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REVIEW OF IRAQ RECONSTRUCTION

HEARING

BEFORE THE

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

JUNE 8, 2006

Serial No. 109–213

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.house.gov/international—relations 

(II)

COMMITTEE ON INTERNATIONAL RELATIONS 

HENRY J. HYDE, Illinois, Chairman 

JAMES A. LEACH, Iowa 

CHRISTOPHER H. SMITH, New Jersey, 

Vice Chairman 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

EDWARD R. ROYCE, California 

PETER T. KING, New York 

STEVE CHABOT, Ohio 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MARK GREEN, Wisconsin 

JERRY WELLER, Illinois 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

KATHERINE HARRIS, Florida 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL MCCAUL, Texas 

TED POE, Texas 

TOM LANTOS, California 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

SHERROD BROWN, Ohio 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JOSEPH CROWLEY, New York 

EARL BLUMENAUER, Oregon 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

BETTY MCCOLLUM, Minnesota 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

RUSS CARNAHAN, Missouri 

THOMAS E. MOONEY, SR., Staff Director/General Counsel 

ROBERT R. KING, Democratic Staff Director 

LARA ALAMEH, Professional Staff Member 

JEAN CARROLL, Full Committee Hearing Coordinator 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable James Jeffrey, Senior Advisor to Secretary Rice and Coordinator for Iraq, U.S. Department of State ........................................................... 14

Mr. Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction .. 17

The Honorable James R. Kunder, Assistant Administrator, Bureau for Asia 

and the Near East, U.S. Agency for International Development ..................... 25

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable James Jeffrey: Prepared statement .............................................. 15

Mr. Stuart W. Bowen, Jr.: Prepared statement .................................................... 19

The Honorable James R. Kunder: Prepared statement ........................................ 28

APPENDIX 

Mr. Stuart W. Bowen, Jr.: Material submitted for the record ............................. 64

The Honorable Sherrod Brown, a Representative in Congress from the State 

of Ohio: Prepared statement ............................................................................... 66

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REVIEW OF IRAQ RECONSTRUCTION 

THURSDAY, JUNE 8, 2006

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON INTERNATIONAL RELATIONS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:10 a.m. in room 

2172, Rayburn House Office Building, Hon. Henry J. Hyde (Chairman of the Committee) presiding. 

Chairman HYDE. The Committee will come to order. Last night 

at 6:15 p.m. justice was delivered to Abu Musab al-Zarqawi, Iraq’s 

most wanted terrorist. Although many challenges remain in Iraq, 

his death seriously undermines the mission of al-Qaeda. 

As President Bush said this morning, Zarqawi’s death has the 

potential to ‘‘turn the tide in Iraq.’’ His death is a victory in the 

Global War on Terror, and today we remember the innocent lives 

taken by Zarqawi and his terrorist network. 

There is no doubt that the United States, with the cooperation 

of our allies, has engaged in dialogue and meaningful reconstructive efforts with the Iraqi people to help build a foundation for establishing a secure and sovereign Iraq. 

The recent formation of the Iraqi Government by Prime Minister 

Nouri al-Maliki is a step in the right direction. The Iraqi people 

should be commended for their unforgettable sacrifices and commitment to rebuilding a nation from the ashes of tyranny, war, and 

sectarian strife. 

The American people also have contributed to this process 

through their military and financial support to the fledgling Iraqi 

Government. Since the fall of Saddam Hussein, the American people have provided approximately $29 billion in United States assistance to Iraq for reconstruction programs. 

Through USAID and other United States agencies operating in 

Iraq, the American people continue to assist in restoring important 

sectors of Iraq’s government and economy. These reconstruction 

projects are an integral part of the President’s strategy to build a 

democratic, stable and prosperous country. 

However, significant challenges to stabilize Iraq have resulted in 

important lessons learned that this Administration is internalizing 

and responding to. Nobody denies that mistakes were made. What 

is important is how the United States adjusts its strategy to serve 

the interests of the American people and to support the new Iraqi 

Government in implementing its agenda to bring security and stability to the Iraqi people. In other words, have we learned from our 

mistakes, and what are the lessons learned? 

2

The war in Iraq has led to a divisive debate about the justification for the war’s necessity. Regardless of where one stands on this 

issue, what is essential is identifying those elements necessary to 

build a functioning democracy in a part of the world that has never 

known that blessing. 

One way the United States is contributing to Iraq’s success is 

through improving the accountability and transparency of the Iraq 

reconstruction process through vigorous oversight provided by the 

Special Inspector General for Iraq Reconstruction. 

Today we will hear from Mr. Stuart Bowen how this process is 

going. One thing we do know is that aggressive oversight works. 

A combination of audits, inspections and investigations have 

brought justice to criminals and have improved coordination and 

management of reconstruction projects. 

We also welcome Ambassador Jeffrey back to the Committee to 

provide his views on these important issues, and additionally we 

will receive an update from Mr. Kunder on the U.S. Agency for 

International Development’s role in the Iraqi reconstruction process. 

I now am pleased to yield to my friend and colleague, the Ranking Democratic Member, Tom Lantos, for any opening remarks he 

may wish to make. 

Mr. LANTOS. Thank you very much, Mr. Chairman. Before I get 

to my opening remarks, I respectfully request, given the importance of today’s hearing, that all Members have an opportunity to 

make brief opening statements. 

Mr. Chairman, let me briefly comment on the death of the alQaeda leader in Iraq, Abu Musab al-Zarqawi. This dramatic news 

out of Iraq will hopefully send a strong political signal to all Iraqis 

that the insurgents will not prevail. 

While Zarqawi’s demise is likely to have a positive impact on the 

security situation in Iraq both symbolically and operationally, we 

must not lull ourselves into a false sense of complacency that the 

job of ensuring a safe and secure Iraq is now near completion. 

Mr. Chairman, there are many debatable points about our policy 

toward Iraq, but the gross mismanagement of reconstruction efforts 

is not one of them. Due to the exceptional work of the Special Inspector General for Iraq Reconstruction, the facts are clear. Billions 

of United States taxpayer dollars have been used unwisely in Iraq. 

The Executive Branch must not allow such slipshod management, 

and the American people, I am convinced, will not tolerate it. 

This is not just about money. The international coalition’s ability 

to exit Iraq responsibly, leaving the Iraqi people in better shape 

than before the war, is directly related to the success of our reconstruction efforts there. These efforts have been severely undermined by waste, by fraud and by abuse, and our troops have been 

needlessly exposed to greater risk because of such failures. 

We therefore appreciate, Mr. Chairman, that you have convened 

today’s hearing with our distinguished witnesses, particularly the 

Special Inspector General for Iraq Reconstruction, Mr. Stuart 

Bowen. The 23 Democrats on this Committee unanimously and formally requested this hearing because we believe that Congress has 

failed to conduct sufficient oversight over the Iraq reconstruction 

program. Without descending into the endless debate over the 

3

number of hearings held or resolutions raised, we can all agree on 

one thing: It is imperative that the Executive Branch learn from 

its mistakes in Iraq and make dramatic changes to our reconstruction efforts to ensure that we are improving the lives of the Iraqi 

people. 

Thanks to the diligence of the Office of the Special Inspector 

General, we now know the scope of the problem. Here are the facts, 

Mr. Chairman. During the reign of the Coalition Provisional Authority almost $9 billion—that is $9 billion with a B—moved 

through Iraqi ministries. 

In another shocking instance in south-central Iraq, with little or 

no accounting for results, managers of the Coalition Provisional 

Authority funds could not account for nearly $100 million in cash 

and receipts. Where did the rest of the money go? It is as if the 

CPA were dumping suitcases of taxpayer dollars into quicksand. 

Recent court documents might indicate where some of the money 

went. One of two defendants arrested in connection with the waste 

and abuse pled guilty to accepting stolen CPA and United States 

property in Iraq and using it to operate a business. He secretly provided public officials things of value such as first-class airplane 

tickets, jewelry and prostitutes at a villa in Baghdad. 

Another defendant who was serving as a comptroller for the CPA stole at least $2 million in United States currency designated to be 

used for reconstruction in Iraq and conspired to transfer it to the 

bank accounts of others. One of these two thieves sent an email to 

the other in January 2004 that closed with the observation, I 

quote, ‘‘I love to give you money.’’

Mr. Chairman, the gross mismanagement of our Iraq reconstruction efforts has not ended with the demise of the CPA. In a recent 

report, the Special Inspector General found that the United States 

continued to fund the restoration of 16 oil pipelines under the Tigris River despite persistent warnings from geologists that the soil 

was not conducive to drilling. We allocated nearly $200 million for 

primary healthcare centers, but completed only six out of the 150 

clinics intended to be built with these funds. 

Unfortunately, Mr. Chairman, these are not isolated incidents. 

More than 75 percent of oil and gas reconstruction projects begun 

with U.S. assistance remain incomplete. More than 50 percent of 

electricity reconstruction projects are still unfinished, along with 40 

percent of water and sanitation reconstruction projects. 

Instead of ensuring that these vitally important projects are finished, the House has just approved a budget resolution on a totally 

partisan vote that slashed $1 billion from Iraq reconstruction. 

Mr. Chairman, we all recognize that the reconstruction of Iraq 

cannot be achieved overnight, easily or on the cheap, but the 

alarmingly slow pace of Iraq reconstruction and the misuse of 

United States and Iraq funds have serious repercussions for our 

own national security. 

Insurgents have capitalized on popular resentment and anger toward the United States and the Iraqi Government to build their 

own political, financial and military support, and the faith of Iraqi 

citizens in the new government has been severely undermined. 

The corruption and incompetence surrounding the rebuilding of 

Iraq has badly damaged our image abroad not just in Iraq, but 

4

throughout the world. Money wasted on reconstruction boondoggles 

could have also been better spent on protecting American and Iraqi 

troops from insurgents. 

Mr. Chairman, unless we show the Iraqi people that their liberation has brought tangible benefits or at the very least the restoration of essential services to pre-war levels, key factions will continue to side with the insurgents and not with the forces of freedom. 

Until we succeed in training enough Iraqi forces to secure their 

nation independently, we risk leaving a destabilized Iraq. Therefore, the Executive Branch must listen closely to the recommendations of the Special Inspector General and other expert voices on 

how to overhaul our reconstruction efforts, and we must simultaneously redouble our efforts to create a truly sustainable Iraqi 

army and police. 

Finally, Mr. Chairman, given Mr. Bowen’s success in uncovering 

waste and fraud and abuse, I find it shocking that this House is 

prematurely curtailing his mission. We should be increasing Mr. 

Bowen’s capacity to do oversight, not weakening it. 

We know these are not simple tasks, Mr. Chairman, but the goal 

we all seek—a stable Iraq at peace with its neighbors—will remain 

elusive until we improve both the security and the economic environment in Iraq. Although the Executive Branch is charged with 

this responsibility, we in Congress clearly need to ensure that the 

job is done right. 

Thank you, Mr. Chairman. 

Chairman HYDE. Thank you, Mr. Lantos. 

Because of the importance of the subject matter and this hearing, 

we are going to recognize everybody to make an opening statement 

that wishes to, stressing that making an opening statement is not 

mandatory. 

We will limit the recognition to 3 minutes so everyone will have 

an opportunity to make a statement in 3 minutes. That saves us 

time, helps us get the witnesses’ testimony, which I hope we are 

here to listen to, and get to the question period, which is very instructive. 

With that in mind, Ms. Ros-Lehtinen is recognized for 3 minutes. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Chairman. I want 

to thank you for holding this important hearing today. I want you 

to know that some of us were on the Floor honoring you, and it is 

great I hope for you to be receiving honors when you are still 

around and kicking every day. Don’t even think about retiring 1 

day sooner than you must. 

Mr. Chairman, the men and women of our armed forces are coalition partners, and those Iraqis committed to a free, democratic and 

peaceful Iraq continue to rise to the challenges before them. They 

are to be commended especially today for dealing a major blow to 

Islamic terrorists in Iraq. 

What a headline, ‘‘Al-Zarqawi Killed, al-Qaeda Leader in Iraq 

Dead After Air Strike.’’ This article says al-Zarqawi himself is believed to have wielded the knife in the beheadings of two of the 

Americans, Nicholas Berg and Eugene Armstrong, and earned himself the title of the Slaughtering Sheikh among his supporters. 

What a great title for him. 

5

Through their hard work and the dedication of our United States 

forces, our coalition forces and Iraqi personnel, there are now more 

than just the democratic alternative to the Middle East, but it has 

given hope to the people throughout the region that there can be 

a better life than the murderous dictatoring of Saddam Hussein 

and his ilk throughout the region. 

By promoting a liberal democracy in place of a brutal autocracy, 

we have mobilized countless Iraqis and millions more throughout 

the region who have demonstrated the will to fight the jihadists. 

Every day we are making progress. Every day United States forces 

transfer more security responsibilities to the Iraqis, giving them a 

vested interest and the tools necessary to secure their nation. 

This doesn’t come from Administration talking points and fact 

sheets. This comes directly from the field. One of our Subcommittee 

staffers, Matt Zweig, is currently serving in Iraq, and my stepson, 

Dougie, just returned from 8 months of serving as a Marine officer 

there. 

We are making progress. There is a lot that can be improved 

upon no doubt, but this headline today tells you about the progress 

that we are making. I look forward, Mr. Chairman, to hearing the 

insight from our witnesses, our panelists, on the lessons learned, 

on the progress achieved and on the challenges ahead. 

Thank you so much, Mr. Chairman. 

Chairman HYDE. Thank you. 

Mr. Ackerman is recognized for 3 minutes. 

Mr. ACKERMAN. Mr. Chairman, thank you. The focus of today’s 

hearing is reconstruction in Iraq, but I think we cannot talk about 

anything in Iraq without addressing the allegations surrounding 

the action of United States Marines in Haditha. 

If these actions are true, we will be facing not just murder trials 

of United States soldiers, but an event as significant and detrimental to our efforts in Iraq as the Abu Ghraib abuses and as disastrous as MyLai was to our efforts and image in Vietnam. 

Our success in Iraq depends on our ability to demonstrate to 

Iraqis that our efforts there will result in better lives for them. To 

date, that has not happened. No amount of electricity or clean 

water or oil production will convince them that we are a force for 

good and decency if our soldiers have murdered innocent Iraqi civilians and then we covered it up and lied about it. Regardless of all 

the good our troops have previously done in Iraq, Haditha will be 

the story that the Arab and Muslim world hears about us. 

I associate myself with the remarks of Mr. Lantos. Many people 

believe that billions of dollars intended to protect our troops and 

help in the reconstruction effort have been misspent, possibly 

criminally, and then have been covered up by an Administration 

that doesn’t even seem to care about investigating it. This Congress 

would be complacent in that coverup if we did not begin a criminal 

investigation. 

We cannot and should not allow the Haditha investigation simply to focus on the troops in the field. Too often our Administration 

has skated by blaming lower ranking officials for things decided at 

higher levels. If the investigation reveals that senior officers or civilians engage in a coverup, then those senior officers or civilians 

should be made to pay the price. 

6

Fundamentally, Mr. Chairman, this is also about leadership, 

leadership from Washington, from the President, the Secretary of 

Defense on down. If the Administration wasn’t so busy playing fast 

and loose with the Geneva Conventions, maybe the message to our 

soldiers would have been clearer. 

Maybe the message to their commanders would have resulted in 

the reporting of this incident instead of waiting for Time Magazine

to disclose it. Maybe the Iraqis would believe us when we finally 

give them the results of this investigation. 

We are in this mess because of failure, failure by the Administration to think seriously and carefully about what it would take to 

invade, subdue, control and rebuild a nation the size of California. 

