Analysis: U.S. Redirects Iraq Aid

Sept. 14, 2004 -- Virtually without fanfare, the Bush administration has reprogrammed some $3.5 billion in aid funds to Iraq in ways that mark a fundamental shift in its strategy in Iraq, and a recognition that much of the U.S. effort during the first year of occupation was a failure.

The administration today sent a proposal to Congress to reprogram $3.46 billion from Iraqi water, power and other reconstruction projects to short-term expenditures designed to provide better security, secure and boost oil exports, and provide immediate aid benefits of the kind that can support the elections scheduled for January 2005.

Out of this total, $1.804 billion — which had previously been allocated for longer term water, sewage and electricity projects — will go to rush efforts to train and equip Iraqi police and other security forces. Another $180 million will go to planning elections and helping local governments in ways that will help secure their areas.

Some $450 million will be reprogrammed to repair and expand Iraq's oil production; $380 million will go to rapid spending on economic and educational reforms; and $286 million will go to rush efforts to expand job training programs and compensate for unemployment.

Some $360 million will be set aside to cover the "budget cost" of forgiving 95 percent of Iraqi debt to the United States incurred during the Iraq War. Washington evidently plans to forgive 95 percent of Iraq's prewar debts to the United States, which total around $4 billion.

A Recognition of Overall Failure

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Part of this reprogramming is a recognition of the fact that the U.S. aid effort to date has had individual successes, but has been a dismal overall failure.

The United States has still spent less than $1 billion of the $18.4 billion programmed for fiscal year 2004. Much of that has been wasted due to sabotage, attacks and bad planning; has been spent outside the country; or has been spent on foreign security forces.

If Congress does not object to the proposed changes, they will, however, do far more than simply shift money.