GWEN IFILL: With major combat largely over, U.S. forces in Iraq are now focused on the most basic of tasks: putting the country back together -- a reconstruction project that extends from roads and bridges to political leadership. Defense Secretary Donald Rumsfeld, traveling in Baghdad today for the first time since the war began, said Americans have a special responsibility to rebuild.
DONALD RUMSFELD: We have to help Iraqis restore their basic services. And we have to help provide conditions of stability and security so that the Iraqi people can form an interim authority, an interim government, and then ultimately a free Iraqi government based on political freedom, individual liberty, and the rule of law.
GWEN IFILL: The task is a daunting one. The war, the regime of Saddam Hussein, and a decade of U.N. imposed sanctions have left a wealthy nation in dire straits. The nation's electricity grid, reduced to blackout during the war, is gradually being restored.
In Baghdad, about 40 percent of the city now has power. Telephone service remains out in much of the country. Water systems need repair. About five million people don't have safe water or sanitation. Many hospitals were damaged and then looted during the war, as were museums and libraries.
Plus, many targets of allied strikes -- airports, government buildings, highways and ports -- must now be repaired. The U.S. Agency for International Development, or USAID, is charged with leading the effort to rebuild Iraq.
So far, USAID has awarded six contracts, all to American companies. The largest by far went to California's Bechtel Corporation -- $680 million to build and repair Iraq's infrastructure. Bechtel, one of the world's largest engineering and construction companies, put out fires and helped clean up Kuwait's oil fields after the 1991 Persian Gulf War. USAID invited just six firms to compete for the contract, a process USAID head Andrew Natsios defended.
ANDREW NATSIOS, Administrator, USAID: The federal law requires us to source our contracts through American companies. That's a federal statute, congressional law. There is a provision in the law that allows us to waive the provisions in the national security interests of the United States.
So in January, we decided to waive the law, particularly for subcontracts, because more than 50 percent of the money that goes to the contracts will in fact go through subcontracts, any country that's competitive, that wants to bid can bid, regardless of whether they're British or European or what.
GWEN IFILL: But the selection of Bechtel, which has close ties to the Bush administration, has stirred some criticism. On Capitol Hill, democrats called for an investigation by the General Accounting Office. Natsios, in response, asked the agency's inspector general to review the awards. Other nations are also anxious to help in the reconstruction. Among them: France, which opposed the Iraq war.
DOMINIQUE DE VILLEPIN (through a translator): I firmly believe that one of the keys to solve Iraq and everywhere else is that everybody brings on board his talents, his own qualities. It is obvious each of our states has relations in the region, a willingness and a capacity to offer, so it is important to mobilize, each of us with his own input.
GWEN IFILL: The reconstruction has already begun near Um Qasr, where crews have delivered humanitarian supplies and will dredge the port. To rebuild the entire country, however, will take years, and, some experts say, anywhere from $25 billion to $100 billion.
GWEN IFILL: So for more now on logistical, political, and cost implications of rebuilding postwar Iraq, we are joined by Eric Schwartz, a senior fellow at the Council on Foreign Relations and director of its independent task force on post-conflict Iraq; Ralph Locurcio, a former brigadier general with the U.S. Army Corps of Engineers -- he served as commander of Kuwait's emergency reconstruction office; and Charles Tiefer, a law professor at the University of Baltimore School of Law.
Mr. Locurcio give us a sense, from a nuts and bolts perspective, exactly how...what will it will take to rebuild Iraq.
RALPH V. LOCURCIO: Well, I think the first thing we need is a stable government there to help us prioritize the work or help the forces that are going to do the reconstruction prioritize the work. As long as there is a stable government in place, then the engineers could do their work. The first step is to assess the damage. It's hard to tell exactly what's really damaged and what the extent of it is.
So we need to isolate specific facilities, hospitals, roads, bridges that need to be repaired and do an estimate of damage. While that's going on, the contractors hired by USAID need to mobilize a work force, move them into the country and position them in various strategic places throughout the country to carry out the task orders once the assessments are done.
GWEN IFILL: Mr. Locurcio that sounds like an immense strategy. When you undertook the same kind of task in Kuwait, which probably wasn't as extensive - tell me if I'm wrong - but probably wasn't as extensive as this promises to be, where did you begin?
RALPH V. LOCURCIO: Well we began with the assessments. We were very, very fortunate in Kuwait that we had a stable government to work with and the Kuwaiti government provided experts from their public works department to work with us and help us through this assessment task. The U.S. Army provided security for us.