We remain in this mess because the same Administration officials 

refuse to acknowledge where they were wrong. 

The investigation into the events at Haditha puts us in a position 

where we are unable to accomplish our objectives in Iraq, and we 

are in this position again because our leadership has failed us 

again. 

Chairman HYDE. The gentleman’s time has expired. 

Mr. Rohrabacher of California? 

Mr. ROHRABACHER. Thank you very much, Mr. Chairman. Today 

I believe all Americans and all people who love freedom should be 

celebrating the departure of a blood soaked Islamo-fascist; who was 

responsible for the brutal murder of tens of thousands of fellow 

Muslims, whose only crime was to desire some modicum of democracy or freedom for their families. 

Zarqawi was also responsible for the killing of a large number of 

American soldiers and Marines who came to free the Iraqi people 

from the secular dictatorship of Saddam Hussein, which also was 

responsible for the wholesale slaughter of hundreds of thousands of 

their fellow Iraqis. 

Zarqawi led the effort to kill the American liberators of Iraq, yet 

Zarqawi himself was a Jordanian. The Muslims of the world should 

take note. The Western-hating gangster of Islam Zarqawi does not 

represent their faith, values or interests. It is totally out of touch 

and contrary to the values of a vast majority of Muslims who 

should now join with the people of Iraq along with non-Muslims in 

the West to build a peaceful and prosperous and tolerant world. 

We can be proud. The American people have held firm even as 

we lost our young people, our young heroes who were there to liberate those people of Iraq, even as there has been criticism and 

nitpicking on the other side because there have been mistakes and 

shortcomings in every war that the United States has ever been in, 

but the American people have held firm even when we had to suffer savage attacks and we lost our children to these gangsters. 

This hearing opens the discussion about the successes and failures of the American effort to liberate the people of Iraq and some 

of the shortcomings and some of the shining examples of success. 

We did this, of course, all of this was done in pursuing the effort 

to establish a democratic model in Iraq for the Muslim world and 

to liberate the people of Iraq from their monstrous dictatorship. 

Yes, mistakes have been made in every noble endeavor. Yes, 

there have been shortcomings that need to be corrected, but that 

does not in any way besmirch the historic commitment that we 

7

have made or the moral basis of which we have decided to try to 

ensure that the people of the Muslim world have alternatives to 

this type of Islamo-fascism represented by Zarqawi. 

Chairman HYDE. The gentleman’s time has expired. 

Mr. Delahunt of Massachusetts? 

Mr. DELAHUNT. Thank you, Mr. Chairman. In your opening remarks you mentioned that aggressive oversight works. You were 

referring to the Special Inspector General for Iraq. I commend him 

for his obvious diligence and outstanding work. 

Unfortunately, this Committee and this Congress have not conducted aggressive oversight. I serve on the Subcommittee that is 

entitled Oversight and Investigations. It is chaired by my friend 

and colleague from California who just spoke, Mr. Rohrabacher. It 

was interesting that he used the phrase that this ‘‘opens the discussion.’’ After how many years are we beginning to discuss the reconstruction phase in Iraq? 

I associate myself with the remarks of Mr. Lantos. I think they 

summed up the case. He referred to multiple examples of egregious 

fraud, abuse and mismanagement. 

I would note that Mr. Bowen assumed his office in January 2004. 

I would suggest that that was late. That was very late, Mr. Chairman. Tragically, it has cost the American people billions of dollars 

in taxpayer dollars, as well as putting forth a perception, albeit unfair, that we didn’t care. We made statements that didn’t match 

the realities. 

You know, the issue of contracting in Iraq could be the biggest 

corruption scandal in history, according to Transparency International. As a former prosecutor, my instincts tell me that that 

statement, given time and given hindsight of history, will prove to 

be accurate. 

We have missed the boat. We have not exercised our responsibility as Congress. We have turned our back on our constitutional 

duty. I do hope, Mr. Chairman, that you authorize the Subcommittee on Oversight and Investigation into conducting a series 

of exhaustive and thorough investigations so that we may learn 

more about the mistakes so we don’t make them again in the future. 

Chairman HYDE. The gentleman’s time has expired. 

Mr. Paul of Texas? 

Mr. PAUL. Thank you, Mr. Chairman. I too would like to associate myself with the comments made about the waste and the 

fraud and the corruption in the reconstruction in Iraq. 

Obviously it is there, but I am not very optimistic that it is going 

to get cleaned up because I think it is the nature of government 

largesse that you always have waste and corruption, especially 

under the conditions that exist on wartime and that exists in Iraq. 

I think we ought to understand that that is the nature of things, 

and tragically I don’t see it coming to an end. 

I would much rather see some interest in stopping the destruction rather than the pretense that we can reconstruct Iraq. We 

have already spent about $300 billion over there, and most of it has 

ended up in destruction of property. The taxpayers really get it. 

They get hit. They get hit. They pay for the destruction. Now evVerDate Mar 21 2002 11:00 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\WORK\FULL\060806\27990.000 HINTREL1 PsN: SHIRL
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erybody expects them to pay for the reconstruction. When is it 

going to end? 

It will probably end when this country goes bankrupt because it does not make any sense. We are spending still $8 billion a day in 

the military affairs over there, which ends up in more and more 

destruction of property. 

There seems to be rather good success in building one building 

in Iraq that is coming along quite nicely, which I think is a tragedy, but it really tell us about our policy, and that is the construction of the great Embassy, the greatest, biggest Embassy that people have ever known in history I have heard. It is going to probably 

be $1 billion before it is built. 

To me and to the American people, I am sure they consider this 

an obscenity. It also symbolizes our permanency, which really defies our pretense of yes, we are getting ready to leave. Zarqawi is 

gone. We have had another milestone, which means why don’t we 

use that as an excuse to getting out of that place? 

No, we are there permanently. We have permanent bases that 

we keep building and refurbishing. They go well, here we are building this Embassy as big as the Vatican City. To me, it dumbfounds 

me that the walls around this Embassy are going to be 15 foot 

thick. I mean, that sounds like ancient China or something. Don’t 

they know about grenade launchers? I mean, how is that going to 

protect us? 

What a pretense that this is going to provide safety and stability 

and send a good message to the Iraqis. It just doesn’t make any 

sense whatsoever that that is our most successful building going up 

in Iraq. 

There are going to be 619 one-bedroom flats, a recreation building, a beauty parlor, a gym, a swimming pool and even its own 

school in this Embassy, a lavish American club which will be the 

lavish club for hosting receptions in the midst of this tragic financial circumstance that we have. 

Now if you add Afghanistan and Iraq together, we have now approached a half a trillion dollars. It is time our policies change. 

I yield back. 

Chairman HYDE. The gentleman’s time has expired. 

Ms. Lee of California? 

Ms. LEE. Thank you, Mr. Chairman. I want to also thank you for 

this hearing and to our Ranking Member, Mr. Lantos. It is, quite 

frankly, long overdue. I want to welcome and thank our witnesses 

for being here. 

Now, as one who has from day one vehemently opposed this war 

because I did not believe it was necessary and we knew there were 

no weapons of mass destruction in Iraq, I believe, however, that 

given the fact that we bombed the heck out of that country and in 

many ways destroyed it, we have a duty and a responsibility to 

help rebuild it. 

I also know we have a duty and responsibility to the American 

people, to taxpayers, to make sure that the resources and the billions of dollars that we put into Iraq are spent wisely and that 

there is oversight and some accountability. 

Now, experts have reported on the reconstruction efforts. We 

have had reports. We are told that in this whole process of the noVerDate Mar 21 2002 11:00 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 F:\WORK\FULL\060806\27990.000 HINTREL1 PsN: SHIRL
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bid contracts, the awarding of no-bid contracts and the well-connected defense contractors that billions of dollars have been lost. I 

remember $9 or $10 billion. We still can’t figure out where that 

went. 

The lack of accountability and oversight, I think that has to be 

reconciled. I am curious, and when we get into your testimony I 

hope you address what processes and mechanisms are in place to 

make sure that there from this day forward is some accountability, 

but also what happened to that $10 billion, if you found it yet. I 

think that we failed in our constitutional obligation to really protect the taxpayers in this process. 

Finally let me just say yes, I agree with Mr. Paul. I think what 

I see taking place now is the final realization of the fact that we 

want a permanent presence of Iraq. This House passed, the Senate 

passed a resolution saying we did not want to authorize permanent 

military bases in Iraq. The American people don’t want permanent 

bases there. The Iraqis don’t, yet it is my understanding that now 

in the Conference Committee that for whatever reason that resolution or that amendment was taken out of the supplemental. 

That makes no sense, so I am curious to find out from you all 

if you believe that part of what we are doing in Iraq will lead to 

a permanent presence with establishment of permanent military 

bases, or if in fact that is not the case I hope you say that. 

Thank you, Mr. Chairman, and I yield the balance of my time. 

Chairman HYDE. Mr. Poe of Texas? 

Mr. POE. Thank you, Mr. Chairman. Thank you for your leadership in the House of Representatives. You are a great role model 

for all of us, and I appreciate your chairmanship of this very important Committee. 

I had the opportunity to view the first free elections in Iraq on 

January 30, 2005, along with Congressman Chris Shays, and I 

learned that the Iraqis, like the American people, love freedom. 

They have tasted it, and they are not going to let it go even though 

it costs lives of Americans and Iraqis. Our troops, by far, are the 

finest in the history of the military, and their voluntary service is 

unparalleled in world history. 

Like the success of the Marshall Plan at the end of World War 

II, rebuilding of Iraq needs to be successful as well. However, as 

a former judge in Texas I am concerned about alleged corruption 

in the rebuilding efforts. Those that prey on the misfortunes of war 

and those that make unlawful profits by war, those that have stolen in Iraq, those that are the thieves of Baghdad are war criminals, and their corruption must be brought to justice. 

This country and the Iraqi Government must insist that justice 

rules the day, and we owe this to the American people and all freedom loving people in the world. 

With that I yield back, Mr Chairman. 

Chairman HYDE. Thank you, Judge. 

Mr. Schiff of California? 

Mr. SCHIFF. Thank you, Mr. Chairman. I want to thank you and 

the Ranking Member for having this hearing today. At the outset, 

I wanted to express my congratulations to the American troops and 

to the Iraqi people who successfully led us to Zarqawi and killed 

a murderous scum that no one will mourn the loss of. 

10

As the positive news out of Iraq has been few and far between, 

I want to take a moment to acknowledge how grateful I am and 

how grateful we should all be that he has been eliminated from the 

face of the earth. 

I think it is also a hopeful sign that Iraq has now filled a couple 

of the key ministries, and we hope that that can facilitate the 

strengthening of the Iraqi Government and also hasten the withdrawal of our own troops from Iraq. 

Turning now to the focus of the hearing, there is a real cost to 

the malfeasance and the reconstruction program in Iraq. There is 

a cost in dollar terms to the taxpayers. There is a cost in terms of 

the mission in Iraq and our ability to withdraw our own forces 

from Iraq. There has been certainly a cost to the Iraqi people. 

There have been opportunity costs in the sense that the billions 

that we have put into reconstruction have not been wisely spent or 

have been syphoned off or corruptly used have meant that other 

areas, other needs have gone underserved. 

I had lunch with a Guardsman who served in Iraq who told me 

about strapping plywood onto the door areas of his Humvee and 

putting sacks of sand or concrete in between them to create what 

has been known as the hillbilly armor. Those additional billions 

that have been wasted in reconstruction could have been put to 

better use protecting our troops. 

There have been enormous costs, and not only I think is this the 

responsibility and fault of those that were administering the reconstruction in Iraq, but I think the Congress bears responsibility because we have not done oversight of this. We have been throwing 

money at Iraq reconstruction without adequate safeguards in place. 

That we would now be beginning this process of oversight 3 years 

into the war is a blight on the reputation of this Congress and on 

our role as a co-equal branch of government. 

I would like to see not only oversight. I would like to see accountability, the twin pillars. We have had no accountability for the failures of the reconstruction program. No one to my knowledge—no 

one, absolutely no one—has been held accountable for these failures. 

I would like to see our Subcommittee on Oversight and Investigations become another Truman Commission. If we had half as many 

hearings on the Iraq reconstruction as we have had on overseeing 

the UN’s finances we would be saving the American taxpayers a 

ton of money. 

Chairman HYDE. The gentleman’s time has expired. 

Mr. SCHIFF. Thank you, Mr Chairman. 

Chairman HYDE. Don’t forget to put the big dig in there too. 

Mr. McCotter? 

Mr. MCCOTTER. Thank you, Mr. Chairman. 

First, gentlemen, thank you for your service to our country in 

these difficult times. 

Off the bat, I would like to associate myself with the remarks of 

my colleagues who have indicated that they believe the congressional oversight over the reconstruction process in Iraq has been 

insufficient. I think it is inherently necessary for elected officials 

within this Congress to responsibly fulfill our duty to the public, 

11

to engage actively and personally in oversight over the reconstruction process. 

Secondly, I am very eager to hear your reports today because to 

a large degree what we are going to hear from you is the consequence of having an absolutely backward reconstruction policy 

for 3 years. 

I will be more specific. We have concentrated reconstruction in 

Iraq on a top down basis where we would start with the National 

Government that hopefully would have elections, that would hopefully filter down to the provincial level, that would hopefully filter 

down to the local level. 

This was done in spite of all evidence that societies tend to 

evolve from the family, through the community, to the provincial 

level and then to a National Government, which was our own experience here in the United States. 

We also did it contrary to the understanding that the Sunnis, 

who had run a strong Central Government for a long period of 

time, would be very, very chary of a strong Federal Government in 

Iraq run by the people they had oppressed for all those years. 

I believe that we should have run a reconstruction from the 

grassroots up, which is what I believe the Ambassador is trying to 

do now, and I applaud him for that. I would hope that in the investigations that we do over what has gone wrong from our initial 

backwards approach, I would hope that investigations and oversights would also reveal why the United States of America held 

that top down position in the first place; 

Why do we continue to hold to that position despite all evidence 

that it was not being particularly successful in the reconstruction 

of Iraq and whether or not we have learned our lesson and will 

avoid that mistake in the future, and should reconstruction occur 

in other countries, God forbid, that we then try to apply the principles that we ourselves used to develop into the nation we are 

today. 

I yield back. 

Chairman HYDE. Thank you. 

Mr. Adam Smith of Washington? 

Mr. SMITH OF WASHINGTON. Thank you, Mr. Chairman. I will be 

brief. 

I just want to first of all echo the comments of my colleagues who 

congratulated our troops and the people of Iraq in the killing of Mr. 

Zarqawi today. That is a significant triumph, and I think we certainly should be happy about that and move forward. 

Second of all, I just want to say that it is great that we are having this hearing. I wish that we had done things like this sooner 

and more often. 

My concern in all of this is the oversight of the Iraq reconstruction. I think it was not planned well. It seems like there was a 

great deal of thought given to how to knock Saddam Hussein out, 

not as much thought, planning and action given to what to do then, 

and I think that is the great tragedy of this war at this point. 

There has been very insufficient oversight with the exception of 

course of Mr. Bowen and the job that he is doing, which, as I understand it, is now in jeopardy, so we need to do more oversight 

12

on how this money is being spent and what is happening with the 

reconstruction. 

This hearing is long overdue, and I don’t think that we will be 

able to solve all of the problems once you folks start talking, but 

I am glad we are doing it, and I think that is what I want to learn 

today. 

With that, I look forward to hearing from the people who are 

here to testify. Thank you. 

Chairman HYDE. Mr. Wilson of South Carolina? 

