain its reconstruction presence” to complete projects still planned. That could take another three to four years, the report stated.

USACE at work

The Army Corps of Engineers has 35,000 employees, only 650 of them military. Most are working in divisions, districts, labs, and centers across the United States. It also is in 93 countries, with its largest overseas contingent now in Iraq: 190 military personnel and 360 civilians.

Months before the March 2003 invasion, USACE moved two task forces into Kuwait to plan to restore Iraqi oil and electrical production. The immediate repairs have turned into long-term fixes, says McCoy.

USACE is partnered with the U.S. embassy in Iraq, the U.S. Agency for International Development, and Multi-National Force-Iraq to identify projects and distribute funds. USACE personnel provide management oversight and expertise in construction design and contracting. U.S. dollars are to be applied to projects that expand essential services and develop infrastructure.

The World Bank estimated after the 2003 invasion that it would take $70 billion to rebuild Iraq’s infrastructure. “We’ve applied about $20 billion to the problem,” says McCoy. “Our intent all along was to jump- start the process. We were not ever intending to rebuild this country.”

Electrical mess

McCoy, 54, arrived in Iraq last June. “I don’t think we’re making an absolute big difference right now” in the lives of many Iraqis, says McCoy with characteristic candor. “But I think they can see a brighter horizon than they could before.”

Of the $18.4 billion that Congress last appropriated to rebuild Iraq, McCoy controls $12 billion, enough to fund 3,600 projects. They include sewer and water treatment plants; electrical generation systems; the refurbishing of oil fields and oil distribution networks; and construction of schools, clinics, and a wide range of facilities for the Iraqi Army and police force.

As of late January, more than 2,200 projects had been completed, and work had begun on 1,000 others, leaving 400 projects still to start.

The biggest, most costly infrastructure challenge is modernizing Iraq’s electrical distribution system. McCoy says that since the occupation of Iraq began, power-generation capacity has been increased by 7,300 megawatts, enough to serve 6.75 million additional users. But the power-transmission system, neglected for 30 years, continually breaks down.

In the United States, a quarter of power-generation capacity is usually down for scheduled maintenance. In Iraq, besides such scheduled maintenance, another quarter of capacity is always down because of equipment failures or because Iraqi operators have run out of fuel.

USACE is training Iraqis for a new electrical distribution system with automatic controls. Until it’s in place, McCoy says, avoiding outages or disruptions by swift transfer of power from one grid to another isn’t possible. Iraqi needs include high-power grids, substations, and new power lines to replace “spaghetti networks of lines” running in and out of houses and businesses.

McMillan has seen some of that. As officer in charge of USACE’s resident office in Taji, McMillan learned that a new school, built with U.S. dollars, has neighbors who tap into the generator at night and on weekends. The schoolmaster allows it, collecting a fee that he says helps pay teacher salaries and buy fuel.

McCoy says sabotage to power lines in north Baghdad routinely disrupts electricity inside the city and has reduced Iraq’s power supply by 12 percent. But McCoy characterized that loss as small compared to other problems with the electric grid.

Sabotage is a fact of life in the new Iraq. A spokesman for Iraq’s oil ministry said that in 2005 the country suffered $6.25 billion in losses to sabotage from damage and lost export revenues.
The attacks delay projects and escalate costs. USACE and the Iraqi government have taken steps to protect infrastructure, including hardening manifolds and valves with concrete, covering supply lines with berms, and stationing even more guards at critical locations, McCoy says.

“Is it easy? No. It takes a change in the ... attitude of the people,” McCoy says. “My sense of the Iraqi people is that over 95 percent … want to move on, want the peace, want the prosperity that we Americans enjoy.”

Changing U.S. strategy

McCoy’s Baghdad staff is organized by specialty: electrical, oil, water, sewage, transportation, and communications. He meets regularly with Iraqi ministers with like responsibilities, including the ministers of electricity and water resources. The meetings can be loud “because they want things done faster or they want things done better.”

The original U.S. strategy on reconstruction was to bring in large, design-build companies with the experience and capacity to do large-scale construction. These firms captured 60 percent of USACE’s initial 2,500 projects. The other 40 percent went to Iraqi firms, but the overall dollar value of those awards was significantly below a 40-percent share.

