	Results in

The United States, along with its coalition partners and various  international organizations and donors, have committed billions of dollars  to the reconstruction of Iraq in the face of an unstable security situation and  other challenges. This enclosure describes (1) the sources and amounts  of funds that have been made available for the reconstruction of Iraq, and  (2) the amounts of U.S. and Iraqi funds that have been obligated and  disbursed as of April 30, 2004,and the uses to which those funds have been  applied. Of the funding available for the reconstruction  effort, about $24 billion had been obligated as of the end of April 2004. About $4 billion of the  $4.5 billion in U.S. funds appropriated in 2003 and about $4.2 billion of the  $19.6 billion in U.S. funds appropriated in 2004 have been obligated. Seized assets refer to former regime assets seized within Iraq. Funding Pledged or Made Available for Iraq

The reconstruction of Iraq has been supported from multiple sources of  funds. Congress has appropriated about $24 billion of the approximately $58  billion provided to date for the relief and reconstruction of Iraq. This  fund, established by the CPA in May 2003 and noted by U.N. Security  Council Resolution 1483, was created to benefit the Iraqi people and  facilitate the reconstruction of their country. 28, 2004). U.S. and Iraqi Funds Obligated and Disbursed

Overall, about $24 billion in U.S. and Iraqi funds has been obligated for the  reconstruction effort in Iraq as of April 30, 2004. 3. What are the roles and responsibilities of the CPA Inspector General  with the transfer of power to the Iraqis? To what extent has the unstable security environment affected the U.S.  government’s ability to provide adequate oversight of the reconstruction  effort, including the auditing of contracts and funding expended? The assessment also notes that the Coalition Provisional Authority  (CPA) estimates that an additional $20 billion will be needed from 2004 through 2007 to  rebuild other critical sectors (e.g., security and oil) outside the scope of the U.N./World  Bank assessment. An Iraqi-led process, endorsed by the Iraqi  Governing Council and put into effect by the Administrator of the Coalition  Provisional Authority, is responsible for coordinating all international  assistance for rebuilding and reforming institutions in Iraq. In May 2004, the CPA began to decrease personnel in anticipation of the transition of authority to the Iraqis and the dissolution of the CPA at the end of June 2004. Several elements of the CPA were identified to continue the U.S. effort in Iraq after the transition. A May 11, 2004, National Security Presidential Directive stated that the U.S. Mission in Baghdad and its temporarily established Iraq Reconstruction Management Office will assume those authorities and responsibilities that will continue after the termination of the CPA. For example, U.S.  officials from the CPA and the State Department stated that, due to the  independent recruiting of staff by some detailees in Baghdad, agency  personnel authorities were unaware of personnel who went to Iraq after the  initial deployment in March 2003. According to a CPA official, this  budget imposed a funding limit on CPA’s ability to hire personnel under the  3161 authority. One week earlier, the Commander of the U.S. Central Command had predicted that the situation in Iraq will become more violent after the transfer of power as the country moves toward elections for a new government, which are currently scheduled to be held by January 2005. Further, the Secretary of Defense said in early May 2004 that there will be uncertainty in Iraq and increased attacks against the coalition, Iraqis, and the United States during the period leading up to the elections. The increase in attacks  has had a negative impact on the presence and operations of international  military and civilian personnel in Iraq. It has led to an increase in U.S. force  levels and to a decrease in freedom of movement for international civilians  working to rebuild Iraq and assist in its political transition. United States and United Kingdom Increased Troop Levels as Other  Coalition Members Reduced Them As a result of the increase in violence during April 2004, the United States  and the United Kingdom decided to increase their overall force levels in the  country. In addition, according to a CPA official, as the  security situation worsened during 2003, the CPA abandoned plans to  fully staff offices throughout Iraq to assist in Iraq’s political transition  and reconstruction and instead established a much smaller field  presence. Our review of selected  electricity projects showed that the security situation delayed the  implementation of key projects, thereby contributing to the CPA not  meeting its objective of providing 6,000 megawatts of electrical  generating capacity to the Iraqi people by its original goal of June 1,  2004. As of late May  2004, the United Nations had not allowed most of its international  personnel to return to Iraq. According to a U.N. assessment, the lack of security may lead to major  disturbances that could undermine the administration of the elections, alter  the established timetable, and compromise the overall credibility of the  process. By mid-April 2004, the multinational force had begun to consider  how it could provide security, logistical, and other support for the elections,  but the United Nations and others had not yet developed a specific plan for  important tasks such as the registration of political parties, voters, and  candidates or the number and locations of polling sites. Although the multinational force is beginning to address these problems, it is unclear what impact April’s security collapse will have on the plans for transitioning Iraq’s security to Iraqi security forces or the extent to which these forces will be capable of providing security during the Iraqi election process. What arrangements  have been made to facilitate coordination between the multinational  force and the interim Iraqi government? What level of support does the multinational force expect Iraqi  security forces to provide during Iraq’s upcoming election process,  and what options and contingency plans are being explored? A large but unknown number of militias are operating outside the control  of the central government in Iraq.
Why GAO Did This Study