Mr. WILSON. Thank you, Mr. Chairman. Mr. Chairman, as you 

get closer to the conclusion of your term, I just want you to know 

I am reminded daily of how significant you have been to people 

serving in Congress. We just appreciate so much your leadership. 

As we proceed today on Iraq reconstruction, I have just returned 

from visiting Iraq on my sixth visit. I am very grateful I have the 

perspective that my oldest served for a year there, and I received 

daily reports from him on the reconstruction efforts. 

I am so pleased again with the success that I knew would be 

coming. In fact, the killing of the mass murderer, Zarqawi, yesterday was an achievement that actually was done even before I 

thought could be done because of his ability to evade the American 

coalition and Iraqi forces. 

I believe there is more progress than has been apparent. Every 

time I go I am so impressed by the young troops I visit with. I am 

just grateful, and with the United States Agency for International 

Development I hope the message comes out about the tremendous 

projects that are underway that have made such a difference in 

building a civil society in Iraq which protect American families at 

home. 

Thank you for your service. 

Chairman HYDE. Thank you, Mr. Wilson. 

Mr. Chandler of Kentucky? Mr. Chandler waives. 

Ms. MCCOLLUM. Thank you, Mr. Chairman. I want to thank you 

and the Ranking Member for having this hearing. I reflect the remarks of many others that this is long overdue. 

I have been to Iraq several times, and every time that I have 

been I have heard about all the reconstruction going on and then 

talking to either members of our military who have returned home 

or to other people out in the field or looking at international reports, and by that I mean even listening to the BBC News quite 

often I was hearing an erratically different story from what we 

were being told in classified briefings without the opportunity to 

have this move forward. 

This hearing is giving us the opportunity to examine the challenges, the problems, the things that we have not done well. That 

is the only way we can move forward in confidence. If we aren’t 

able to move forward with hope and opportunity on some of these 

reconstruction issues we have in front of us then the Iraqi people 

will once again wonder where is the United States’ commitment because that is what I have heard from average citizens in Iraq, 

‘‘What are you doing?’’

Mr. Chair, thank you for holding this. I look forward to this just 

being the beginning of a discussion. We do need to find out how 

we are going to make all the missing dollars, U.S. taxpayer dollars, 

13

in this reconstruction, including the $8.8 that has been talked 

about earlier today, how we are going to find out what happened 

to that and what kind of investigation we are going to have on 

that. 

We need to have the same robust investigation on U.S. taxpayers’ dollars as we did on the World for Food program. 

Thank you, Mr. Chair. 

Chairman HYDE. Thank you. 

Mr. Flake of Arizona? Mr. Flake passes. 

Mr. CARNAHAN. Thank you, Mr. Chairman and Ranking Member 

Lantos, for this vital hearing on reconstruction in Iraq. 

I think it goes without saying that this Congress has not exercised sufficient oversight over reconstruction. It is our responsibility and duty to provide serious and meaningful oversight over 

the Administration’s efforts to rebuild Iraq. 

I had the opportunity to travel to Iraq in March 2005. In the 

year since, the progress has been too little and too slow. The billions of dollars have been wasted without questioning the Administration at a time when our country spends less than $2 billion a 

year on alternative energy research, while spending $7 billion a 

month in Iraq, is grossly irresponsible for this Administration to be 

wasting any money, let alone the billions it has in Iraq. 

In addition to the immense cost of reconstruction, one of my 

main concerns is where we are in terms of Iraqi self-governance. 

Moreover, the basic infrastructure construction that they need is 

quite insufficient, and I question whether the Administration has 

a clear plan to complete this essential project. 

I am also interested in looking at the model and learning from 

the model of the Truman Commission during World War II. Truman took this on as his patriotic duty in a way that was pro troop 

and pro taxpayer, and it was one of the most bipartisan Committees in this Congress. 

I hope we can learn from that model and this Congress can join 

behind these efforts in a bipartisan way in a pro troop, pro taxpayer way to really turn this around. 

Thank you, Mr. Chairman. 

Chairman HYDE. Mr. Tancredo of Colorado? Mr. Tancredo 

waives. 

Has everyone who wishes to make an opening statement fulfilled 

their urge? Good. 

I would like to welcome Ambassador James Jeffrey. On August 

10, 2005, Secretary of State Rice appointed Ambassador Jeffrey as 

Senior Advisor to the Secretary and Coordinator for Iraq. Ambassador Jeffrey is a career member of the U.S. Foreign Service, previously serving as Deputy Chief of Mission in Baghdad from June 

2004 to March 2005. 

Mr. Stuart Bowen is Special Inspector General for Iraq Reconstruction. He previously served as the Inspector General for the Coalition Provisional Authority. Mr. Bowen has served President 

George W. Bush as Deputy Assistant to the President and Deputy 

Staff Secretary and Special Assistant to the President and Associate Counsel. 

Mr. James Kunder is Assistant Administrator of the Bureau of 

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opment. From July 2002 to 2004, he served as Deputy Assistant 

Administrator for Asia and the Near East. Mr. Kunder has extensive government and private sector experience in assistance and 

international development. 

Ambassador Jeffrey, if you would proceed with a 5-minute, give 

or take, summary of your prepared statement? The full statement 

will be made a part of the record. 

STATEMENT OF THE HONORABLE JAMES JEFFREY, SENIOR 

ADVISOR TO SECRETARY RICE AND COORDINATOR FOR 

IRAQ, U.S. DEPARTMENT OF STATE 

Mr. JEFFREY. Chairman Hyde, Mr. Lantos, Members of the Committee, it is an honor to be again here today to discuss our strategy 

for victory in Iraq and the important role of reconstruction in that 

effort. 

What I would like to do is, as the Chairman said, submit my 

written comments to the record for the sake of brevity, but also to 

address I think head on the core issues that were raised in the 

comments by Members of the Committee. 

I will spend a couple of minutes in a general sense, and then we 

can get into some of this in the question and answer period if that 

is all right with you, sir. 

Chairman HYDE. Sure. 

Mr. JEFFREY. As one who has been involved in reconstruction, I 

cannot underline too much how important oversight is on our part 

and that of USAID and the others working on the part of my friend 

Mr. Bowen, the Special Inspector General, other Inspector General 

agencies and of you, the Congress, and, frankly, of the media and 

the Iraqis. 

In a huge endeavor like this being carried out in the midst of 

horrific combat, many errors will be made. Many decisions will be 

made that in hindsight were the wrong decisions, and we need to 

get to the bottom and do better. We think we are doing that, but 

we have to justify ourselves to you, and that is why we are here 

today. 

There is one thing I would urge, however. There is a basic element of fairness at play here, and some of the comments I have 

heard I cannot associate myself with, to be very blunt. Hundreds 

of diplomatic personnel and civilian contractors, Americans and 

others, have died in action trying to carry out this program. They 

are also serving. 

In honor of them and the people who serve with me, I want to 

say that most of these people are honorably doing their best under 

conditions that most Americans could not possibly imagine. They 

are honest, reliable people. Many of them are making mistakes. 

There are differences, for example, between the $9 billion that 

has been mentioned, and that is a concern to us, but that was not 

United States taxpayer money. For the record, we should point out 

that this was money from the Iraqi oil account that the UN and 

the Iraqis asked us in the immediate period after the fall of Saddam to rush into reconstruction at a time when all infrastructure 

was on its back, when there was no oil whatsoever being produced, 

let alone exported, when electricity was basically down. 

15

It was urgent that we get a great deal of money out into the 

field. The Iraqis supported us, and, frankly, accounting measures 

by the standards that we use here today with United States funds 

were not applied. We have to explain that, and we will do our best 

to. 

The same thing with some of the corruption cases that also 

flowed from that. These must be and they have been investigated, 

and we are here today to commit to doing that. 

In other areas such as those mentioned by Mr. Lantos, the pipelines laid under the Tigris River, that was a huge mistake on our 

part, but I would like to say today, sir, those pipelines are under 

the Tigris because we went back, found out what we were doing 

wrong, got another contract with another company that did it right. 

The same thing with the schools project. We are quite unhappy 

with the work of a major American contractor, and we are working 

with the U.S. military and looking at other funds. We have over 

$100 million in medical equipment that we are planning on providing to those schools. Many of them have been partially done, 

and we are going to find ways to fix many, if not all, of these 

schools and proceed on. That has been the record. 

As has been mentioned here with Ambassador Khalilzad’s efforts, 

we started from the top up. Now we are doing it from the bottom 

up. We appreciate and we try to respond to your suggestions and 

your criticisms, but let me assure you that the vast majority of people who are working on these programs, whether they are making 

mistakes or not, are trying to do their best for their country and 

for our effort in Iraq. 

Thank you very much, sir. 

[The prepared statement of Mr. Jeffrey follows:]

PREPARED STATEMENT OF THE HONORABLE JAMES JEFFREY, SENIOR ADVISOR TO

SECRETARY RICE AND COORDINATOR FOR IRAQ, U.S. DEPARTMENT OF STATE

Chairman Hyde, Mr. Lantos, members of the Committee, it is an honor to be here 

today to discuss our Strategy for Victory in Iraq and the important role of reconstruction in that effort. 

The U.S. objective in Iraq is a federal, democratic, pluralistic and united Iraq, stable, at peace with its neighbors, prosperous, and an ally in the Global War on Terrorism. To accomplish this, all our efforts support the President’s three strategic 

tracks—security, political, and economic—with the intent of having the Iraqis eventually take complete responsibility for these tracks. Our experience has demonstrated that this transition cannot be sustained without integrated progress on 

all three tracks. This must not only be in full consultation with the Iraqis, but increasingly with them in the lead. We are dealing with a highly political struggle 

for power, which is at the heart of the insurgency, and only Iraqis can determine 

the path ahead—the compromises, the critical issues, and the shape of their politics 

We have seen significant progress in recent weeks along the political track. Following a series of major electoral events, the Iraqi Council of Representatives recently approved the formation of a new government under Prime Minister Maliki. 

The delay in the appointment of the Ministers of Interior and Defense reveal legitimate divergences of opinion among the Iraqi political parties. We are encouraging 

the Iraqis to resolve these differences sooner rather than later. We are now at a 

turning point where political progress must be measured by significant steps taken 

by the democratically elected Iraqi leaders, rather than the successful accomplishment of well identified events laid out by U.N. Security Council resolutions or Iraq’s 

Transitional Administrative Law. Success in these tasks will require determination 

and the ability to execute a myriad of small decisions correctly that will have a positive cumulative effect, rather than pulling off the big, spectacular event, such as a 

national election. Participation by all communities in Iraq will be important both 

to a successful outcome and the fostering of a sense of national reconciliation, along 

the lines of the Prime Minister’s well received statement Tuesday. As discussed 

16

above, forward movement on the political track helps to advance efforts in the economic and security tracks as well. 

One area in particular where we are committed, with the Iraqis, to seeing an immediate reversal is in the recent rise in sectarian violence. This is a top priority 

with both governments. Our joint security, political and economic initiatives are intended to help cement national unity. 

Similarly, foreign assistance, led by the flagship U.S. programs, IRRF I and II, 

totaling $20.9 billion, is essential to progress on all tracks. Supporting only the security track is not enough. Progress on the economic and political tracks is equally 

critical to victory, and this progress requires U.S., other international, and Iraqi 

funding, to augment the IRRF, whose new obligations authority expires this year. 

In particular, funding our teams that work closely with key Iraqi institutions, such 

as the Council of Representatives, the provincial governments and national ministries will be critical to our success in ensuring the democratic and effective character of these institutions. 

In 2003, the World Bank estimated that rebuilding Iraq’s dilapidated infrastructure would require over $50 billion. The IRRF II $18.4 billion program was designed 

by the Administration and Congress, not to take on that entire burden, but, rather, 

to quickly respond to the most pressing needs, including repairing an infrastructure 

neglected for over 20 years, increasing oil production and export, providing key essential services, developing Iraqi security forces, and strengthening democratic institutions and the private sector development. To a considerable degree IRRF II, 

supplementing the initial $2.5 billion in IRRF I, is accomplishing that mission. 

Reconstruction, generally speaking, can be described as a series of successes and 

some setbacks. We have been successful in rehabilitating water and sewage services 

and immunizing nearly all children against childhood diseases but face problems 

with capacity in the service delivery ministries. While efforts in the oil and electricity sectors have been hampered by years of mismanagement, neglect, smuggling, 

corruption and decay during the Saddam era, and targeted attacks on critical infrastructure, we have increased Iraq’s total potential electrical generation capability by 

30 percent. The dramatic increases in income in post-conflict Iraq (income per capita 

has nearly doubled from 2003 to 2005) has resulted in new vehicle and appliance 

purchases as well as increasing demand for fuel and electricity, but without a corresponding rationalization in pricing for these goods and services. 

We are making progress. Almost all of the large infrastructure projects currently 

funded by the IRRF are expected to be completed by the end of the year. These 

projects are already having a significant impact on daily life in Iraq. IRRF projects 

have added, rehabilitated, or maintained more than 2700 megawatts of electricity. 

IRRF projects have increased access to potable drinking water for 3.1 million Iraqis 

and improved access to sewage systems for 5.1 million Iraqis. Success can be seen 

beyond the large infrastructure projects as well. Approximately 32 percent of Iraq’s 

more than 14,000 schools have been rehabilitated or refurbished, including the provision of 8.7 million new textbooks. We have helped Iraq launch a stable new currency and stock exchange, develop more transparent budget procedures, and make 

millions of dollars in job-creating loans to micro, small, and medium-sized enterprises. Our technical assistance programs and diplomatic engagement have facilitated Iraq’s reintegration into the global economic community, including an IMF reform program, its WTO accessions process, and a hugely successful Paris Club debt 

relief program. These are all admirable achievements, particularly when one considers the environment in which they were achieved. 

Meanwhile, with the end of IRRF availability approaching, closeout of the IRRF 

has begun. As of May 30, of the $18.4 billion appropriated in IRRF II, $16.6 billion 

has already been obligated and $12.3 billion has been disbursed, in addition to the 

$2.5 billion from IRRF I. Our proposed FY 06 supplemental and FY 07 base budget 

assistance programs totaling almost $2.4 billion will help Iraq in its transition to 

self-reliance in the civilian realm by focusing on building Iraqi capacity at the national and provincial levels and supporting emergency stabilization programs. 

To ensure that the benefits of this progress reach the entire Iraqi population, we 

have initiated five Provincial Reconstruction Teams, with more to come, to strengthen provincial and regional governments as previously described by Secretary Rice. 

I am also delighted to be here today with my colleague, Mr. Stuart Bowen. His 

organization, the Special Inspector General for Iraq Reconstruction (SIGIR), and 

other organizations within the Iraq IG working group that monitor our activities 

have done an incredible job under the austere and dangerous conditions with which 

we operate in Iraq. The Secretary has, on numerous occasions, reiterated her support to his agency’s on-going activities in every way possible. I know Ambassador 

Zal Khalilzad echoes these sentiments. 

17

What we do recognize is that the IRRF alone will not complete our work, as Mr. 

Bowen has suggested. But right now, our priority will be to complete the IRRF program’s projects that are vital to boosting the Iraqi economy and capacity. At the 

same time, we will continue to work to convince our friends and allies to disburse 

the remainder of the $13.5 billion pledged at the Madrid Conference and consider 

additional funding. As SIGIR reported at the end of April, our international partners have made more than $800 million in new pledges since Madrid. The UN and 

the World Bank Trust Funds have made notable progress in implementing their 

projects as well. The UN has signed contracts for $602 million and disbursed more 

than $465 million of the $910 million in its trust fund, and the Bank has contracted 

for $172 million and disbursed $55 million of the $458 million in its trust fund. We 

are also looking at new modalities, possibly including an ‘‘international compact,’’ 

to better link the global community with Iraq. 

