Figure 1 shows that the overall levels of violence in Iraq—as  measured by enemy-initiated attacks—decreased about 70 percent from  June 2007 to February 2008, a significant reduction from the high levels of  violence in 2006 and the first half of 2007. Security conditions deteriorated in March 2008, with the average number  of attacks increasing from about 50 per day in February 2008 to about 70  attacks per day in March—about a 40 percent increase (see fig. Several Factors Have Complicated the Development of Capable Iraqi Security Forces

The United States faces several challenges in enhancing the capabilities of  Iraq’s security forces: (1) the lack of a single unified force; (2) sectarian  and militia influences; (3) continued dependence upon U.S. and coalition  forces for logistics and combat support; and (4) training and leadership  shortages. Between 2005 and 2007, Iraq budgeted about $27 billion in capital  investments for its own reconstruction effort, as shown in table 3. However, Iraq’s central ministries spent only 11  percent of their capital investment budgets in 2007—a decline from  similarly low spending rates of 14 and 13 percent in 2005 and 2006,  respectively. These challenges include violence  and sectarian strife, a shortage of trained staff, and weak procurement and  budgeting systems. In May 2008, crude oil production was 2.5 million barrels per day and  exports were 1.96 million barrels per day, according to the State  Department. For example, a recent State Department report shows that for  June 3 to 9, the daily supply of electricity from the grid met only 52 percent  of demand. U.S. Efforts to Update Strategies to Stabilize and Rebuild Iraq

According to State and DOD officials, as of late May 2008, the  Administration has not revised its prior Iraq strategy document (NSVI) to  include U.S. goals and objectives for The New Way Forward, which ends  in July 2008, or the phase that follows. In May 2008, the State Department reported that the MNF-I/U.S. The  current strategy—The New Way Forward—responds to failures in prior  plans that prematurely transferred security responsibilities to Iraqi forces  or belatedly responded to growing sectarian violence. The United States  has made some progress in achieving key goals stated in The New Way  Forward, but progress is fragile and unmet goals and challenges remain:    Violence has declined from the high levels of 2006 and early 2007, largely  the result of an increase in U.S. combat forces, the creation of  nongovernmental security forces, and the Mahdi Army’s cease fire. However, the security environment remains volatile and dangerous. However, the number of Iraqi units capable of performing  operations without U.S. assistance has remained about 10 percent. The Iraqi government has passed key legislation to return some Ba’athists  to government, give amnesty to detained Iraqis, and define provincial  powers. However, it has not enacted other important legislation for  sharing oil resources or holding provincial elections, and its efforts to  complete a constitutional review have stalled. However, the departments  stated they shall review and refine the strategy as necessary. We reaffirm the need for an  updated strategy for several reasons. Appendix I: Objectives, Scope, and Methodology

In this report, we discuss progress in meeting key U.S. goals outlined in  The New Way Forward, specifically, (1) improving security conditions; (2)  developing Iraqi security forces’ capabilities and transferring security  responsibilities to the Iraqi government; (3) facilitating Iraqi government  efforts to draft, enact, and implement key legislative initiatives; (4)  assisting Iraqi government efforts to spend budgets; and (5) helping the  Iraqi government provide key essential services to its people. The New  Way Forward established goals to achieve over 12 to 18 months, or by July  2008. A  number of documents outline the goals and objectives of The New Way  Forward: (1) National Security Council, Highlights of the Iraq Strategy  Review, January 2007; (2) the President’s address to the nation, January  10, 2007; (3) Fact Sheet: New Way Forward in Iraq, January 10, 2007; (4)  Office of the Press Secretary, White House, Background Briefing by  Senior Administration Officials, January 10, 2007; and (5) the July and  November 2007 MNF-I/U.S. However, DOD did not concur with our  recommendation, stating that The New Way Forward strategy remains  valid.
Why GAO Did This Study

Since 2001, Congress has appropriated about $640 billion for the global war on terrorism, the majority of this for operations in Iraq. In January 2007, the President announced The New Way Forward to stem violence in Iraq and enable the Iraqi government to foster national reconciliation. This new strategy established goals and objectives to achieve over 12 to 18 months, or by July 2008. GAO discusses progress in meeting key goals in The New Way Forward: (1) improve security conditions; (2) develop capable Iraqi security forces; and help the Iraqi government (3) enact key legislation, (4) spend capital budgets, and (5) provide essential services. GAO also discusses U.S. strategies for Iraq. GAO reviewed documents and interviewed officials from U.S. agencies, the United Nations, and the Iraqi government. GAO also had staff stationed in Baghdad. Since May 2003, GAO has issued over 130 Iraq-related audits, which provided baseline information for this assessment. GAO prepared this report under the Comptroller General's authority.

What GAO Found

The New Way Forward responded to failures in prior strategies that prematurely transferred security responsibilities to Iraqi forces or belatedly responded to growing sectarian violence. Overall violence, as measured by enemy-initiated attacks, fell about 70 percent in Iraq, from about 180 attacks per day in June 2007 to about 50 attacks per day in February 2008. Security gains have largely resulted from (1) the increase in U.S. combat forces, (2) the creation of nongovernmental security forces such as Sons of Iraq, and (3) the Mahdi Army's declaration of a cease fire. Average daily attacks were at higher levels in March and April before declining in May 2008. The security environment remains volatile and dangerous. The number of trained Iraqi forces has increased from 323,000 in January 2007 to 478,000 in May 2008; many units are leading counterinsurgency operations. However, the Department of Defense reported in March 2008 that the number of Iraqi units capable of performing operations without U.S. assistance has remained at about 10 percent. Several factors have complicated the development of capable security forces, including the lack of a single unified force, sectarian and militia influences, and continued dependence on U.S. and coalition forces. The Iraqi government has enacted key legislation to return some Ba'athists to government, give amnesty to detained Iraqis, and define provincial powers. However, it has not yet enacted other important legislation for sharing oil resources or holding provincial elections. Efforts to complete the constitutional review have also stalled. A goal of The New Way Forward was to facilitate the Iraqis' efforts to enact all key legislation by the end of 2007. Between 2005 and 2007, Iraq spent only 24 percent of the $27 billion it budgeted for its own reconstruction efforts. More specifically, Iraq's central ministries, responsible for security and essential services, spent only 11 percent of their capital investment budgets in 2007--down from similarly low rates of 14 and 13 percent in the 2 prior years. Violence and sectarian strife, shortage of skilled labor, and weak procurement and budgeting systems have hampered Iraq's efforts to spend its capital budgets. Although oil production has improved for short periods, the May 2008 production level of about 2.5 million barrels per day (mbpd) was below the U.S. goal of 3 mbpd. The daily supply of electricity met only about half of demand in early May 2008. Conversely, State reports that U.S. goals for Iraq's water sector are close to being reached. The unstable security environment, corruption, and lack of technical capacity have contributed to the shortfalls. The Departments disagreed with our recommendation, stating that The New Way Forward strategy remains valid but the strategy shall be reviewed and refined as necessary. We reaffirm the need for an updated strategy given the important changes that have occurred in Iraq since January 2007. An updated strategy should build on recent gains, address unmet goals and objectives and articulate the U.S. strategy beyond July 2008.