Almost one year ago, the US Congress authorised $18.4 billion for the reconstruction of post-war Iraq.

The funds were intended for large-scale projects such as rebuilding the country's oil and electricity infrastructure, fixing damaged sewage systems and galvanising Iraq's shattered economy.

Yet 11 months later, only $1.14 billion of the money has been disbursed and the Bush administration is receiving bipartisan criticism for its failure thus far to accelerate the process.

Of the $4.2 billion allocated for water and sanitation projects, only $16 million has been spent, as first reported by The Washington Post.

While $786 million was intended for health projects, only $2 million has been spent and just $7 million has been used from the $367 million approved to rebuild roads and bridges.

Serious doubt

Both Republican and Democratic members of Congress have sharpened their attacks on Bush officials recently, casting serious doubt on the state of reconstruction activities and efforts to quell the insurgency that continues to plague US forces on the ground.

Violence has held up utilisation
of funds meant for civilian uses

"I think we're at the end of our rope here unless we get smart real quick," said Democratic Senator Joseph Biden of Delaware, during a hearing of the Senate Foreign Relations Committee.

The security situation has degenerated to the point where the administration recently announced plans to shift $3.5 billion from the reconstruction budget to improve Iraqi police training and other areas of concern such as unemployment.

The money will be diverted primarily from sewage and electricity projects.

Republican Senator Chuck Hagel of Nebraska called the decision a "clear acknowledgement that we are not holding ourselves hostage to some grand illusion that we are winning".

Getting worse

The administration announced the proposed shift in funds just days before several news organisations reported the existence of a new National Intelligence Estimate that suggests the problems in Iraq are getting worse.

"Projects throughout Iraq have suffered from attacks by insurgents"

Ronald L Schlicher,
Deputy Assistant Secretary of State for Iraq

The new funding plan would set aside $1.8 billion for security purposes, most of which would go towards beefing up Iraqi police and military forces.

Government officials and military experts say the problems encountered in disbursing the reconstruction money are primarily attributable to the lack of security in parts of Baghdad, Falluja and other hotspots across the country.

"Violence, and the threat of violence, has slowed down the rate of progress on reconstruction," Ronald L Schlicher, the deputy assistant secretary of state for Iraq, told members of the Senate Foreign Relations Committee. "Projects throughout Iraq have suffered from attacks by insurgents."

Biden said "the insurgency is growing" in Iraq, citing the fact that attacks against US forces jumped from roughly 700 in March to nearly 2700 in August.

Diversion pitfalls

US lawmakers have generally been supportive of the move to focus on stabilising the security situation first, but they are worried about the political consequences of reduced funding for water, sewage and electricity sectors.

Biden himself cited one US commander in Iraq who said violent attacks in Sadr City had increased as sewage piled up higher in the streets. The administration's plan would divert $1.94 billion away from water and sewage projects.

The insurgency has left ambitious
Iraq rebuilding plans in tatters

At a press briefing announcing the new strategy, Marc Grossman, the under secretary of state for political affairs, said there would still $2.2 billion left for the rebuilding of water and sewage infrastructure.

"So we don't want anybody to walk away thinking that there won't be any money in these accounts left," Grossman said.

The fallout from decreasing the funds for various social service projects could be overcome by downsizing the scope of certain tasks and focusing on smaller projects controlled by local Iraqi groups, said Frederick Barton, co-director of a new study conducted by the Center for Strategic and International Studies (CSIS) titled, "Progress or Peril? Measuring Iraq's Reconstruction Progress".

"It probably will be a problem, but you can minimise the problem by moving away from these large-scale public works projects to smaller community-driven projects," Barton said.

Local coffers

The US could expedite the disbursal of reconstruction funds by decentralising the process and putting more of the money directly into the coffers of local governing councils, instead of going through large US companies and the Iraqi interim government.

"The high unemployment has compounded security problems in Iraq. In some cases, frustrated, unemployed Iraqis have joined the ranks of the insurgency"

Center for Strategic and International Studies report

The CSIS report also focused on the overall lack of progress in creating jobs for ordinary Iraqis, a problem it said had fuelled attacks against US forces.

"The high unemployment has compounded security problems in Iraq," the report said. "In some cases, frustrated, unemployed Iraqis have joined the ranks of the insurgency."

Part of the proposed funding realignment would provide an additional $380 million for economic development and $286 million to accelerate Iraqi employment.

In addition, $450 million would go towards oil infrastructure improvements, $360 million towards forgiving Iraq's $4 billion debt to the US and $180 million would be used for democracy-building efforts.