We continue to work actively with our international partners, including the IMF 

and World Bank, to increase support for the new Iraqi government. It will be important to build on existing coordination structures, like the IRRFI and the SBA. It will 

be critical that future assistance efforts also reinforce Iraqi commitments to undertake economic, political, and security reforms. We are consulting now with the Iraqi 

government on the best way forward. Our FY 2006 supplemental request of $1.6 billion and our FY 2007 base assistance submission of $771 million represent a shift 

away from the large infrastructure projects the IRRF funded to a focused capacitybuilding program that will help enable Iraqis to build and sustain a democratic society and healthy economy. Some of the programs funded will include infrastructure 

sustainment, capacity building at core Iraqi ministries, banking reform, agricultural 

development, rule of law, and democracy and civil society programs. As the House 

moves today to consider the FY 2007 foreign operations appropriations bill, we will 

look to your support for our continued activities in Iraq, including the State Department and USAID operating budgets. 

Finally, let me again today commit the Department of State and our Mission in 

Baghdad to the most efficient, transparent, cost-conscious execution of funds entrusted to us, in the service of extraordinary national objectives, and to the best possible working relationship with those organizations such as SIGIR and GAO who 

provide valuable oversight.

STATEMENT OF MR. STUART W. BOWEN, JR., SPECIAL 

INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

Mr. BOWEN. Thank you, Mr. Chairman. I am Stuart Bowen, the 

Special Inspector General for Iraq Reconstruction. Thank you, 

Ranking Member Lantos and Members of the Committee, for having me here this morning to report on SIGIR’s work in Iraq providing oversight. 

I will provide a brief summary of my written statement. I also 

want to draw attention to the fact that our quarterly report, which 

details the work that we continue to perform in Iraq, is available 

at our Web site, www.sigir.mil. 

I just returned from my twelfth trip to Iraq since my appointment a little over 2 years ago. I have spent approximately a total 

of a year in Iraq overseeing the efforts of SIGIR in-country to account for what the taxpayers are getting for the investment in Iraq 

reconstruction. 

Very simply, that is what I see that you, the Congress, have appointed me to do with my staff, and that is to deter fraud, waste 

and abuse and go out and visit the sites and see what has happened, see what we have, and to help promote the success of the 

overall reconstruction endeavor. 

My philosophy as an Inspector General is a little bit different 

than a traditional mold, and this is what I tell my auditors. When 

you go out and perform an audit and you find a problem, you immediately bring it to management’s attention, and you work with 

them right then to resolve that issue. 

18

My goal is that when an audit is finally produced that we are 

able to say at the end that issue has been addressed and is being 

resolved or has been resolved. I am happy to report that frequently 

we have been able to achieve that goal. 

You asked in your letter, Mr. Chairman, how oversight has improved the reconstruction efforts. First, I want to say that you are 

right, as you said in your opening statement, that aggressive oversight works. That aggressive oversight has been present on the 

ground and is present today in Iraq through the Special Inspector 

General for Iraq Reconstruction. 

I have 55 individuals serving over there—25 auditors, 10 investigators, 10 inspectors and support staff—undergoing the same rigors that everyone who has to operate in a lethal environment does. 

I am proud of their work. 

We have also achieved results in the 2 years that we have been 

there. SIGIR Audit has completed 55 audits since inception with 

165 recommendations. Most of them have been concurred with and 

responded to, $10 million in direct savings and almost $400 million 

in indirect and direct financial benefits. 

SIGIR Inspections. Their job is to travel across Iraq and visit the 

sites. I traveled to Nasiriyah 2 weeks ago and visited a prison facility that is 40 percent done—it is being built by parsons—with our 

inspectors. 

Sure, it was emblematic of the experience in Iraq. I think it is 

going to be a good project, but it is behind schedule. The scope has 

had to be revised because of cost issues related to security. That 

encapsulates, is a certain microcosm of the reconstruction experience, but eventually it will be a very modern prison operating in 

south-central Iraq. 

My inspectors do that every day over there. They have completed 

42 inspections and 97 limited reviews. We have also been using 

overhead imagery to look at project sites that no one can get to to 

make some assessment of how they are doing. We have done 112 

of those with benefits through engineering suggestions that have 

been in the tens of millions of dollars. 

Investigations. We have had 177 cases opened. One hundred and 

five are closed. Seventy-two are ongoing. We have had five arrests, 

two convictions. I think you know that Philip Bloom and Robert 

Stein have gone to prison for a long time, indeed probably for the 

rest of their lives, and they are ordered to pay restitution. 

We have 20 cases already referred to the Department of Justice 

and at least $13 million in recovered assets right now, so the answer is do we have oversight in Iraq? Yes. Is it aggressive? Yes. 

Is it making a difference? I believe it is. 

The latest quarterly report updated what we said in the January 

report; that we are in the middle-of-the-year transition. We identified five critical issues that need to be addressed—improve infrastructure security, close the reconstruction gap, energize the oil 

and gas industry, fight corruption, a huge issue that Prime Minister Maliki has taken on, and engage the donor community. 

Indeed, multilateralizing the effort to support Iraq’s fledgling democracy and growing economy is essential at this stage, and I see 

that beginning to happen right now. 

19

With that, I thank you for this opportunity to deliver brief remarks and look forward to answering your questions. Thank you, 

Mr. Chairman. 

[The prepared statement of Mr. Bowen follows:]

PREPARED STATEMENT OF MR. STUART W. BOWEN, JR., SPECIAL INSPECTOR GENERAL

FOR IRAQ RECONSTRUCTION

INTRODUCTION

Mr. Chairman, Ranking Member Lantos, and members of the Committee—thank 

you for the opportunity to address you today on important matters regarding the 

United States’ role in the reconstruction of Iraq. The Congress has tasked my office, 

the Special Inspector General for Iraq Reconstruction (SIGIR), to provide oversight 

of this substantial and challenging endeavor. I am here today to provide you with 

the most current reporting on SIGIR’s oversight efforts in Iraq. I hope for a productive exchange of views and ideas in this hearing regarding Iraq reconstruction. 

A few days after submitting our April 30, 2006 Quarterly Report to Congress, I 

returned to Iraq for my 12th tour, to work in Baghdad and across Iraq with SIGIR’s 

50 staff members currently stationed in Baghdad. I also had numerous meetings 

with those managing the operational and contracting components of the US reconstruction effort in Iraq. I returned from Iraq a week ago and I am pleased to provide 

you my observations garnered from my recent weeks of work in Iraq. I also want 

to update you on the critical issues raised in SIGIR’s April 30, 2006 Quarterly Report to Congress. 

As SIGIR noted in its January 2006 Quarterly Report, this is the Year of Transition in Iraq reconstruction. By the end of 2006, most programs and projects funded 

by the IRRF will be turned over to Iraqi authorities. With that prospect on the horizon, reconstruction planning and operations are increasingly becoming a joint enterprise, with U.S. and Iraqi officials coordinating more and more on the planning of 

key reconstruction initiatives. 

With approximately 67% of the $18.4 billion in Iraq Relief and Reconstruction 

Funds (IRRF) now expended and just under $2 billion left to obligate, the U.S. reconstruction program in Iraq is fully engaged in project execution and sustainment, 

contract close-out, and program transition. Effectively advancing the progress of reconstruction and development in Iraq at this critical juncture requires the U.S. government to work closely with the Iraqi government and international donors to sustain the substantial U.S. investment in Iraq’s infrastructure. 

In its April 2006 Quarterly Report, SIGIR identified five critical issues confronting the reconstruction program at this watershed moment in the Iraq endeavor:

• Improve Infrastructure Security: critical nodes must be protected

• Close the Reconstruction Gap: fund the Secretary of State’s initiative to build 

capacity at the local level

• Energize the Oil and Gas Industry: 94% of Iraq’s national income is derived 

from this industry but only 9% of the IRRF was spent on it

• Fight Corruption: Iraq continues to lose capital to widespread corrupt practices

• Engage the Donor Community: the reconstruction program must be 

multilateralized

Improve Infrastructure Security—SIGIR continues to review the critical issue of 

infrastructure security. Insurgent activity impedes ongoing reconstruction projects 

and interrupts the transition of these projects to Iraqi control. Attacks on Iraq’s oil 

and gas and electrical infrastructures have limited progress in the past within these 

key sectors. Early U.S. efforts to address this issue did not succeed as SIGIR auditors discovered in a review of a $147 million program called Task Force Shield, 

which was established in September 2003 to build Iraq’s capacity to protect its oil 

and gas and electrical infrastructure. Task Force Shield sought to cover 340 key installations, 7,000 kilometers of oil pipeline, and 14,000 kilometers of electrical transmission lines. The audit found that the program failed to meet its goals. 

SIGIR is now executing a significant current review of this issue and will provide 

a classified report on it during this quarter. I addressed the infrastructure security 

issue with U.S. leadership in Baghdad during my recent trip to Iraq. Recognizing 

its importance, the U.S. Ambassador to Iraq has made infrastructure security an 

essential element of the Embassy Joint Blueprint for Success. Of note, significant 

progress has been made on infrastructure security over the past quarter. For examVerDate Mar 21 2002 11:00 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6621 F:\WORK\FULL\060806\27990.000 HINTREL1 PsN: SHIRL
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ple, the Department of Defense dispatched a team of experts to Iraq last quarter 

to assess the protection of oil and gas facilities. They examined the sector’s infrastructure protection programs, seeking to identify current security challenges. The 

team is now drafting a strategy that will help the Iraqis more effectively protect 

their energy infrastructure. 

Close the Reconstruction Gap—SIGIR’s October 2005 Quarterly Report identified 

a ‘‘reconstruction gap,’’ which acknowledged that—for a variety of reasons, security 

being the most salient—the U.S. relief and reconstruction program will accomplish 

less than originally planned. The shortfall in various sectors was caused by more 

than 250 reprogramming actions, delays driven by security and administrative problems, poorly managed cost-to-complete schedules, and shifting emphases in contracting and program management. Of note, another reprogramming of the IRRF occurred this quarter: $353 million was shifted from the electricity and health care 

construction sectors into non-construction programs. The reconstruction gap, however, comprises more than simply the notion that fewer projects will be completed 

than expected; it also addresses the shortfall’s impact on outputs and outcomes. 

Fewer projects completed axiomatically affects infrastructure outputs in Iraq—

that is, fewer electrical projects means fewer megawatts on the grid, and fewer oil 

and gas projects means fewer barrels of oil produced per day. These constrictions 

have the cumulative effect of slowing improvement in the daily lives of Iraqis. 

Ambassador Khalilzad’s initiative to devolve more project decision-making to 

Iraqis at the local governorate level should help remediate the perceived effects of 

the reconstruction gap by giving Iraqis more of a say in reconstruction priorities 

that can be implemented close to home. Iraqis are now exerting a formative influence over project choices. Their management of the process through the Provincial 

Reconstruction Development Councils, assisted by coalition-staffed Provincial Reconstruction Teams, is building local government capacity in Iraq. The aim of the Ambassador’s initiative is to produce more immediate, perceptible benefits for Iraqis in 

every governorate. The success of the Ambassador’s initiative depends, in part, on 

new funding. Thus, SIGIR strongly supports the President’s FY 2006 supplemental 

and FY 2007 budget requests, which propose an additional $3.2 billion to help secure and sustain Iraq’s critical infrastructure, to build the capacities of national and 

local governments, and to stimulate economic growth, increased employment, and 

private-sector development. 

Energize the Oil and Gas Industry—Iraq has the second-largest oil and gas deposits in the world, with revenue from this sector providing 94% of Iraq’s national income. Several factors, however, have limited progress in the oil and gas sector: 

breakdowns in the sector’s deteriorated infrastructure, delays in forming the new 

Iraqi government, uncertainties regarding the legal framework governing Iraq’s petroleum industry, and attacks on the sector’s critical nodes. 

Despite U.S. allocations of $1.7 billion (9% of IRRF II) and supplemental Iraqi expenditures, the sector is struggling to return to pre-war oil production levels. Consequently, Iraq’s national income has yet to achieve its great potential, which will 

be necessary if the country is to fully shoulder its primary role in recovery and reconstruction. Before the war, three assumptions were made about the oil and gas 

sector in Iraq:

• that oil and gas revenues in post-war Iraq would pay for much of the reconstruction

• that foreign private investment in the oil and gas sector would quickly flow 

into Iraq after the fall of the Saddam regime

• that post-war Iraq would be sufficiently secure to allow the development of 

oil and gas without hostile impediment.

To varying degrees, each of these assumptions has proved to be incorrect. Attacks 

on the oil infrastructure and a dilapidated system have slowed production and reduced potential revenue. Moreover, outside investors have been unwilling to commit 

capital to this sector until the insurgency abates and a permanent government takes 

power and articulates the rules of the game. Accordingly, the new Iraqi government, 

which is now forming, can provide necessary certainty by quickly drafting, approving and implementing laws that govern foreign investment in the oil and gas sector. 

Fight Corruption—Corruption is another form of insurgency in Iraq. This second 

insurgency can be defeated only through the development of democratic values and 

systems, including the evolution of effective anticorruption institutions in Iraq. The 

primary players in this effort are the Commission on Public Integrity, the Board of 

Supreme Audit, and the 29 inspectors general in the Iraqi ministries. 

SIGIR worked at generating support for these institutions early on and continues 

to highlight the need to support them financially. Iraq, the United States, and other 

21

donors should sustain and increase funding for these essential institutions. New 

funding will bolster their effectiveness, while raising general awareness of the new 

Iraqi government’s commitment to fighting corruption. Better anti-corruption practices would help improve the overall investment climate. 

SIGIR previously reported that the Department of State developed an initiative 

to strengthen anticorruption efforts in Iraq. Now, at the request of U.S. EmbassyBaghdad, SIGIR and the DoS Office of Inspector General are finishing up a coordinated survey of the $365 million supporting U.S. anticorruption programs in Iraq. 

The survey is intended to assess the initiatives and establish metrics to gauge 

progress. The next step should be to coordinate further with other donors on anticorruption activities. 

Engage the International Donor Community—As the year of transition in Iraq 

unfolds and IRRF funds concomitantly draw down, the role of international donor 

nations will become increasingly important. The next phase of Iraq’s reconstruction 

will require a broader international effort. U.S. reconstruction officials should begin 

now to engage more directly and intensively with their international counterparts—

the World Bank, in particular—to help ensure that donors implement pledges and 

develop, in close coordination with the Iraqis, the way forward for the next phase 

of reconstruction. 

Funding is particularly needed to stimulate the oil and gas sector, which has thus 

far underperformed for a variety of reasons (noted above). SIGIR applauds the 

promising development of an integrated donor database to aid coordinating and deconflicting donor activities, but the system needs more comprehensive inputs from 

all donors before it can become an effective management tool. 

SIGIR is now in its third year of providing oversight for reconstruction and relief 

in Iraq, detecting and preventing waste, fraud and abuse in the lethal operating environment that is Iraq today. Moreover, we continually seek to help improve the 

controls, processes and accountability measures of those managing Iraq reconstruction. I instruct every SIGIR auditor and inspector to focus on achieving real-time 

real time results by reporting problems immediately upon their discovery, which allows for improved operational guidance within the reconstruction program. We do 

not wait for our reports to be released to apprise those concerned of our concerns. 

This philosophy diverges from traditional IG oversight mechanisms, but it is essential in Iraq because there is no time for lengthy critiques. Thus, along with its 

oversight role, SIGIR also performs a consultative role, seeking to achieve real, 

money-saving results by applying relief and reconstruction lessons learned in real 

time. 