For the 1,100 projects remaining, the strategy changed. USACE and its partners now set out to direct business to Iraqi firms. McCoy says he recently gave the ministry for construction and housing responsibility for eight road and bridge projects. The initiative was successful.

“His estimate was 30 percent lower than our U.S. estimate. We allowed him to award the contracts. We provided the money,” McCoy says.

Army Maj. Daniel Coffey, 39, an engineering officer at Camp Victory, a large U.S. complex near Baghdad International Airport, oversees projects across an area 40 to 50 miles wide. He is the officer in charge of USACE’s resident offices for the 1st Brigade Combat Team (BCT), 10th Mountain Division and the 2nd BCT, 101st Airborne Division (Air Assault). In February his eight-person staff was overseeing about 70 projects with a combined value of $160 million.

Coffey and McMillan and their staffs monitor construction projects largely through surrogates. That’s because visits to project sites can endanger workers and undermine local authority. Most resident offices rely on Iraqi quality assurance engineers to track progress on site, supplemented by photographs. McMillan recently was shown a photograph of a new youth center built nearby that was “packed full of kids,” he says.

Worker safety

USACE officers will visit a few job sites each week. But in Iraq, it’s better if locals associate the project with Iraqis.

Iraqi contractors who aren’t local probably face the greatest risks, McMillan says. They can be perceived as taking jobs away from locals.

“If we go to the council and hire their nephews to do the job, they’re pretty safe. If we bring in a major third-country contractor to do the job, they’re fairly safe. But if it’s anybody else from Iraq, there is probably going to be some sort of expectation of threats,” says McMillan.

One contractor hired to install a new generator to pump water from the Tigris for irrigation reported 10 workers had disappeared. At Taji, two U.S. helicopters have been shot down and about a half dozen soldiers killed.

Early last fall, Coffey’s convoy was leaving a project following a spot inspection when an improvised explosive device detonated between his Humvee and the one ahead of him. Insurgents engaged them with small arms before running away. No one was injured.

Iraqis are starting to step up to the opportunity the United States and its coalition partners have provided, McCoy says. Security forces are getting stronger and infrastructure is improving, though not as fast as most would like.

“All we needed to do was provide them with a kind of irreversible momentum,” McCoy says. “I think the resources that the government of the United States provided are doing that exactly.”

Bowen’s report said the administration should make one last request for $2 billion to sustain projects completed and to transfer operations and projects to the Iraqi government.

In early 2006, the Bush administration asked for $642 million more for reconstruction, part of a $72.4 billion supplemental budget to continue to fund the occupation and battle terrorists in Iraq and Afghanistan.

USACE soon will begin working with Iraqi provinces to set up their own reconstruction teams. Funding likely would come from their national government.

Providing hope

Three years after the fall of Saddam Hussein, McMillan compared the poor water, sewer, and electrical situation in some parts of Iraq to that of the United States more than a century ago.

But McMillan says he thinks the most striking part of the Iraq experience is the extreme poverty. “I’ve been to the Philippines before and saw poverty. But at least they had villages and something they could eat. Here there is sewage on the ground outside ... kids running in and out of it. Shepherds take their sheep to eat from the trash. It stinks,” says McMillan.

Yet he also has learned from conversations with Iraqi contractors how alike people are. “They’re just human too,” McMillan says, “with families and needs and problems, and looking for a good job.”

When U.S. reconstruction efforts end, Iraq still will have problems, says McCoy. “There will be places where the street is not paved and the sewage might be out on the street,” he predicts.

“But in a lot of places we are going to have fresh water, we’re going to have places where sewage is treated, we’re going to have electricity, we’re going to have kids in schools that have floors rather than just mud. We’re making a difference. That’s the part that Americans can be proud of.”

Looking to history, McCoy compares the $20 billion being spent to rebuild Iraq to the $100 billion, in 2005 dollars, the United States spent to help rebuild Europe after World War II.
“Was it worth it? I think so. That’s kind of what America does. We provide hope to people who [have] lost it.”