The $87 Billion Money Pit

Newsweek -- Iraqis like to point out that after the 1991 war, Saddam restored the badly destroyed electric grid in only three months. Some six months after Bush declared an end to major hostilities, a much more ambitious and costly American effort has yet to get to that point. It is only in recent weeks that the Coalition amped up to the power-generation level that Saddam achieved last March—4,400 megawatts for the country (though it’s since dropped back). True, Saddam didn’t have a guerrilla war to contend with, and his power infrastructure was in much better shape than the Americans found it. But he also had far fewer resources.

Six months ago the administration decided to cut corners on normal bidding procedures and hand over large contracts to defense contractors like Bechtel and Halliburton on a limited-bid or no-bid basis. It bypassed the Iraqis and didn’t worry much about accountability to Congress. The plan was for “blitzkrieg” reconstruction. But by sacrificing accountability for speed, America is not achieving either very well right now. For months no one has seemed to be fully in charge of postwar planning. There has been so little transparency that even at the White House “it was almost —impossible to get a sense of what was happening” on the power problem, says one official privy to the discussions.

Numerous allegations of overspending, favoritism and corruption have surfaced. Halliburton, a major defense contractor once run by Vice President Dick Cheney, has been accused of gouging prices on imported fuel—charging $1.59 a gallon while the Iraqis “get up to speed,” when the Iraqi national oil company says it can now buy it at no more than 98 cents a gallon. (The difference is about $300 million.) Cronies of Iraqi exile leader Ahmad Chalabi, NEWSWEEK has learned, were recently awarded a large chunk of a major contract for mobile telecommunications networks.

Despite L. Paul Bremer’s new push to get contractors to hire Iraqis—”We realized that if they’re not working for us, they’re shooting at us,” one administration official said—the Iraqi Governing Council estimates unemployment is still as high as 75 percent.

Bush should heed the words of a 13-year-old schoolgirl who attends one of those Bechtel-renovated schools, with new equipment supplied by the U.S. government. “In the old days they would have made me carry a bag with Saddam’s face on it,” she told her uncle, an Iraqi translator. “Now they’re making me carry one with an American flag.” The child resents it, her uncle says.