In Iraq, SIGIR staff works side-by-side with the leaders of the reconstruction program: Ambassador Zalmay Khalilzad; General George Casey, Commander, MultiNational Force, Iraq; Ambassador Dan Speckhard, the Director of the Iraq Reconstruction Management Office; Major General Bill McCoy, who is about to complete 

his tour as Commanding General, Gulf Regional Division, U.S. Army Corps of Engineers; Major General Darryl Scott, Commander, Joint Contracting Command—Iraq/

Afghanistan; and Ms. Dawn Liberi, the USAID Mission Director. 

In the course of performing our oversight functions during this reporting period, 

we found that the U.S. Ambassador to Iraq, the Commander of the U.S. Army Corps 

of Engineers Gulf Region Division, and the Mission Director of the U.S. Agency for 

International Development have continued to improve management coordination of 

the Iraq reconstruction program. 

To facilitate coordination and collaboration among U.S. oversight bodies covering 

Iraq, SIGIR created and chairs the Iraq Inspectors General Council, to ensure that 

all oversight organizations keep one another informed of current and planned work 

on overseeing Iraq reconstruction programs. 

The April 30, 2006, SIGIR Quarterly Report to Congress provides SIGIR’s latest 

series of new audit and inspection reports, which, taken together, detail the current 

challenges, issues and concerns confronting the Iraq reconstruction effort. 

More specifically, SIGIR issued 29 audits and inspections this quarter, which contain 58 new recommendations. Although these audits and inspections raise a variety 

of concerns, SIGIR generally found many instances of effective reconstruction 

projects and the overall picture, though mixed, nevertheless conveys a sense of gradual progress. SIGIR concluded that the likelihood of a project’s success was high if 

quality control had been integrated actively into the project’s management and if 

government oversight was consistent and disciplined. 

SIGIR’s audit work this quarter included a performance review of the contract to 

construct primary health care centers, an audit of reconstruction management information systems, and an examination of the planning and processes for transferring 

reconstruction assets to the new Iraqi government. The primary health care center 

report presents a difficult story. 

22

Our comprehensive look found shortfalls: only 6 of 150 clinics have been completed, although 75% of the funding had been spent. In addition, 14 more clinics 

are being completed under the original contract, each with construction issues yet 

to be resolved. The Iraq Reconstruction Management Office estimates that approximately $36 million will be required to complete 121 partially constructed clinics that 

were terminated for convenience. 

The 13 inspections completed this quarter continued SIGIR’s mission to provide 

on-site assessments of projects in every sector across Iraq. Most of the projects reviewed are still in progress; thus, SIGIR’s recommendations allow for money-saving 

course-corrections. SIGIR also inspected 55 additional projects through its rapid-review program, using local hires to visit sites that SIGIR inspectors cannot reach. 

Overall, SIGIR inspectors found that, where management and quality assurance 

programs were active in the on-site construction process, the quality of work usually 

met or exceeded contract standards. Moreover, we believe that the expansive coverage of its inspections teams provides a highly visible deterrent to those who might 

be inclined to commit acts of fraud, waste, and abuse. 

SIGIR criminal investigators are currently working on 72 open cases involving 

fraud, theft, bribery, and other alleged crimes. As outlined in our quarterly report, 

contractor Philip Bloom and former Coalition Provisional Authority (CPA) regional 

comptroller Robert Stein pleaded guilty to conspiracy, bribery, and money laundering in connection with a scheme to defraud the CPA. Bloom now faces up to 40 years in prison and a fine of $750,000. Under the terms of his plea agreement, he must pay $3.6 million in restitution and forfeit $3.6 million in assets. Bloom admitted that from December 2003 through December 2005, 

he, Stein (who faces 30 years in prison), and other officials conspired to rig bids to 

ensure that the contracts were awarded to Bloom. The total value of the contracts 

exceeded $8.6 million. Bloom admitted paying Stein and other public officials more 

than $2 million in bribes. 

Earlier this year, SIGIR investigators conducted a sting operation involving an alleged criminal conspiracy. The sting resulted in the arrest of a contractor who offered a bribe to a SIGIR undercover agent. The case is currently being managed by 

the U.S. Department of Justice. 

During this quarter, the third forum of SIGIR’s Lessons Learned Initiative was 

conducted, focusing on program and project management in Iraq reconstruction. It 

brought a number of the leading experts on Iraq reconstruction together for a daylong review of the research that SIGIR had compiled on this critical issue. In the 

next few weeks, SIGIR will release its second Lessons Learned report, addressing 

contracting in Iraq reconstruction. The report examines the establishment and evolution of the contracting policies, procedures, and systems used by U.S. government 

agencies to address the challenges associated with strategy and planning, policies 

and processes, and staffing during the U.S. reconstruction effort in Iraq. This report 

is the result of extensive research and a formal, collaborative process involving a 

panel of experts from inside and outside government. Our recommendations include:

• Creating a Contingency Federal Acquisition Regulation

• Institutionalizing special contracting programs for federal agencies

• Including contracting staff from the beginning of any reconstruction effort’s 

pre-deployment planning process

• Creating a ready-to-deploy reserve corps of contracting personnel who are 

trained to execute relief and reconstruction contracting for contingency operations

• Developing a system for formulating better contracting and procurement requirements in contingency operations

• Pre-competing and pre-qualifying a diverse pool of contractors with expertise 

in specialized reconstruction areas

The program and project management report will be released in late summer of 

2006. It will examine the issues associated with initiating, planning, executing, controlling, and closing/hand-off of the Iraq reconstruction program. The report will examine a variety of execution challenges within the key project management issues: 

scope, time, cost, quality, people, communication, risk, and procurement (subcontractors). 

SIGIR’s first Lessons Learned report, which examined human capital management, was released in January. SIGIR will release a comprehensive capping report 

on all of our lessons learned in the Iraq reconstruction process during the first quarter of 2007. 

As SIGIR looks to it next Quarterly Report, it is working on audits and inspections that address developing critical issues. For example, SIGIR is now conducting 

23

a review of ministry capacity building efforts. Iraq’s new government is now re-staffing the 28 ministries responsible for managing government operations. For transition to succeed, Iraq must ensure that its ministries are ready to receive and capably manage completed projects. U.S. transition plans anticipate this structural development to occur within Iraq’s government this year. SIGIR’s review will provide 

an update on this issue. 

In conclusion, let me say that SIGIR remains committed to supporting the reconstruction efforts in Iraq by identifying ways to accomplish the mission more effectively and efficiently, and by deterring fraud waste and abuse of US taxpayer dollars. SIGIR’s 55 auditors, inspectors and investigators will continue to carry out the 

duties and responsibilities assigned by the Congress in the highly hazardous environment that is Iraq today. 

I remain proud of my staff’s commitment and willingness to serve in harm’s way, 

far from their families, and in very fluid circumstances. I will continue to do my 

best to ensure effective oversight and timely reporting, and to thereby advance the 

success of the Iraq reconstruction plan. Thank you for the opportunity to participate 

in this important hearing, and I look forward to answering any questions that the 

Committee may have.

Chairman HYDE. Thank you, Mr. Bowen. 

Before we get to you, Mr. Kunder, I would just like to state for 

the record we have heard some sharp criticism of this Committee 

that we haven’t been diligent enough in oversight, and that statement has been repeated by several Members. 

I was able to get the record from the staff, and we had a Full 

Committee hearing on Iraq April 26, 2006. We had a Full Committee hearing on May 15, 2003; June 4, 2003; May 13, 2004. We 

had a Full Committee meeting, Members only, with the Prime Minister. We have had many Subcommittee hearings on Iraq. 

The Middle East and Central Asia Subcommittee held a hearing 

on Iraq’s Transition to Democracy. The Oversight and Investigations Subcommittee held a hearing on The Iraqi Documents: A 

Glimpse Into the Regime of Saddam Hussein. We have had one, 

two, three, four, five, six classified briefings. Not all the Members 

see fit to attend those classified briefings, but we have had them. 

We have had many unclassified briefings with government and 

non-government officials. Yesterday the Committee held a briefing 

with Special Inspector General for Iraq Reconstruction. We have 

dealt with nine resolutions of inquiry that get filed and they get 

sent to us and that we have a full court press on those. Everybody 

piles on. Nine of those we have had. 

I think we have been an active Committee on one of the most important issues facing this Congress and this country, and I just 

wanted to get a little balance into the record. 

Now, Mr. Kunder? 

Mr. ACKERMAN. Would the Chair yield? 

Chairman HYDE. Who is seeking? 

Mr. ACKERMAN. Who else? 

Chairman HYDE. Mr. Ackerman, of all people. Go ahead. 

Mr. ACKERMAN. I don’t mean to surprise you, Mr. Chairman, but 

most of those hearings really were not oversight hearings. 

I would call your attention to the fact that from May 2004 to 

April 2006—and that is when everything started to go to hell in a 

hand basket—there has been no Full Committee hearing on Iraq. 

Chairman HYDE. Well, I have May 13, Full Committee hearing, 

The Imminent Transfer, Sovereignty in Iraq. You must have 

missed that one. 

Mr. ACKERMAN. Not reconstruction, Mr. Chairman. 

24

Mr. DELAHUNT. Mr. Chairman? 

Chairman HYDE. Yes? 

Mr. DELAHUNT. I have missed almost no hearings, Mr. Chairman. Mr. Chairman? 

Chairman HYDE. Yes? 

Mr. DELAHUNT. Would the Chair recognize me? 

Chairman HYDE. I do recognize you. That was an informal recognition. 

Mr. DELAHUNT. Thank you, Mr. Chairman. You made reference 

to the fact that the Subcommittee that is tasked with oversight and 

investigations has had a hearing on Iraq. 

I hold the Chair of the Full Committee in high regard, but that 

was not an oversight investigation, Mr. Chairman. That was a 

glimpse into the mind of Saddam Hussein. To in any way suggest 

that the Subcommittee tasked with oversight and inquiry into reconstruction or any aspect of the Iraq issue is simply not based in 

reality. 

Now, if you want to talk about whether we did an investigation 

and inquiry into the Oil-for-Food Program, I can tell you, Mr. 

Chairman, we sent staff all over the world. We sent them to Cyprus. We sent them to the Middle East. We sent them all over the 

world. 

I think I am not overstating it. We had 16 hearings as far as the 

Oil-for-Food Program, but not one legitimate hearing on an issue 

that impacts the American people in a profound way. I would stand 

in profound disagreement with your statement. 

We have not met our constitutional responsibility, and I hope 

that you will take it upon yourself to authorize Mr. Rohrabacher 

to expend the same effort and the same resources and the same 

number of hearings and to follow up today’s hearing with actual investigative work that can hopefully help us as we move forward. 

I thank my friend, the Chairman, for the time. 

Chairman HYDE. Well, you are more than welcome. 

At last, Mr. Kunder, we get to you. 

Mr. KUNDER. Thank you, Mr. Chairman. 

Mr. ROHRABACHER. Mr. Chairman, could I ask just as a point of 

personal privilege whereas I was just referred to? 

Chairman HYDE. I am sorry. Yes. 

Mr. ROHRABACHER. I would just like to note that I am not sure 

if my colleague and friend understands—I am sure he must—that 

the Oil-for-Food scandal had something to do with Iraq as well. 

You know, Oil-for-Food wasn’t just about the United Nations. The 

other half of the Oil-for-Food scandal was Iraq. 

Let me note that as we have heard today, this long-touted charge of $9 billion that we are missing, it has nothing to do with American money. It is Iraqi money that was probably involved, oil 

money that probably was involved in the Oil-for-Food system. 

Our investigation into the United Nations Oil-for-Food scandal 

was not just an overall view of the United Nations. It also dealt 

specifically with Middle East and Iraqi policy and was important 

to the people of the United States. 

As far as our other hearing on the documents that have been 

captured during the war in Iraq and the translation of those documents, it had a lot to do with some aspects of the Iraqi war. It had 

25

everything to do with, of course, charges made by the people on the 

other side of the aisle during the war about what our motives were 

and what was going on in Iraq prior to the decision of the United 

States to initiate this military action against Saddam Hussein. 

That had everything to do with Iraq, everything to do with 

whether or not we were justified in the expenditures that we have 

made and the loss of life that we have suffered in order to liberate 

that country from that dictatorship of Saddam Hussein. These 

things were very relevant. 

Mr. ACKERMAN. Would the gentleman yield? 

Mr. ROHRABACHER. I can’t because I believe it is time for us to 

get onto the witness. Thank you. 

Chairman HYDE. The Chair would really like to get our witness’ 

testimony before us, and then we can have a discussion. 

With your permission, Mr. Kunder? 

STATEMENT OF THE HONORABLE JAMES R. KUNDER, ASSISTANT ADMINISTRATOR, BUREAU FOR ASIA AND THE NEAR 

EAST, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

Mr. KUNDER. Thank you, Mr. Chairman. I would just like to 

summarize my statement and try to answer all the questions the 

Committee asked us in a number of slides. If we can put the first 

slide up? 

[Slide.] 

Mr. KUNDER. What this slide attempts to show, Mr. Chairman, 

since one of the issues that has been raised repeatedly in questions 

is what the overall structure of our reconstruction program is, moving from Stage 1 in the early years of the Iraq Relief and Reconstruction Fund down in what we call Stage 1 at the bottom, we 

have done a broad range of activities, as the Committee knows, in 

essential services like electricity and water, health and education 

and so forth. 

Where we want to ultimately end up, of course, all of us, is up 

in Stage 3 where the Government of Iraq, with its extensive oil resources, can provide for a secure and stable society, a market-based 

economy, an effective and legitimate government. 

Where we are right now in our reconstruction program is what 

we are calling the transitional stage where we are trying to build 

and sustain Iraqi systems, and what we have divided that program 

into is four areas that I have listed in Stage 2—community stabilization, expanding economic opportunities, strengthening local 

governments and strengthening national capacity. 

The point here is, we are trying to get Iraqi capacity and Iraqi 

resources linked to this reconstruction effort. That is the specific 

goal of the stage we are in right now and the specific objectives we 

have set. 

The next slide, please? 

In each of these areas, taking for example community stabilization, we have established concrete and quantifiable objectives. For 

example, in the area of business development 10,000 small or medium businesses expanded, 55,000 microenterprises, that is smalllevel businesses started, creating 100,000 jobs and providing nonformal education opportunities for young men and women between 

26

16 and 25, those who might otherwise be recruits for the insurgency. 

What I am trying to show in these first couple slides and to answer as many detailed questions as you would like, we have a very 

concrete plan to build Iraqi capacity during this period of the reconstruction effort and concrete and quantifiable goals we are trying to achieve. 

Next slide, please? 

The next couple slides just have to do with some other kinds of 

reconstruction programs that are going on. I am not going to try 

to suggest that everything happening in Iraq is a success story. 

That is obviously not the case, but we see so few slides, so few pictures of actual successes taking place on the ground that I wanted 

to share with the Committee at least some of these success stories 

as well. 

This first slide is taking place near Dohuk. One of the things we 

are trying to do is focus on agricultural revitalization. While oil is 

the lifeblood of the Iraqi economy, agriculture is where jobs are created. Many, many more jobs are created in the agricultural sectors, 

so what we have been doing is improving the wheat economy in 

Iraq, getting the date palm economy, which was destroyed under 

Saddam’s regime, back in business and doing this kind of agricultural work so we keep more young men down on the farms and create more of an agricultural economy in the countryside. 

Next slide, please? 