And we had much less of a problem than appears to be happening in Iraq right now.
So I still think security and a stable government need to be established. But we divided up the country to sectors. It's kind of like eating an elephant; you have to do it one bite at a time; you break it down into human sized pieces. We divided the country up into sectors and allocated various teams to those sectors and controlled them all from a central location in Kuwait City.
GWEN IFILL: Mr. Schwartz let's talk about the need for a stable government before anything else happens that Mr. Locurcio was just talking about, how is that going so far and how do you go about doing that?
ERIC SCHWARTZ: Let me echo the point that was just made. The technical requirements for Iraqi reconstruction are doable. Iraq has a highly educated population, has great potential wealth, a lot of interest in the international community.
So it's absolutely correct to say that the technical requirements really are secondary. The key requirements will be stability, especially in the immediate post conflict period. And from the perspective of the United States, it seems to me the key question is, our political commitment to stay the course; first, to spend huge amounts of money, in particular in the effort at peace stabilization, which will require a large number of American troops.
Secondly, our willingness to deploy not only military but civilian personnel to assist not only in the administrative aspects but also in the political constituting process for a future Iraq, and finally our willingness to be there for some considerable period of time. I think in short -- I think we got a bit of a late start in the post conflict period. I think some of the disorganization and chaos that occurred in the immediate aftermath, we're going to have to do better in the future.
But I also think the effort to move forward on a transitional government in this interim authority process is something that's very important and I'm gratified that General Garner is moving forward on that.
GWEN IFILL: But, Mr. Schwartz can both of those things happen at the same time, that is to say the administrative part of it, can it happen at the same time as the bricks and mortar part?
ERIC SCHWARTZ: It has to happen at the same time. There is no alternative. On the political side there are lots of different action that have to take place simultaneously. Let me just name two or three of them. First in the immediate post conflict period, our troops have to be on the ground providing public security. Our aid deliverers have to be doing short-term economic development projects so Iraqis have some sense that their life is better now after the war.
So that's immediately. But at the same time, we have to begin the process of training a new Iraqi security force, security forces, police, military, rule of law, courts, all of those actions have to take place, have to begin taking place right now. They should have already begun.
And in addition to these sort of administrative requirements we also have to be working with Iraqis in defining the political future of their own country. There is no alternative but to do it all right now.
GWEN IFILL: Professor Tiefer, if you have do it right now the bricks, the mortar, the people in charge, the right people in charge from the United States' point of view, is it being done the right way so far?
CHARLES TIEFER: Well, the administration has a plausible argument for how it's gone, but it has gone about this in quite a secretive way, but unlike normal contracting which is done in an open process and transparent to inspire trust, there has been a lot of suspicion about how it's been done.
GWEN IFILL: Suspicion from whom?
CHARLES TIEFER: Well, you have both domestic critics about the fact that this was kept secret for several months. You also have international critics who are angry that their own companies were never given a chance to bid on these prime contracts.
GWEN IFILL: Does that undercut what the government is trying to accomplish in Iraq, the fact that there are these questions being raised, or was it just...was this the only way this could get done in this timetable?
CHARLES TIEFER: It does undercut, because in the long run -- and these are contracts that are expected to go 18 months, 21 months -- either the full load will be on the American taxpayer or we expect other countries to contribute. And it will undercut us if we can't persuade other countries; your companies are in on it so you should be contributing money.
GWEN IFILL: So when - for instance Bechtel says that fully half of their contract is going to go to subcontractors, some of those from the countries you mentioned. Isn't that addressing the issue?
CHARLES TIEFER: In part the subcontracting to foreign companies will make things a little better. But these foreign companies could have been prime contractors who could have bid on them. They are the big construction companies in that part of the world, are foreign companies.
GWEN IFILL: Mr. Locurcio, we're talking about water supply and bridges and roads and airports and museums and hospitals. What is the biggest logistical challenge, the biggest physical challenge in this rebuilding effort?
RALPH V. LOCURCIO: Well, I think first of all, the prime utility that needs to be fixed first is the electrical system because it drives everything else. There's no question about that. As far as logistical problems, getting enough parts and raw materials into that sector flowing in there is a tremendous job. When you start thinking about the amount of bricks and mortar, windows, doors, communication facilities, the various parts that are needed to put the air conditioning systems back together again. All that requires a tremendous logistical effort.
