	Some Gains Made; Certain Security, Legislative, and Economic Challenges Remain

The United States has made some progress in achieving key goals stated in  The New Way Forward; many challenges remain. DOD reports that about 65 percent of Iraqi army battalions are  leading counterinsurgency operations. 2). The number of  independent Iraqi security forces as measured by Operational Readiness  Assessments (ORA) level 1 continues to be an important measure of the  capabilities of Iraqi security forces. However,  as of mid-July 2008, 8 provincial governments do not yet have lead  responsibility for security in their provinces. Security conditions remain volatile and dangerous. Iraq Has Enacted Legislation to Promote Reconciliation, but Critical Laws Are Still Being Debated

To facilitate national reconciliation, The New Way Forward identified  legislation that the Iraqi government committed to enact with U.S. support  and set a goal for enacting all key legislation by December 2007. In early  2008, the Iraqi government enacted laws to return some Ba’athists to  government service, give amnesty to certain detainees in Iraq’s justice  system, and define provincial powers. Iraq Has Made Limited Progress in Spending Its Capital Investment Budgets and Has Not Met Oil Production Goals or Demand for Electricity

The New Way Forward emphasized the need to build capacity in Iraq’s  ministries and help the government execute its capital investment budget;  this is particularly important as the $48 billion in U.S. funding for Iraq  reconstruction and stabilization efforts is almost 90 percent obligated. However, expenditure data from Iraq’s Ministry of Finance show that,  between 2005 and 2007, Iraq spent only 24 percent of the $27 billion it  budgeted for its own reconstruction efforts. Overall crude oil production has increased or improved for short  periods; however, the early July 2008 average crude oil production  capacity of about 2.5 million barrels per day has not reached the U.S. goal  of 3 million barrels per day. Meanwhile, the daily supply of electricity met  only 54 percent of demand in early July 2008. The State Department reports that U.S. goals for Iraq’s water sector are  close to being reached. Need for Updated U.S. Strategy in Iraq

Since late 2003, the United States has employed numerous strategies and  plans to address the security and reconstruction needs of Iraq. To address the high levels of violence, the  administration announced The New Way Forward strategy in January  2007. While the documents that comprise The New Way Forward and the  phase that follows clearly state the importance the Administration places  on continued U.S. support for Iraq, they represent an incomplete strategic  plan because they only articulate goals and objectives for the near-term  phase that ends in July 2008. Current Strategic and Operational Plans for Iraq

In response to the escalating violence, the President in January 2007  announced The New Way Forward, which established a new phase in U.S.  operations in Iraq. State and DOD cite the classified MNF-I/U.S. We will provide  more information on the Joint Campaign Plan in the closed portion of this  hearing. Recommendation

The New Way Forward and the military surge that was central to it end in  July 2008. Moreover, the UN mandate authorizing MNF-I to maintain  security and stability in Iraq expires December 31, 2008; the United States  and Iraq are negotiating the legal framework to allow the United States  and its coalition partners to conduct operations to support the Iraqi  government after the UN mandate ends. Given these uncertainties, the  decreasing levels of enemy-initiated attacks, and weaknesses in current  DOD and State plans, an updated strategy is needed for how the United  States will help Iraq achieve key security, legislative, and economic goals. Accordingly, we recommend that DOD and State, in conjunction with  relevant U.S. agencies, develop an updated strategy for Iraq that defines  U.S. goals and objectives after July 2008 and addresses the long-term goal  of achieving an Iraq that can govern, defend, and sustain itself.
Why GAO Did This Study

In January 2007, the President announced a new U.S. strategy to stem the violence in Iraq and help the Iraqi government foster conditions for national reconciliation. In The New Way Forward, the Administration articulated near-term goals to achieve over a 12- to 18-month period and reasserted the end state for Iraq: a unified, democratic, federal Iraq that can govern, defend, and sustain itself and is an ally in the war on terror. To support this strategy, the United States increased its military presence and financial commitments for Iraq operations. This testimony discusses (1) progress in meeting key security, legislative, and economic goals of The New Way Forward; and (2) past and current U.S. strategies for Iraq and the need for an updated strategy. GAO reviewed documents and interviewed officials from U.S. agencies, MNF-I, the UN, and the Iraqi government. GAO also had staff stationed in Baghdad. Since 2003, GAO has issued about 140 Iraq-related products, which provided baseline information for this assessment.

What GAO Found

The United States has made some progress in achieving key goals stated in The New Way Forward. Looking forward, many challenges remain, and an updated strategy is essential. In the security area, violence--as measured by the number of enemy-initiated attacks--decreased about 80 percent from June 2007 to June 2008, trained Iraqi security forces have increased substantially, and many units are leading counterinsurgency operations. However, as of July 2008, 8 of 18 provincial governments do not yet have lead responsibility for security in their provinces, and DOD reported that, in June 2008, less than 10 percent of Iraqi security forces were at the highest readiness level and therefore considered capable of performing operations without coalition support. The security environment remains volatile and dangerous. In the legislative area, Iraq has enacted key legislation to return some Ba'athists to government, grant amnesty to detained Iraqis, and define provincial powers. The unfinished Iraqi legislative agenda includes enacting laws that will provide the legal framework for sharing oil revenues, disarming militias, and holding provincial elections. On economic and infrastructure issues, Iraq spent only 24 percent of the $27 billion it budgeted for its reconstruction efforts between 2005 and 2007. Although crude oil production improved for short periods, the early July 2008 average production capacity of about 2.5 million barrels per day was below the U.S. goal of 3 million barrels per day. In addition, while State reports that U.S. goals for Iraq's water sector are close to being reached, the daily supply of electricity in Iraq met only slightly more than half of demand in early July 2008. Since 2003, the United States has developed and revised multiple strategies to address security and reconstruction needs in Iraq. The New Way Forward responded to failures in prior U.S. plans and the escalating violence that occurred in 2006. However, this strategy and the military surge that was central to it end in July 2008, and many agree that the situation remains fragile.

What GAO Recommends

GAO recommends an updated strategy for Iraq for several reasons. First, much has changed in Iraq since The New Way Forward began in January 2007. Violence is down, U.S. surge forces are leaving, and the United States is negotiating a security agreement with Iraq to replace the expiring UN mandate. Second, The New Way Forward only articulates U.S. goals and objectives for the phase that ends in July 2008. Third, the goals and objectives of The New Way Forward are contained in disparate documents rather than a single strategic plan. Furthermore, the classified MNF-I/U.S. Embassy Joint Campaign Plan is not a strategic plan; it is an operational plan with limitations that GAO will discuss during the closed portion of the hearing.