One of the impediments we have discovered to rebuilding that 

agricultural economy is simply no infrastructure left to restore 

farm implements, to repair farm implements, so U.S. taxpayer dollars have gone to create 14 tractor repair workshops around the 

country where we are repairing thousands of pieces of agriculture 

equipment that had gone to rust and weren’t working because of 

lack of imports of spare parts and lack of skilled technicians to repair them. These are the kinds of things that are going on behind 

the scenes that are not making the front pages. 

Third slide, please? 

This is a typical one of thousands of a microenterprise training 

program. This one happens to be an attempt to teach tailoring to 

Iraqi women. There are thousands of these kind of projects going 

on. 

Ambassador Jeffrey, in his statement, talks about the growth of 

the Iraqi economy, the increases in GNP that have taken place despite the attacks of the last couple of years. These are the kind of 

microenterprise projects that have taken place. 

In the last couple of years, the U.S. taxpayers have supported a 

business registry at the Ministry of Commerce. More than 30,000—

30,000—new Iraqi businesses have been started in the last couple 

of years since United States military forces arrived. 

Next slide, please? 

Business reconstruction in Iraq won’t just take place at the 

microenterprise level. It has to take place at the macro level as 

well. These sessions displayed in the lower right of this slide shows 

a group of Iraqi business and government leaders working on 

World Trade Organization accession. 

27

We have built and put in place the kinds of macroeconomic reforms that will allow the Iraqis to get debt forgiveness through the 

International Monetary Fund, so there is work taking place at the 

macroeconomic level, invisible work, not front page work, but critically important work to get Iraqi oil revenues linked to the reconstruction effort in Iraq. 

Next slide, please? 

There have been more than 3,000 schools built in Iraq. By this 

July, more than a third of Iraqi teachers will have gone through 

training programs to teach a new method, a more interactive, a 

more student participatory type of teaching and type of pedagogy. 

Is this going to solve the entire education problem in Iraq? Of 

course not, but these are the kinds of programs taking place. 

One more slide perhaps because this is obviously a woman voting, but our new Administrator, Ambassador Tobias, just returned 

from Iraq. One of the things that most impressed him are the hundreds of Iraqi civil society organizations—lawyers associations, 

women’s associations, business persons associations—that have 

sprung up. 

One of the Members mentioned earlier the importance of getting 

grassroots democracy started in Iraq and not just starting from the 

top down. I can guarantee you that, again with United States taxpayer dollars, hundreds of these civil society organizations are 

starting a rebirth of democracy in Iraq. 

There are other slides, but I think I will stop at that point in the 

interest of time. 

Again in summary, Mr. Chairman, I don’t want to pretend that 

no mistakes have been made. Mistakes have been made. We have 

had to reconfigure the reconstruction effort because of the violence 

of the insurgency. 

As I reported to the Committee in the past, somewhere between 

16 and 22 percent, depending on the program, of the reconstruction 

dollars are going into security, paying for armed guards so that we 

can conduct immunization programs for children and so forth. 

Clearly there are problems. Clearly we have not made as much 

progress as we would like, but I clearly want to point out that 

there has been a great deal of work done. 

One of the issues in electricity, one of the reasons we continue 

to hear of problems and complaints from Iraqi citizens about lack 

of supply, is that while the total production capacity has gone up 

in Iraq since United States forces arrived, demand has gone up 

twice as fast because of these 30,000 new businesses, because of 

the ability of people to buy air conditioning units and generators 

and so forth. 

In closing, Mr. Chairman, I would just like to reiterate what Ambassador Jeffrey said about the issue of waste, fraud and abuse. 

We very much appreciate the work that Mr. Bowen has done. We 

appreciate the work of the Congress in giving us a Special Inspector General for Iraq Reconstruction, but when we come to the Congress for our annual appropriation we also ask for money for our 

own Inspector General. 

Lest Members of the Committee think that we had not thought 

about reconstruction, I can guarantee you that before Mr. Bowen’s 

position was created we had embedded in our USAID mission in 

28

Baghdad our own Inspector General staff who have conducted more 

than 90 financial and performance audits, so we take very, very seriously the issue of accountability. 

Does that mean we have made no mistakes? Absolutely not. I 

have profound respect for all Members of the Committee, including 

the Ranking Minority Member. But I must politely categorically reject the statement that, if I took him correctly, that the reconstruction program has been significantly undermined by waste, fraud 

and abuse. 

Perhaps it is a definitional issue. Waste, fraud and abuse to me 

means malfeasance, misuse of the taxpayers’ dollars. Have we 

made mistakes? Yes. Have we had to reconfigure our program? 

Yes. But, if the impression left with the Committee is that somehow the majority of our problems are caused by waste, fraud and 

abuse, that is simply not true. 

I read very carefully the Inspector General’s quarterly reports 

and other audits he does. I do not want to speak for Mr. Bowen. 

That is not how I read what he has said, and that is not the fundamental problem. Most of the taxpayer employees who are out there 

are, as Ambassador Jeffrey said, very dedicated, very honest individuals. 

We take quite seriously in response to the Committee’s questions 

the issue of accountability. We have built our own accountability 

before SIGIR was created, and simply the fundamental problem is 

not waste, fraud and abuse in appropriated funds entrusted to us 

by the Congress. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Kunder follows:]

PREPARED STATEMENT OF THE HONORABLE JAMES R. KUNDER, ASSISTANT ADMINISTRATOR, BUREAU FOR ASIA AND THE NEAR EAST, U.S. AGENCY FOR INTERNATIONAL

DEVELOPMENT

Mr. Chairman, members of the Committee, it is an honor to appear before you 

today. I welcome the opportunity to testify on behalf of the U.S. Agency for International Development (USAID). Today, I would like to describe to the committee 

USAID’s contributions to the President’s National Strategy for Victory in Iraq, as 

well as USAID’s perspective on the work of the Special Inspector General for Iraq 

Reconstruction (SIGIR) and the USAID Inspector General. 

During Administrator Tobias’ recent trip to Iraq, he remarked on the courage, 

skill and dedication of the Iraqis who, themselves, are actively involved in the reconstruction process. While visiting the Provincial Reconstruction Team (PRT) in Babil 

Province, south of Baghdad, Ambassador Tobias met with Iraqi civil society organizations—local non-governmental organizations—who are spurring grassroots democracy through community groups in the region, despite personal threats and personal 

dangers. These groups described how they were mobilizing public opinion to lobby 

provincial leaders on community needs and priorities—a new, but exhilarating process in south-central Iraq. Ambassador Tobias noted how impressed he was with the 

sophistication that these Iraqi groups displayed in understanding the dynamics of 

democracy, their ready grasp of information technology as a communications mechanism, and their total commitment to a new, democratic Iraq. 

The Administration has a clearly defined plan of action in Iraq, and USAID’s programs, including our goals and benchmarks, support the President’s National Strategy for Victory in Iraq in all three tracks—security, political and economic. The goal 

of the Administration’s strategy is to create a new Iraq with a constitutional, representative government that respects civil and human rights; is able to maintain domestic order; keep Iraq from becoming a safe haven for terrorists; is capable of proving essential and other services to Iraqi citizens; and is able to harness its economic 

potential to create jobs and other opportunities for its people. The fundamental operating principle of this strategy is that transition to Iraqi self-sustainment and responsibility cannot be made without integrated progress on all three tracks. 

29

I would like to talk about what USAID is doing now as well as what we are planning for the future. The civilian U.S. government (USG) effort is crucial to our success in Iraq. It not only supports the Multi-National Force-Iraq (MNF–I), it advances the Government of Iraq’s (GOI) security actions against the insurgency. We 

have all heard how Iraqi and Coalition forces have wrested control of many cities 

and areas from the terrorists. In most cases, Iraqi troops, with the help of the Coalition, are maintaining security. Their success in these post-conflict areas will allow 

our forces to come home. But these Iraqi units cannot be expected to maintain peace 

and stability without the help of Iraqi civilian institutions, and without assurances 

that Iraqis can depend upon essential services provided by their government and 

can look forward to political participation and economic opportunities. Specifically, 

the U.S. and international civilian effort helps to enable and consolidate gains made 

in the security situation in several ways:

• It strengthens Iraq’s capacity at the local and national level to govern and 

provide essential services to Iraqi citizens.

• It supports economic and social stabilization programs to minimize local support for the insurgency and foster support for the GOI.

• It assists the public sector’s sustainable economic development by creating 

the enabling environment that will allow the private sector to flourish and 

by providing the private sector with the resources for the economic growth 

necessary to create jobs.

Since March 2003, USAID has been allocated approximately $5.1 billion in Iraq 

Relief and Reconstruction Funds (IRRF). Of this amount, we have disbursed approximately $4 billion and we expect to disburse most of the remaining funds by 

this summer. Now, let me briefly summarize some of our accomplishments. 

ACCOMPLISHMENTS

First USAID is working with U.S. multinational units to help cities recover from 

the effects of battle and to begin the revitalization process. Projects are funded with 

complementary USAID and military funds. These projects are aimed at a combination of small, rapid programs followed by more complex projects that operationalize 

public services, promote representative local government and help resuscitate the 

economy. USAID’s implementing partners provide the majority of project monitoring 

with assistance from the military as needed. USAID is continuing this effort 

through our new Community Stabilization Project, which creates opportunities for 

disenfranchised people. 

Second, USAID-managed programs enable the democratic transformation in Iraq. 

USAID supported US goals and worked with the United Nations, the United Kingdom, Canada, and the European Community for a successful constitutional referendum in October 2005 and two national elections, in January and December 

2005. Our programs have also provided expert assistance, drawing from the international community and Iraqi civil society to assist the Iraqi Constitutional Drafting 

Committee. USAID continues to support decentralization, empowering provincial 

and city authorities to provide essential services so that Iraq will be less likely to 

return an authoritarian centralized government. In the field, assistance teams work 

with the Provincial Councils to help them shoulder the burden of decentralized 

power 

Third, on the economic front, USAID worked with the Treasury Department to 

provide assistance to the Central Bank of Iraq that helped stabilize the dinar, prevented hyperinflation, and enabled Iraq to qualify for International Monetary Fund 

(IMF) lending and Paris Club debt rescheduling. Our assistance to the Ministry of 

Finance, through the design and placement of a Financial Management Information 

System (FMIS) at 53 centers country wide, is providing the GOI with the ability 

to track its budget and expenses. Through increased statistical gathering and analysis provided by the new Government Public Distribution System, USAID is able 

to provide assistance to the Iraqis in the most need 

Fourth, is working with the Project Contracting Office (PCO) to facilitate infrastructure repairs that are addressing gaps in power and water delivery. At present, 

USAID projects have added 1,292 MW of new or rehabilitated generation capacity 

to the national grid. This is a big portion of the over 2,700 MWs of new or rehabilitated capacity added in total by the USG. USAID partners provided operation and 

maintenance programs that will safeguard the investment of U.S. assistance. In 

telecommunications, USAID has installed 12 domestic switches and one international switch; installed a satellite gateway system and restored international calling service; and completed the installation of a consolidated fiber optic network 

which connects electricity and communications sectors and will allow Ministry of 

30

Electricity officials to monitor and control the electrical grid from three central locations, greatly improving the reliability of electric power service to Iraqis. 

USAID has refurbished or expanded 19 water treatment plants in five cities in 

Iraq increasing the supply of potable water from USAID projects to over 2.3 million 

Iraqis. USAID has also provided sewage treatment to over 5.1 million people. We 

have also been providing plant-level operations and maintenance support at major 

potable water and sewage treatment plants nationwide to ensure that these plants 

continue to function. In addition, USAID’s rural water program is installing over 70 

small water treatment systems in rural communities of less than 5,000 people 

throughout Iraq. The rural water program will help to supply clean water to almost 

500,000 villagers each day. 

Fifth, USAID is helping to build a long-term sustainable economy through our agricultural assistance programs. USAID’s Agriculture Reconstruction and Development Program for Iraq (ARDI) is generating real jobs that sustain livelihoods—up 

to 28,000 jobs per day according to employment records in 2006. The program is 

managed by a small core of expatriate technical advisers and a larger team of 250–

300 Iraqis through five offices across the country with less than 8 percent of project 

funds going towards security. 

Thanks to canal and water infrastructure improvements made possible by smallscale grants, 445,000 Iraqi farmers now have improved efficiency of irrigation or access to water on 320,000 acres of farmland. ARDI has also established date palm 

nurseries in 13 governorates that will expand the true to type palm tree population 

by 410,000 new trees a year. Throughout the country ARDI planted 9,000 olive trees 

in 16 demonstration plots, which will produce high value oil. 

Sixth, USAID is focused on providing a better future for Iraq and is investing in 

this future by focusing on the country’s children and youth. A demographic youth 

bulge threatens Iraq’s future. In 2004, half of all Iraqis were under the age of 20 

years old. Given current population growth rates, the population will double by 

2030. Despite vast oil reservoirs, Iraq currently has some of the lowest literacy rates 

and poorest health statistics in the region. USAID’s education and health projects 

have partnered with the United Nations (UN) to improve education and health care 

for future generations through improving the quality of teaching and the learning 

environment for schoolchildren and improving the capacity of the Ministry of Health 

to provide quality essential services nationwide, including vaccinations against infectious diseases such as measles, mumps, rubella, and polio. 

PROVINCIAL RECONSTRUCTION TEAMS (PRTS)

USAID is working cooperatively with other USG and Iraqi agencies in the current 

combined effort to expand Provincial Reconstruction Teams (PRTs). PRTs add value 

to the USG effort by building productive relationships between provincial and national government institutions; establishing lines of communication and cooperation 

between the civilian and military components of the PRTs; devolving USG authority 

to an interagency group outside of the host country’s capital city; and linking external donor assistance to sub-national government structures and populations. 

To date, four PRTs have been inaugurated in Iraq (Nineva, Tamim, Babil, and 

Baghdad) with four others having been stood up (Anbar, Salah ad Din, Dhi Qar, 

and Basrah) but have yet to be inaugurated. USAID has identified seasoned development professionals to serve as the USAID representative to each of the current 

and future PRTs, a procedure that will be replicated for each future US-led PRT 

opened in Iraq. This individual works to ensure the appropriate linkage of PRT activities with USAID programs, in particular its local governance program, as well 

as citizen participation for greater transparency and accountability and improved 

services delivery. 

Additionally, the USG is working to engage other coalition partners in the PRTs. 

The USG, in coordination with these coalition partners, is currently setting up several additional PRTs. USAID is an active participant in this process and is staffing 

the necessary positions as they are made available and needed. 

OUR COMMITMENT TO ACCOUNTABILITY

USAID has been, and continues to be, committed to ensuring that the resources 

that Congress has provided are managed effectively and transparently. Ensuring 

that these funds are utilized in such a manner only strengthens their impact on 

Iraq and improves the chances for success in Iraq. Accountability for Iraq funds is 

fortified by the right mix of experience and teamwork between our field mission in 

Baghdad and office in Washington. Experienced controllers, contracting officers, and 

Inspector General staff have been in Iraq since 2003 working with technical staff 

to help ensure program accountability. 

31

We have welcomed the creation by the Congress of the Special Inspector General 

for Iraq (SIGIR), with whom we work closely. 

Accountability starts with a fair and open procurement process. USAID complies 

with all applicable federal regulations and works closely with our Office of the Inspector General (OIG) to identify and address any weaknesses USAID may have 

had in its procurement processes. USAID’s accounting and procurement systems ensure that the responsibility for procurement authorizations, justifications, and payments are segregated and recorded. A summary audit report on the contract award 

process found that USAID has generally complied with applicable regulations. 

The President’s Management Agenda shows USAID with ‘‘green light’’ progress on 

improvements in financial management. The Iraq Budget and Finance Team received the Administrator’s 2005 Management Improvement Award for innovative financial information tracking. 