And it goes to the contractor that you select to actually muster that logistical effort and that's why you have these large companies like Bechtel and so on, being chosen because they have the throw weight and the pockets if you will and the systems set up on international basis to go ahead and move those supplies into the region as well as personnel from offshore.
I remember in Kuwait the large companies -- we hired Kellogg, Brown, and Root -- they had barges which they had leased coming into the ports with supplies for the reconstruction. That's the kind of thing you need and that's why you need a huge company such as Bechtel or Brown and Root or some of the others that have been selected to do these kinds of jobs. Smaller companies cannot do it on their own.
GWEN IFILL: Thank you. Mr. Schwartz, when you hear this talk about the necessity for these big U.S. companies to come in and undertake this, does this make it easier or more difficult for the political stability, especially if there are suspicions about the motivations of these outside firms?
ERIC SCHWARTZ: Well let me say at the outset that I don't question Andrew Natsios's statement that they felt they needed to move quickly and to move to companies which they knew. I do think as a matter of diplomacy doing it in the manner that we did has resulted in some diplomatic costs and I think that's a problem. I think that AID administrator Natsios has tried to compensate for that by making the point repeatedly that the subcontracts could go to foreign firm. So I give him credit there.
But I think this whole issue really raises the broader question as to what extent is the United States prepared to share the burden for the post conflict stabilization and transition and reconstruction process. I think there are strong reasons that we should seek to share the burden. Number One, it will lighten our load and Number Two, I think very importantly, it will diminish the perception that post conflict Iraq is an American project. We don't have any interest in perpetuating that notion to the Iraqis or to the region.
So I think the administration needs to think hard about bringing other governments in, bringing United Nations agencies in, without sacrificing American influence in the post conflict civil administration, but at the same time bringing others in to demonstrate that this is not simply an American occupation.
GWEN IFILL: Professor Tiefer, what about that, is enough being done share the burden?
CHARLES TIEFER: I'm afraid that we are discouraging foreign countries. We have given the prime contracts -- not just on the Bechtel contract but on all eight of the initial contracts are American only. And this is sending to the rest of the world the signal that this is an American project and not a world project.
GWEN IFILL: What kind of timetable should there be, if any, on this?
CHARLES TIEFER: There should have been temporary American only efforts, because there was a war going on, but then for the second, third, fourth year of this reconstruction effort, we should be contracting in a way that brings in mid-sized companies and foreign companies.
GWEN IFILL: Mr. Locurcio when we're talking about timing here, are we also talking about the cost inevitably being driven up?
RALPH V. LOCURCIO: No. Actually costs will probably be driven down as time goes by. Our costs were steepest in the first months of the reconstruction and as the materials began to flow, supply and demand takes over, you have more supply and the price goes down.
So it really works in your favor. I do agree that we need to move perhaps to an international base. We did hire some international contractors. The thing I'd like to point out though, that is in the initial phase, you need a work force that you really can depend upon and I think what's what USAID has done. I think we're in the initial phases and as the professors stated as we move forward phase two and three, when we actually get into the improvements I think there is plenty of time then to expand the horizon of the contracting effort.
But in the initial stages you have to have people that you know can manage the effort and can do it dependably and quickly and I think what's what USAID has done.
GWEN IFILL: Mr. Schwartz what do you think about the potential for costs, both economic and political?
ERIC SCHWARTZ: Well, on the economic side I think the major cost to the United States will be in the area of peace stabilization, supporting our troops who need to be there. I think initially we need to be also contributing to the economic reconstruction effort, that's why I welcome the administration's decision to put about $3 billion or more towards the reconstruction effort initially. I think we're going to continue to have to do that for a while but over time Iraqi oil revenues will be able to supply the bulk of reconstruction assistance. That's not going to happen immediately but over time.
On the political side, I'll say what I said before, I think we should be doing more to share the burden with other governments and I think this issue is really now being debated frankly in New York, at the United Nations on the question, on the question of what role that institution is going to play in the political process that's unfolding in Iraq and on issues like the future of the oil for food program. I would hope the administration is a little bit forthcoming on those issues.
GWEN IFILL: And briefly Professor Tiefer on that same issue of cost and the American public's ability to hang in there long enough for that eventual reimbursement from the oil program?
CHARLES TIEFER: There are some estimates it could be five to ten years before Iraqi oil takes over the costs. So unless we procure in a way that wins us sympathy from Europe, from Japan, the whole cost would be on the American taxpayer, who may not be willing to carry it.
GWEN IFILL: Okay. We'll leave it there for tonight. Thank you, gentlemen.