Security, Measurement, and Sustainability Challenges in Rebuilding and Stabilizing Iraq

The United States faces three key challenges in stabilizing and rebuilding  Iraq. First, the unstable security environment and the continuing strength  of the insurgency have made it difficult for the United States to transfer  security responsibilities to Iraqi forces and to engage in rebuilding efforts. Second, inadequate performance data and measures make it difficult to  determine the overall progress and impact of U.S. reconstruction efforts. Third, the U.S. reconstruction program has encountered difficulties with  Iraq’s inability to sustain new and rehabilitated infrastructure projects and  to address maintenance needs in the water, sanitation, and electricity  sectors. U.S. agencies are working to develop better performance data and  plans for sustaining rehabilitated infrastructure. Strength of the Insurgency Has Made It Difficult to Transfer Security Responsibilities to Iraqi Forces and Engage in Rebuilding Efforts

Over the past 2½ years, significant increases in attacks against the  coalition and coalition partners have made it difficult to transfer security  responsibilities to Iraqi forces and to engage in rebuilding efforts in Iraq. Security Situation and Management Issues Have Affected Rebuilding Efforts

The security situation in Iraq has affected the cost and schedule of  reconstruction efforts. In January 2006, State reported that direct and indirect security  costs represent 16 to 22 percent of the overall cost of major infrastructure  reconstruction projects. Limited Performance Data and Measures and Inadequate Reporting Present Difficulties in Determining Progress and Impact of Rebuilding Effort

State has set broad goals for providing essential services, and the U.S.  program has undertaken many rebuilding activities in Iraq. In September 2005, we  recommended that the Secretary of State address this issue of measuring  progress and impact in the water and sanitation sector. Iraq Faces Challenges in Financing Future Needs

As the new Iraqi government forms, it must plan to secure the financial  resources it will need to continue the reconstruction and stabilization  efforts begun by the United States and international community. However, Iraq’s needs are greater than originally  anticipated due to severely degraded infrastructure, post-conflict looting  and sabotage, and additional security costs. The United States has borne  the primary financial responsibility for rebuilding and stabilizing Iraq;  however, its commitments are largely obligated and remaining  commitments and future contributions are not finalized. Further, U.S.  appropriations were never intended to meet all Iraqi needs. Finally, Iraq’s ability to  contribute financially to its additional rebuilding and stabilization needs is  dependent upon the new government’s efforts to increase revenues  obtained from crude oil exports, reduce energy and food subsidies, control  government operating expenses, provide for a growing security force, and  repay external debt and war reparations. Iraqi Needs May be Greater Than Originally Anticipated

Initial assessments of Iraq’s needs through 2007 by the U.N., World Bank,  and the CPA estimated that the reconstruction of Iraq would require about  $56 billion. International donors have provided a lesser amount of funding for  reconstruction and development activities. Measuring the outcomes of  U.S. efforts is important to ensure that the U.S. dollars spent are making a  difference in the daily lives of the Iraqi people. In addition, the United  States must ensure that the billions of dollars it has already invested in  Iraq’s infrastructure are not wasted. This will  not be easy, but it is necessary for the Iraqi government to begin to  contribute to its own rebuilding and stabilization efforts and to encourage  investment by the international community and private sector. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

The United States, along with coalition partners and various international organizations, has undertaken a challenging and costly effort to stabilize and rebuild Iraq following multiple wars and decades of neglect by the former regime. This enormous effort is taking place in an unstable security environment, concurrent with Iraqi efforts to transition to its first permanent government. The United States' goal is to help the Iraqi government develop a democratic, stable, and prosperous country, at peace with itself and its neighbors, a partner in the war against terrorism, enjoying the benefits of a free society and a market economy. In this testimony, GAO discusses the challenges (1) that the United States faces in its rebuilding and stabilization efforts and (2) that the Iraqi government faces in financing future requirements. This statement is based on four reports GAO has issued to the Congress since July 2005 and recent trips to Iraq. Since July 2005, we have issued reports on (1) the status of funding and reconstruction efforts in Iraq, focusing on the progress achieved and challenges faced in rebuilding Iraq's infrastructure; (2) U.S. reconstruction efforts in the water and sanitation sector; (3) U.S. assistance for the January 2005 Iraqi elections; and (4) U.S. efforts to stabilize the security situation in Iraq (a classified report).

What GAO Found

The United States faces three key challenges in rebuilding and stabilizing Iraq. First, the security environment and the continuing strength of the insurgency have made it difficult for the United States to transfer security responsibilities to Iraqi forces and progressively draw down U.S. forces. The security situation in Iraq has deteriorated since June 2003, with significant increases in attacks against Iraqi and coalition forces. In addition, the security situation has affected the cost and schedule of rebuilding efforts. The State Department has reported that security costs represent 16 to 22 percent of the overall costs of major infrastructure projects. Second, inadequate performance data and measures make it difficult to determine the overall progress and impact of U.S. reconstruction efforts. The United States has set broad goals for providing essential services in Iraq, but limited performance measures present challenges in determining the overall impact of U.S. projects. Third, the U.S. reconstruction program has encountered difficulties with Iraq's inability to sustain new and rehabilitated infrastructure projects and to address basic maintenance needs in the water, sanitation, and electricity sectors. U.S. agencies are working to develop better performance data and plans for sustaining rehabilitated infrastructure. As the new Iraqi government forms, it must plan to secure the financial resources it will need to continue the reconstruction and stabilization efforts begun by the United States and international community. Iraq will likely need more than the $56 billion that the World Bank, United Nations, and CPA estimated it would require for reconstruction and stabilization efforts from 2004 to 2007. More severely degraded infrastructure, post-2003 conflict looting and sabotage, and additional security costs have added to the country's basic reconstruction needs. However, it is unclear how Iraq will finance these additional requirements. While the United States has borne the primary financial responsibility for rebuilding and stabilizing Iraq, its commitments are largely obligated and future commitments are not finalized. Further, U.S. appropriations were never intended to meet all Iraqi needs. In addition, international donors have mostly committed loans that the government of Iraq is just beginning to tap. Iraq's ability to financially contribute to its own rebuilding and stabilization efforts will depend on the new government's efforts to increase revenues obtained from crude oil exports, reduce energy and food subsidies, control government operating expenses, provide for a growing security force, and repay $84 billion in external debt and war reparations.