USAID’s on-the-ground presence is critical to project oversight. Well-trained, onsite contracting staff and project managers use informed judgment to oversee 

USAID projects. USAID’s project managers are trained through a certification program in acquisition management practices. These personnel, located in Baghdad 

and regional offices, provide the technical oversight of our programs. Throughout 

this year, USAID personnel have averaged 14 project site visits per week. Our colleagues in the U.S. military have been forthcoming in providing not only security 

support for our staff, but assistance in monitoring USAID projects in those areas 

deemed to be insecure. USAID has also taken proactive measures, such as fraud 

awareness training for government employees, contractors, and grantees to reduce 

the likelihood of undetected fraud, waste or abuse of funds. OIG audit staff in Baghdad conduct performance audits of USAID programs on a regular basis and often 

concurrently to enable USAID to identify problem areas early on. There have been 

over 20 OIG performance audits and reviews and approximately 70 financial audits 

completed. 

Finally, one of USAID’s most valuable resources in ensuring program effectiveness 

and accountability are Iraqis themselves, who have greater freedom of movement 

than expatriates. USAID has 107 Iraqi national staff in its Mission in Baghdad and 

through its implementing partners, an extensive network of Iraqi organizations that 

are critical to the design and implementation of USAID’s projects. USAID and its 

implementing partners currently employ thousands of Iraqis in professional career 

positions. These staff members have the community ties that facilitate Iraqi ownership and contribute to proper oversight of USG resources. 

USAID works closely and collaboratively with SIGIR in support of the fulfillment 

of its mandate regarding the oversight and monitoring of funds appropriated or otherwise made available to the IRRF. 

USAID has participated in or been the subject of a number of SIGIR audits or 

reports, including: the audit of USAID Mansuria Electrical Reconstruction Project, 

the audit to determine compliance with the Prompt Payment Act for IRRF expenditures; the audit of USAID’s management of the transfer of IRRF projects to the 

Iraqi Government; and the audit of methodologies for reporting cost-to-complete estimates under P.L. 108–106. 

On-going SIGIR audits and reports in which USAID currently participates include: SIGIR’s review of USG roles and responsibilities under IRRF; audit of the 

Basrah Children’s Hospital Project; review of the definitization of contracts supporting reconstruction in Iraq; review of close-out processes and procedures for IRRF 

contracts; review of infrastructure protection; and the SIGIR survey of the U.S. Embassy Baghdad’s anticorruption program. 

Additionally, USAID regularly provides information to SIGIR for input to its 

quarterly reports to Congress and responds to any number of ad-hoc SIGIR data 

calls, including a data call related to education, migration, human rights and governance. 

To date, only two of the completed SIGIR audits have resulted in recommendations for USAID:

1. In the audit report on methodologies for reporting cost-to-complete estimates, 

SIGIR recommended that USAID develop internal guidance for estimating 

and reporting cost-to-complete information for IRRF-funded activities and 

seek to coordinate with IRMO, to develop a mutually agreeable methodology 

for calculating cost-to-complete estimates. 

USAID is working to develop, in coordination with IRMO, guidance for calculating and reporting cost-to-complete estimates for USAID IRRF-funded 

projects.

2. In the SIGIR audit concerning USAID’s management of the transfer of IRRF 

projects to the Iraqi Government, SIGIR recommended that USAID, in coVerDate Mar 21 2002 11:00 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6621 F:\WORK\FULL\060806\27990.000 HINTREL1 PsN: SHIRL
32

ordination with IRMO, complete the development of a common policy and 

process facilitating the transfer of completed project assets to the GOI.

USAID firmly believes that the USG must ensure that its IRRF investments in 

Iraq are formally accounted, operated, and sustained by the GOI. To this end, 

USAID participated in an IRMO-led interagency process to develop uniform procedures for the formal transfer and recognition of USG-funded capital assets to the 

Iraqi Government. Procedures were being developed at the time the SIGIR audit 

was issued. 

The procedures entail a three step process: 1) each participating USG executing 

agency develops and implements a project that produces or improves a capital asset 

in accordance with its own rules, policies and procedures; 2) upon completion, again 

using its own policies and procedures, each executing agency hands over control of 

capital assets to the responsible GOI line ministry (e.g., Ministry of Electricity) for 

its beneficial use, operation, management, control, and protection; and 3) in coordination with IRMO, each executing agency or department formally transfers the capital assets to the GOI, as represented by the Ministry of Finance and the relevant 

line ministry. 

USAID endorses and utilizes steps 1 and 2 of the above-referenced procedures and 

has carried out these steps with the majority or our major infrastructure projects. 

Now that the new government is in place, USAID is working to finalize the parameters of step 3. 

In conclusion, I want to assure you that USAID is taking every measure it can 

to ensure that U.S. government resources and are used effectively and transparently. The successes that have been achieved to date in Iraq are the tangible results of these efforts. I believe with Congress’ continued support, USAID will be able 

to make further strides in helping to achieve success in Iraq 

Mr. Chairman, thank you for offering me this opportunity to discuss USAID’s role 

in Iraq with your Committee. I am prepared to answer any questions that the committee has. Thank you.

Chairman HYDE. Thank you, Mr. Kunder. 

We now will recognize Members for 5 minutes to interrogate the 

witnesses, and we start with Mr. Lantos. 

Mr. LANTOS. Thank you very much, Mr. Chairman. 

Let me take a moment to comment on Mr. Kunder’s last statement. I fully stand by my statement of waste, fraud and abuse. 

Your addition that it is my view that the majority of the problems 

in Iraq are related to waste, fraud and abuse is a statement I never 

made, and I reject and resent your creating statements which I 

never made. 

Waste, fraud and abuse characterize much of the program. The 

bulk of the problem in Iraq is security, and everybody understands 

that, so don’t be sensitive when some of us use phrases you don’t 

like. There has been an enormous amount of waste, fraud and 

abuse, and if you don’t believe it read Mr. Bowen’s reports. 

I commend him for his reports. They provide chapter and verse 

for waste, fraud and abuse. So much for that. 

Chairman HYDE. Mr. Smith? 

Mr. LANTOS. I have just begun, Mr. Chairman. 

Chairman HYDE. I am sorry. I should have known better. Go 

ahead. 

Mr. LANTOS. I want to raise a generic issue and a very important 

one. It is self-evident that at the beginning of the Iraq enterprise 

there was a great deal of disagreement both in this country and 

with many countries overseas, but there is at least articulated unanimity on the part of all of Iraq’s neighbors, and I particularly refer 

to the oil rich Arab countries, that reconstruction is wanted and desired by all of these countries. 

Many of them have made significant pledges in Madrid and elsewhere. What I am looking for now, gentlemen, is specificity, not 

33

general statements. In the light of obscene oil profits running into 

tens of billions of dollars with the explosion of petroleum prices, 

have these countries met their initial obligations, let alone additional commitments, to participate in the reconstruction of Iraq? 

Mr. Jeffrey? 

Mr. JEFFREY. No, sir, they have not. 

Mr. LANTOS. What efforts has the State Department made to ensure that these rich Arab countries which are now benefitting from 

windfall profits of obscene proportions, with gasoline in my State 

of California approaching $4 a gallon, that they meet at least the 

puny initial commitments they have made to reconstructing Iraq? 

By the way, our Ambassador to Saudi Arabia was in my office 

a few days ago, and he was stunned when I asked him what are 

you doing to see to it that Saudi Arabia participates in this effort, 

in the effort to help the people of Darfur. This was a brand new 

idea for him. 

I was so appalled by his lack of understanding of the issues an 

American Ambassador needs to deal with. What are our Ambassadors instructed to do in the oil rich Arab countries to see to it 

that they live up to their commitments and obligations? 

Mr. JEFFREY. Sir, let me answer that. We have very significant 

pledges. They are very large even by the standards of these countries. Saudi Arabia, for example, half a billion dollars in——

Mr. LANTOS. Well, what is the value of their windfall profit just 

in the past year? 

Mr. JEFFREY. It is in the tens of billions of dollars. 

Mr. LANTOS. It is in the tens of billions, so half a billion dollars 

is not that impressive, but be that as it may. 

Mr. JEFFREY. And another half a billion dollars in loans. In addition, other countries—Kuwait, half a billion. Kuwait has disbursed 

some of its monies, I am happy to say. UAE, $200 million. 

In addition, these countries collectively, particularly Saudi Arabia, hold between $30 and $40 billion in Iraqi debt. We are urging 

them to follow the lead of the Paris Club and to forgive 80 to 100 

percent of that debt. 

In terms of what we have done, and, Mr. Lantos, I am always 

concerned about giving you inputs because what you are interested 

in is outputs, and I have basically said that there have been little 

outputs up until now, and I will try to explain perhaps why, but 

in terms of inputs by the Administration there have been a great 

many. 

I traveled for 10 days through the region in October. This was 

followed up by the Secretary, who met with the GCC Foreign Ministers in November in Bahrain. The President communicated with 

the leaders of these countries on this very subject. All of this was 

directed toward supporting the new Iraq. 

Mr. Zeloko, the Consulate, was out, as were Treasury officials, in 

January, and we are also, as I mentioned in my written comments, 

looking at the possibility of an international compact with the UN 

and other international organizations participating with us, the 

Iraqis and countries in the region to get them to move forward. 

Now, you are absolutely right that they understand, and they do, 

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ical. They also understand that they are the beneficiaries of large 

windfall profits. 

Why haven’t they moved? I believe—I cannot verify, but I believe—that one of the reasons is that these countries want to see 

whether a stable political democratic system can be established in 

Iraq that will include the Sunni Arabs, as well as the Shi’a Arabs 

and the Kurds who, of course, we had in the prior government. 

We have attained that at this time, so therefore I can give you 

no further reason why they wouldn’t move forward. I do have to 

say in their defense that in terms of political outreach to Sunni 

Arabs and to some of the Shi’a Arabs and to the Kurds they have 

been extremely aggressive. 

Zal Khalilzad has traveled to most of the Arab capitals of the region repeatedly in this regard, and they have been very, very supportive behind the scenes in bringing together this government. 

Now, however, we have to see cashflow, sir. 

Mr. LANTOS. Do you have any comment, Mr. Bowen? 

Mr. BOWEN. Yes. On page 93 of our April quarterly report there 

is a chart that details every donor nation’s commitment both at the 

Madrid Conference and subsequent. It shows that $13.5 billion was 

pledged at Madrid and since then another $1 billion, so $14.5 billion roughly is the amount of non-United States donor nation commitments. 

Mr. LANTOS. And how much of that has been actually received? 

Mr. BOWEN. A little over $3 billion of the Madrid donor funds 

and not very much progress in the past year. Japan and Korea 

have stepped forward, Japan most notably within the mix of those 

who have actually moved beyond the pledge stage. Ambassador Jeffrey is exactly right that those commitments have yet to truly 

ripen. 

Mr. LANTOS. Well, I think this is absolutely outrageous. If the 

American taxpayer would know that Arab countries which are getting tens of billions of dollars in windfall oil profits are not meeting 

their puny obligations to participate in the reconstruction of their 

fellow Arab nation of Iraq they would be outraged by this. 

I very much hope, Mr. Ambassador, you take this message back 

to the Secretary, who is very able and effective and I am quite sure 

shares my view on this subject. 

Thank you, Mr. Chairman. 

Chairman HYDE. Mr. Smith of New Jersey? 

Mr. SMITH OF NEW JERSEY. Thank you very much, Mr. Chairman, and thank you to our very distinguished panel. 

Let me just ask Ambassador Jeffrey first. Last year’s Conference 

Report for the Science, State, Justice and Commerce and Related 

Agencies Appropriations Act stated that the conferees expect that 

within the planned personnel complement for Baghdad in Iraq one 

senior Foreign Service official who reports directly to the Ambassador will be assigned as the lead as the human rights official in 

Baghdad. 

I wonder if you can tell us if that person has been named? Are 

they working at that job? Is their portfolio, whoever it might be, 

primarily or hopefully exclusively the human rights portfolio? 

Secondly and related to that, the U.S. Commission on International Religious Freedom and other groups have expressed grave 

35

concern that human rights guarantees in the new Iraqi constitution 

remain ambiguous, and there are a number of pieces of legislation 

I understand that are being drafted. Some put it at as many as 55 

to 80 pieces of legislation. What is your take on whether or not religious freedom especially will be secured in Iraq? 

Finally, on the sustainability issue of infrastructure, my understanding is that the Special Inspector General’s number is between 

$650 million to $950 million annually to operate and maintain 

U.S.-sponsored infrastructure projects as they are handed over to 

the Iraqi Government. The 2006 supplemental and 2007 budget contain $355 million and $154 million for sustainability aid, and I am wondering in the 

intermediate and long term, what it looks like. 

I know you just mentioned the Madrid Conference and donors. 

Whether or not that money will come in does remain an open question, but sustainability obviously has to be uppermost or very high, 

I should say, on many of our minds. 

Mr. JEFFREY. The political counselor, Ambassador Margaret 

Scobie, who just got there, is overall responsible for our human 

rights programs. She has several officers in the Political Section 

who have primary or secondary responsibility for human rights. It 

is an important part of our portfolio. 

We do several reports a year that we bring to you, the trafficking 

and peoples report, human rights report and a special human 

rights implementation report. We are also deeply involved with 

many of the NGOs, IFIS and others, and of course we have major 

democracy programs. 

In terms of the constitution, sir, we think that by the standards 

of the region, in fact by international standards, the constitution 

does protect liberties, including religious freedom. It states that 

people do have the right to choose between, for example, Shari’a 

courts or civil courts. 

It gives people a great deal of freedom to worship regardless of 

whether they are Christian, Jewish or Shi’a or Sunni Muslim, and 

there are a wide variety, there is a wide pluralism of our groups 

there. I think it stands in comparison well to many other areas. 

What you said is correct. There will be a large number of implementing laws, and those have to be watched carefully by Iraqi 

NGOs, many of whom are concerned, supported by the international community to ensure that the constitutional rights that 

have been secured in the constitution are in fact carried out in 

practice. I am amazed at how well they do do in the middle of a 

war zone, but still this is very important to all of us. 

In terms of the $650 million to $950 million a year, that basically 

is not very different from our own estimates. This is why we put 

in almost $300 million for—we have done several things. First of 

all, in our contracts themselves over the past year or so based upon 

Mr. Bowen’s investigations and others we have built in certain requirements for preparing the way to train Iraqis and to have a 

transition plan. 

In addition, we have put in ourselves in our request for 2006 and 

2007 respectively approximately $300 million and then $150 million to basically have a glide path toward Iraqi support. As you 

pointed out, the Iraqis are also earning $50 to $60 a barrel on their 

36

oil. They are doing quite well with the support of the money that 

you have given us in the oil sector in exporting. 

We think that they will have a good number of billions of dollars 

for capital budget purposes, including the maintenance of not only 

our infrastructure, but theirs, in the years ahead, particularly if we 

can get the security situation better under control. Even under the 

current situation, they have got $6 billion for capital purposes, be 

it new investment or maintaining the investment they have, sir. 

Chairman HYDE. Thank you. We have a vote on the Floor. It is 

one vote. It is a procedural vote on the rule. I don’t think I will 

go over for the vote. I will stay here. 

Does somebody want to ask a question? Mr. Ackerman is next. 

Mr. ACKERMAN. Thank you, Mr. Chairman. 

I want to just echo Mr. Lantos’ sentiments about the participation of the international community. Mr. Bowen, you had stated in 

your remarks that reconstruction officials should begin now to engage other international donors. I don’t know why we really haven’t 

done that a long time ago, why we should begin now. 

