GWEN IFILL: Since 2003, the United States has set aside more than $30 billion for relief and reconstruction in Iraq. But a new report by the inspector general in charge of tracking how that money has been spent finds many shortcomings, especially when it comes to rebuilding, roads, hospitals and water, sewage and power plants.
For instance, the report finds only 49 of 136 planned water and sanitation projects, and only 245 of 400 planned electricity projects, are on track. As a result, services in these key areas remain at less than their prewar levels. What are the reasons, difficulties and consequences that arise from these numbers?
For that we are joined by Stuart Bowen, the special inspector general for Iraq reconstruction. Before going to Iraq, Mr. Bowen worked in the Bush White House as a deputy assistant to the president.
Welcome, Mr. Bowen.
STUART BOWEN: Thank you, good to be with you.
GWEN IFILL: You write in your report that there is a reconstruction gap. I would like to kind of walk through your findings and have you explain to me where the gaps exist. For instance, with water, you say 35 percent of the planned water projects are on track. That's not a lot.
STUART BOWEN: That's right. But the reason for the reconstruction gap which is an observation of a reality, not an alarm bell, is the fact that we are confronting an insurgency that we didn't anticipate, at least the level of lethality.
This is not the Marshall Plan, this is a reconstruction program performed virtually under fire. And that's required reprogramming of money that was initially intended for reconstruction, for bricks and mortar, to security -- a reprogramming that I fully support. I mean --
GWEN IFILL: So when you say reprogramming you with speaking in budget-speak but you mean they basically have taken a big chunk of the money that was supposed to go for the water or the electricity or the oil rehabilitation and just moved it into taking care, making sure people don't get shot?
STUART BOWEN: Well, not just doing that. We're talking about standing up a substantial security force within Iraq, an Iraqi security force, one that will take the place of our troops over there now.
You are right; the water sector allocations were cut by half. But that money didn't just go to random projects; it went to focused training of the police and the troops on the ground in Iraq.
GWEN IFILL: Yet you find in your report that only one-third of Iraqis have potable water right now.
STUART BOWEN: That's right. I mean, there is still a long way to go. The money that we've allocated for reconstruction is going to get the Iraqi system off to a good start towards rehabilitation.
Three years ago the World Bank observed it would take $55 billion to bring the Iraqi system up to modern standards. We have made a very substantial start in that direction but there's a lot of work yet to be done.
GWEN IFILL: When you talk about a substantial start, you also find that electricity is not even at prewar levels yet. How does that help in the fight for the hearts and minds of Iraqis?
STUART BOWEN: Well, you are right; restoring an effective infrastructure is an important component to bringing stability to Iraq. But it's difficult to do so when power lines get taken out by insurgents and they have to be rebuilt.
Thus, the investment that we chose and the reprogramming to bolster the security forces was a wise one because ultimately that will promote a secure and stable infrastructure and economy.
GWEN IFILL: Was there just a miscalculation made early on by the coalition provisional authority about what it would take to do these big projects?
STUART BOWEN: I don't think there was any anticipation that the insurgency would be as persistent and lethal as it's been. And in fact, it's been focused on hitting infrastructure projects. The Corps of Engineers is perpetually under fire out as they try to oversee the projects that are -- that are ongoing in Iraq.
GWEN IFILL: Seventy-five percent of oil production -- I'm fascinated by the details in this report -- 75 percent of oil production would be expected to come from those oil plants you were supposed to be able to rehabilitate and put back on line but only a quarter of them are going on schedule. What are the consequences of that?
STUART BOWEN: Well, you are right, the investment in the oil sector is important because that's the engine that drives Iraq's national income. But simply the level of the insurgency has prevented the reconstruction program from staying on the originally anticipated schedule.
It was a schedule devised without that level of lethality in mind. However, over the next two years we're going to see significant oil infrastructure projects come on line. And when they do the potential for Iraq's economic growth will be realized.
GWEN IFILL: Will they come on line before money runs out?
STUART BOWEN: They -- there will need to be more investment. And I'm confident that third country donor nations are stepping forward. The Madrid Conference promises are being met. And there is more money coming out from the World Bank and other sources to promote infrastructure development.
GWEN IFILL: Is there an end in sight for the U.S. role in reconstruction?
STUART BOWEN: 2006 will be a year of transition. Politically we've already seen that. Economically it's coming. We've announced an audit to look carefully at the transition planning by U.S. authorities in Iraq.