Rebuilding Iraq is a U.S. national security and foreign policy priority. According to the President, the United States intends to help Iraq achieve democracy and freedom and has a vital national interest in the success of free institutions in Iraq. As of April 30, 2004, billions of dollars in grants, loans, assets, and revenues from various sources have been made available or pledged to the reconstruction of Iraq. The United States, along with its coalition partners and various international organizations and donors, has embarked on a significant effort to rebuild Iraq following multiple wars and decades of neglect by the former regime. The Coalition Provisional Authority (CPA), established in May 2003, was the U.N.-recognized coalition authority led by the United States and the United Kingdom that was responsible for the temporary governance of Iraq. Specifically, the CPA wasresponsible for overseeing, directing, and coordinating the reconstruction effort. On June 28, 2004, the CPA transferred power to a sovereign Iraqi interim government, and the CPA officially dissolved. To pave the way for this transfer, the CPA helped the Iraq Governing Council develop the Law of Administration for the State of Iraq for the Transitional Period in March 2004. The transitional law provides a framework for governance of Iraq while a permanent government is formed. In June 2004, U.N. Security Council Resolution 1546 provided international support to advance this process, stating that, by June 30, CPA will cease to exist and Iraq will reassert full sovereignty. Resolution 1546 also endorsed the formation of a fully sovereign Iraqi interim government; endorsed a timetable for elections and the drafting of an Iraqi constitution; and decided that the United Nations, at the Iraq government's request, would play a leading role in establishing a permanent government. Resolution 1546 further noted the presence of the multinational force in Iraq and authorized it to take all necessary measures to contribute to security and stability in Iraq, in accordance with letters annexed to the resolution. Such letters provide, in part, that the multinational force and the Iraqi government will work in partnership to reach agreement on security and olicy issues, including policy on sensitive offensive operations. Resolution 1546 stated that the Security Council will review the mandate of the multinational force in 12 months or earlier if requested by the government of Iraq and that it will terminate the mandate if requested by the government of Iraq. As part of our broad effort to monitor Iraq reconstruction, which we undertook at the request of Congress, this report provides information on the status of the issues we have been monitoring, as well as key questions that will assist Congres in its oversight responsibilities. Specifically, this report focuses on issues associated with (1) resources, (2) security, (3) governance, and (4) essential services. For the essential services issue, we focused on the Army Corps of Engineers' Restore Iraqi Electricity project, a major component of the U.S. assistance effort to rebuild the power sector.

What GAO Found

As of the end of April 2004, about $58 billion in grants, loans, assets, and revenues from various sources had been made available or pledged to the relief and reconstruction of Iraq. Resource needs are expected to continue after the transfer of power to a sovereign Iraqi interim government. Of the funds available, the United States obligated about $8 billion of the available $24 billion in U.S. funds. The CPA obligated about $15.5 billion of the nearly $21 billion in available Iraqi funds. The international community pledged nearly $14 billion. In December 2003, the CPA put into effect an Iraqi-led process to coordinate reconstruction efforts. An October 2003 U.N./World Bank assessment noted that Iraq's ability to absorb resources as the country gains sovereignty and decision-making authority will be one of the most significant challenges to reconstruction. The security situation in Iraq has deteriorated since June 2003, with significant increases in attacks against the coalition and coalition partners. The increase in attacks has had a negative impact on military operations and the work of international civilian organizations in Iraq. As part of the effort to provide stability, the coalition plans to transfer security responsibilities from the multinational force to Iraqi security forces and to dissolve Iraqi militias operating outside the central government's control. During the escalation of violence that occurred during April 2004, these security forces collapsed in several locations. However, key elements of the CPA's transition and reintegration process remain to be finalized. With U.S. and others' assistance, Iraqis have taken control of government institutions at the national and subnational levels. National ministries are providing some services to citizens as their facilities are being rebuilt, reforms are being introduced, and their staffs trained. According to the head of the now-dissolved CPA, all ministries were under Iraqi authority as of the transfer of power on June 28, 2004. However, the security situation hinders the ability of the ministries to provide needed services and maintain daily operations. To reform the rule of law, ongoing efforts have begun to establish a functioning independent judiciary, although courts are not at their pre-war capacity. However, efforts to rebuild Iraq's judicial system and restore the rule of law face multiple challenges. U.S. officials said that rehabilitating and reforming Iraq's judicial system will likely take years. The Coalition considers reconstruction of the power sector critical to reviving Iraq's economy, supporting essential infrastructure, improving daily well-being, and gaining local support for the coalition presence in Iraq. The CPA set a goal of 6,000 megawatts of generating capacity by June 30, 2004, in anticipation of the higher demand for power during the summer months. As part of the overall effort to achieve this goal, the U.S. Army Corps of Engineers (Corps) has undertaken $1.4 billion in work under the Restore Iraqi Electricity (RIE) program. As of late May, the Corps anticipated that 59 of the 66 RIE projects expected to help meet the goal would be completed by June 30. However, electrical service in the country as a whole has not shown a marked improvement over the immediate postwar levels of May 2003 and has worsened in some governorates. RIE contractors report numerous instances of project delays due to difficulties in getting employees and materials safely to project sites. Further, the security environment continues to affect the cost of rebuilding the power sector.