GWEN IFILL: When you say transition, you mean handing over this role of reconstruction to third parties or to someone else? Do you know that the Iraqis can do that?
STUART BOWEN: Well, it is about capacity building. That is why we've looked at sustainability. It's about empowering the Iraqis to manage the new infrastructure that we built for them by providing them funding, operation and maintenance funding, that will help them sustain those projects and thus, the locus of management will move from U.S. managers into the Iraqi Ministry of Planning.
GWEN IFILL: There has been -- you had some pretty shocking detail in this and other reports about the level of corruption which has taken place in this reconstruction effort as well; for example, repair of a hospital elevator, which was done so poorly that three Iraqis died as a result. How did you find out about that?
STUART BOWEN: There was a real problem in Hillah during CPA. The comptroller down there was corrupt. He is now under arrest pursuant to investigations that we conducted, as are the contractors and other people that conspired to commit this criminal scheme.
It came through a hotline tip. Our auditors spent three months in Hillah auditing a whole series of projects; five audits were produced. And our investigators followed them in, tracked down the wrongdoers and they are being brought to justice.
GWEN IFILL: And these were Americans we're talking about who are the wrongdoers you are referring to.
STUART BOWEN: That's right.
GWEN IFILL: Also a lot of money was gambled away, apparently, in the Philippines, money that was intended for the reconstruction?
STUART BOWEN: Not a lot but --
GWEN IFILL: What do you mean by not a lot?
STUART BOWEN: Twenty thousand was gambled away. It was meant to support the Iraqi Olympic team. It was a -- we caught that person. We brought them to justice.
But let me say this about fraud. It has not been a pervasive reality in Iraq. However, wherever we have found it, we have pursued those who have committed those wrongs and we will continue to do so until our mandate runs out.
GWEN IFILL: You have what, more than 50 cases open now that are you investigating?
STUART BOWEN: Fifty-seven cases, that's right.
GWEN IFILL: The Karbala library, apparently there was a contract there for computers, 64 computers; how many were actually installed?
STUART BOWEN: Fourteen. This is again the same story down at Hillah; this is the comptroller in Hillah who was corrupt, managing a series of contracts for a person with whom he was in league. And we -- we conducted an audit on that.
We conducted an investigation, and I did a follow-up inspection this last quarter to assess whether any progress had been made on those projects from which there has been so much taken. And the answer is not yet. And I was disappointed about that.
GWEN IFILL: But I really do want to you explain this. It seems like a simple thing to provide computers to a local library but we are talking about computers that didn't have software or hardware or anything else that comes with what makes a computer work, so basically even the ones that were installed didn't work?
STUART BOWEN: Well, that was not the only problem there. There were no books provided. There was no training, no supplement to the training incomes that was anticipated. There was a whole series of contracts that simply were not met with respect to that program
GWEN IFILL: You are confident that these examples that we've been talking about here are exceptions to the rule?
STUART BOWEN: They are.
GWEN IFILL: How are you confident of that?
STUART BOWEN: Simply because we have been on the ground in Iraq working hard. Our oversight has been present now for two years. I have 10 investigators, 25 auditors, and 10 inspectors.
And I believe that if pervasive fraud was present in Iraq, we would have identified it and brought it to light. But what we have in a chaotic environment, cash-heavy environment, a few bad actors that have sought to take advantage of a difficult situation.
GWEN IFILL: You are returning to Iraq this week for how many --
STUART BOWEN: For my 11th trip.
GWEN IFILL: Your 11th trip. When you -- as you travel there, what are the expectations of Iraqis and of new government officials who you deal with there about what the reconstruction process ought to be doing at this stage?
STUART BOWEN: The year of transition is upon us. We have a new government taking their seats right now, followed by a new prime minister, a new president. That's a tectonic switch in how the government will operate in Iraq.
Over the last two years we've had three governments; now we'll have one government for the next four years. That fundamentally alters how infrastructure and economic decision-making will be made in Iraq.
And, as I said, the locus of decision-making will move from U.S. Managers to the Iraqis.
GWEN IFILL: When you say sustainability, what do you mean by that, can the Iraqis do it?
STUART BOWEN: With the right resources and training, yes. And it's an issue that has been on the forefront of the U.S. Managers for the last year. It is an issue that we have focused on in our last two reports -- and continue to focus on. And if there is going to be more investment in Iraq, it should be in sustainability.
GWEN IFILL: Stuart Bowen, thank you very much.
STUART BOWEN: Thank you, Gwen.