It seems that their participation is woefully, embarrassingly and 

disastrously inadequate, a little over $3 billion, while the whole 

rest of the world, especially the Gulf States and the Arab and Muslim worlds, not participating in reconstruction is something that is 

beyond my understanding, or maybe they just think that it is a bad 

investment. 

Our participation as I understand it, we have appropriated $21 

billion, and we have obligated already over $19 billion, and we 

have actually spent $14.6 billion as of May 23 of this year. 

If we were to approach this as an appraiser or an insurer looking 

to ensure property or determine its value and we went over there 

and looked at the stuff that we have reconstructed, what would be 

the value of that in dollars? 

Mr. BOWEN. Mr. Ackerman, we are looking at exactly that issue 

in the course of our audits. I can’t give you a precise figure now, 

but it is a valid question, and it actually cuts right to the core of 

what our mission is to assess what we have gotten for our investment or taxpayer dollars in Iraq reconstruction. 

Mr. ACKERMAN. So we don’t know right now what we have gotten for our $14 billion spent? 

Mr. BOWEN. I can catalog for you a whole variety of projects that 

we have received, but you are asking for a summary number, and 

that work continues. 

Mr. ACKERMAN. When do you think that you might have a rough 

idea? 

Mr. BOWEN. Well, we are in what I call the fourth quarter of reconstruction with respect to the U.S. led part of the program. Thus, 

we are in the middle of the year of transition. As we said in January, 2006 is the year of transition, contract closeout. 

Indeed, certain large contractors are beginning to shut down. 

KBR will be gone by August. Parsons is closing down. They will be 

gone this summer. As those large design/build contractors close up 

shop and begin the process of closing out their contracts, we can 

better account and get exactly to the question you are asking, and 

I plan on doing that, giving you a list of here is what the oil sector 

spent. Here is what we got in toto from that sector. 

37

If you go to Section 2 of this report, the April report, you will see 

a current cataloging of what the U.S. has obtained to date and 

what it will obtain in the course of this year. 

Mr. ACKERMAN. How much of what we have built got blown up? 

Mr. BOWEN. That is also difficult to catalog, but it has hindered. 

It is part of the security problem. 

Mr. ACKERMAN. Are you able to quantify it in any way? 

Mr. BOWEN. We don’t have a quantifiable analysis of attacks 

versus what we have built and what got blown up. 

Mr. ACKERMAN. Is there a line anywhere that says we have to 

rebuild so and so that we already paid for? 

Mr. BOWEN. That is a different question. When you are engaging 

in a design/build cost plus contract you continue to push forward. 

Certainly certain projects have been attacked. That has delayed 

those projects and required more investment into them. 

Mr. ACKERMAN. How much reconstruction money has actually 

gone for security? 

Mr. BOWEN. There are two ways to look at the security question, 

direct and indirect costs. The direct costs are the amount of money 

that has had to be invested in bolstering the Iraqi security forces. 

In 2004 there was a substantial reprogram, actually three——

Mr. ACKERMAN. That is out of reconstruction money? 

Mr. BOWEN. It moved reconstruction money, yes, IRRF dollars 

and other dollars. That is what the ISSF did last May. 

Mr. ACKERMAN. This is still showing up as reconstruction and 

not part of the war effort? 

Mr. BOWEN. That is correct. It is part of the relief effort. 

Mr. ACKERMAN. So the war effort is actually costing more than 

it would appear at first glance, and reconstruction is actually receiving less dollars? 

Mr. BOWEN. Yes, that is true. 

Mr. ACKERMAN. Do you have any idea how much? Is that half? 

Mr. BOWEN. I don’t know what half means, but what I can tell 

you is——

Mr. ACKERMAN. About 50 percent. 

Mr. BOWEN. No, not half of the reconstruction money. I mean, I 

don’t know if half of the reconstruction or half of the war effort. No. 

Mr. ACKERMAN. Half of the reconstruction money. 

Mr. BOWEN. It is neither of those. It is $5.8 billion that has been 

reallocated not just for security, but for democracy and governance. 

Mr. ACKERMAN. So $5.8 billion out of $19 billion is about 30 percent? 

Mr. BOWEN. And the $5 billion was in the ISSF last May. It was 

put into MNSTC–I, Multi-National Security Transition Command 

Iraq, to train. 

Mr. ACKERMAN. How much was? 

Mr. BOWEN. $5 billion. 

Mr. ACKERMAN. $5 billion? 

Mr. BOWEN. Last May’s additional supplemental. 

Mr. ACKERMAN. An additional $5 billion more out of the $19? 

That is $5 billion out of the $19 besides the $6? That is $11 out 

of the $19? 

38

Mr. BOWEN. No. No. That is on top of the Iraq Relief and Reconstruction Fund. It is not part of the IRRF allocation. That was a 

military allocation. 

Mr. ACKERMAN. What percentage of the money for reconstruction 

has gone into no-bid contracts? 

Mr. BOWEN. A very small percentage. The time for no-bid contracting or limited contracting occurred prior to the war or in the 

spring and the summer of 2003. Since then over 90 percent—probably 99 percent—of the contracting has been competitive. 

Mr. ACKERMAN. How many contractors in dollar amounts? How 

many contractors have folded, gone bankrupt, left town, were not 

able to complete their projects, had to be replaced or couldn’t do the 

job? 

Mr. BOWEN. I don’t know any that have gone bankrupt or had 

to fold because of financial difficulty. There have been contractors 

that have failed to complete their job, most notably Parsons in the 

primary healthcare clinic contract which has been detailed in this 

latest report by SIGIR. 

Mr. ACKERMAN. I will yield back my time if I have any and wait 

until later. 

Chairman HYDE. Thanks. 

Ms. Ros-Lehtinen? 

Ms. ROS-LEHTINEN. Thank you, Mr. Chairman. I thank the panelists for their testimony. 

I wanted to ask about the funding and the training for the Iraqi 

police. Can you elaborate on the training that the Iraqi police are 

receiving? How much are we spending on this training, and will we 

oppose the inclusion in the security forces of anyone actively involved in militias or other armed groups outside of the state’s monopoly on force? What criteria have been established for the recruitment of Iraqi police and security personnel? 

Also, when providing training and technical assistance to the 

Iraqi police force or other official security organizations, what safeguards are in place to ensure that the materials and the knowledge 

provided to them are not disseminated to Islamic jihadists or to 

militant organizations that are openly engaged in criminal activities or sectarian violence? 

Thank you. 

Mr. JEFFREY. Certainly. I will take that. Congresswoman, of the approximately $10 billion of U.S. funds inside of the IRRF program 

and in the DoD supplemental in 2005 that have gone to security 

forces, a little less than 50 percent have gone to the police. These 

include major programs by our State Department Bureau of International Narcotics and Law Enforcement to train the police. 

They have a police academy in Jordan. They have various police 

academies around Iraq to give people a roughly 8-week training 

program. The Jordanian one has a large number of trainers from 

many other countries as well, we are happy to say. 

In addition, we do a great deal of specialized training of police 

and forensics and special weapons and tactics and this kind of 

thing, so a great deal of the effort in our security field has gone 

into the police. 

In terms of the training, the training includes a great deal of 

classic police work, some human rights training, but frankly a 

39

great deal of tactical survival skills because these police are out on 

checkpoints. They are doing essentially a combat function. 

As you know, in America people often get degrees in law enforcement, and then they spend a year or 2 in training before they are 

put out on the street. We do not have that option with Iraq because 

the police force we had to create almost anew. 

What we have done is put teams, including some 500 State Department INL civilian police personnel, in there, many of whom I 

am afraid have died in the line of duty, and the United States military for the past 6–9 months has begun putting special police advisory teams like they have with the regular army, the Iraqi army, 

into the Iraqi police units as well. 

Ms. ROS-LEHTINEN. Thank you. Just because I know the time 

will be up, how about the exclusion of certain folks from serving? 

Mr. JEFFREY. There is a very extensive vetting process. I cannot 

assure you, however, how effective that vetting process is in the police. In the army we are very confident. In the police, because much 

of the recruiting is done locally in the command and control of the 

police is local at the provincial level, we don’t have as good eyes 

on, and neither we nor the Iraqi Central Government have the 

same control over the leaders. Like everything else, leaders are so 

important. 

Ms. ROS-LEHTINEN. Thank you, Mr. Chairman. 

Chairman HYDE. Mr. Schiff of California? 

Mr. SCHIFF. Thank you, Mr. Chairman. I will be brief because I 

want to try to get over in time to vote. I would like to ask a question I had asked of our last panel that came to discuss Iraq and 

see if the response is any different here today. 

I know that some minor level players that have committed just 

sort of outright graft have been arrested, but on the broader level 

we are talking about the lack of accountability for billions of dollars 

of funds which, whether they are Iraqi oil funds or United States 

funds, they are still held in our trust. 

Who has been held accountable for all of the failures that have 

been so graphically illuminated by your Inspector General report? 

Who has been held accountable for the significant lapses in reconstruction? 

Mr. BOWEN. Well, first of all two significant cases came to conclusion during this last quarter. Robert Stein, who was a comptroller 

in the South Central Region of CPA during 2003 and 2004, and a 

contractor with whom he engaged in a criminal scheme both were 

sentenced to 30 to 40 years in prison and ordered to pay back restitution of over $6 million each. 

There are two other cases that I can’t go into detail about here 

that are at the Department of Justice moving forward in the prosecutorial phase. 

Now to address your big question about we have heard about the $9 billion talked about today, first let me say that that audit addressed a phase during CPA of how the development fund for Iraq 

money was transferred from CPA to the interim Iraqi Government, 

actually the government in counsel at that point, for the funding 

of the incipient new Iraqi governing authorities. 

Our concern was that there was no sufficient mechanism in place 

to give feedback to CPA, which, as you said, had stewardship of 

40

that money so that some assessment could be made of how that 

money was used. It was a chaotic environment, and therefore more, 

not fewer, controls were necessary in SIGIR’s view. 

A private accounting firm did some looking into how that money 

was used on the Iraqi side of the ledger, and it was——

Mr. SCHIFF. But again, Mr. Bowen——

Mr. BOWEN. Yes? 

Mr. SCHIFF [continuing]. My question is about accountability. 

Mr. BOWEN. Yes. I guess the abuse of that money or the fraudulent disposition of it involved Iraqis over which the Commission on 

Public Integrity has charge. 

We have been supporting them in their efforts. They have 960 

cases ongoing regarding fraud within the Iraqi Government and 

convicted a senior director general last week of fraud. 

Mr. SCHIFF. So is your response then that the people that have 

been held accountable for the massive lapses in terms of billions of 

dollars and the reconstruction efforts that have begun, but not finished, are Iraqis; that we have held no one accountable who was 

actually responsible for the trust of those funds or the management 

of those funds or the oversight? 

I thought the CPA was running the show. I thought we were 

running the reconstruction effort and working with Iraqis, but no 

one other than the Iraqis and a handful of small grafters compared 

to the billions that are missing have been held accountable? 

Mr. BOWEN. We have jurisdiction over prosecuting Americans 

who commit crimes in Iraq. 

Mr. SCHIFF. I am not talking about necessarily prosecutable 

criminal offenses. I am talking about we have invested tens of billions of dollars in Iraq reconstruction. We have very little to show 

for it. 

We have very little accounting of even how big chunks of money 

have been spent in terms of the Iraqi oil funds. That is our responsibility. I don’t see anyone who has been held accountable for that. 

Mr. BOWEN. Well, we are in the midst of a significant lessons 

learned program that is looking at how the program during CPA 

unfolded and thereafter. 

Mr. SCHIFF. Can I make one point because my time is running 

out? 

Mr. BOWEN. Yes. 

Mr. SCHIFF. I think one of the lessons learned here may not be 

enumerated in your report, but it is true with respect to the reconstruction. It is true with respect to the prosecution of the war effort. Where there has been inadequate oversight and where there 

has been a lack of accountability there is a commensurate decline 

in public confidence in the entire effort. 

When people don’t see the oversight and they don’t see the accountability, they seriously question whether we know what we are 

doing. That, I think, is an important lesson learned. 

I really hope that this is not a hearing, just a shot in the dark. 

I hope it is a part of a continuing process because this body and 

the Administration have the responsibility for the oversight and 

the accountability. 

Let me ask you one other—well, I am out of time. 

Chairman HYDE. Go ahead. 

41

Mr. SCHIFF. The last question I wanted to ask is there have been 

reports, Mr. Bowen, that the Pentagon has been unhappy with 

your reports; that they consider you mettlesome. 

Are you getting any push back? Are you finding any resistance 

at the Pentagon to the work you are doing that we need to know 

about because we support the work you do, and we don’t want 

there to be any impediment. 

Mr. BOWEN. No. No, I haven’t. When I met with Secretary England, the Deputy Secretary of Defense, a month ago I raised this 

issue with him because of those anonymous reports in the press. 

He disassociated himself with those entirely and said that he completely supported SIGIR’s efforts, and the Secretary of Defense did 

as well. 

Mr. SCHIFF. Thank you, Mr. Chairman. 

Chairman HYDE. Mr. Rohrabacher? 

Mr. ROHRABACHER. Yes. I would like to commend Mr. Schiff before he leaves the room, that is, number one for the tone of his 

opening statement, as well as the tone and substance of his session 

just a few months ago and his approach to the questioning. I believe Mr. Schiff demonstrated again a much more responsible posturing than I have seen of other of his colleagues from the other 

side of the aisle. 

Let me also identify myself, Mr. Chairman, with remarks of Mr. 

Lantos. I hope that you take those very seriously when he said that 

you should go back and make sure that this Administration understands that we expect this Administration to enlist more financial 

support from our allies, especially the moderate Muslim allies that 

we have, which are now involved in a windfall of profit from the 

expansion of oil prices. They should be helping out more in the cost 

of reconstruction of Iraq. 

They cannot expect the American people to bear this burden 

alone. We should have more support from the Saudis and the people from Qatar and Kuwait and others, other countries that are 

now flush with cash. That is a message that I hope you will take 

back and take very seriously, and that is certainly a bipartisan 

message to you today. 

Let me note that in the very beginning of this conflict there was 

a decision that had to be made as to how it would be paid for. The 

Administration decided that instead of presenting the Iraqis with 

a bill that we would instead take this burden upon the American 

people. I think that was a horrible mistake in the beginning. 

Again, if the American people did not feel that they were carrying an unfair share of burden of this conflict, I think there would 

be more support of the long-term commitment that is necessary to 

win such a conflict that we are in. 

Instead, the Administration chose again to consider the economics of international interest and other countries’ interest other than 

the interest of the American taxpayer. At a time when again the 

price of oil has gone up and the value of the oil that Iraq sits on 

top of has so dramatically increased, the Iraqi people should be expected. 

We could have coupled a policy forgiving the debt from Saddam 

Hussein, which should have been forgiven and should have been 

wiped off the books because the people of Iraq, that was a dictatorVerDate Mar 21 2002 11:00 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6601 F:\WORK\FULL\060806\27990.000 HINTREL1 PsN: SHIRL
42

ship. They shouldn’t have to bear that burden. We should have 

combined that, wiping away that debt, which would have hurt who, 

the German and French banks, maybe the Russian banks, and 

then coupled that with letting the Iraqi oil revenues pay for this 

war, which would have been right now much more palatable to the 

American people. 

I want to thank you for being here today. As I say, already we have heard from Mr. Bowen about the nature of that $9 billion 

which has been over and over and over again talked about as if it 

was American money. It was not. 

Yes, we should not be in any way complacent about a lack of ac- counting for even that $9 billion, but let us note that in a barrage 

of propaganda which has undercut our war effort we have just 

heard over and over again as if that was a $9 billion hunk of corruption that cost the American taxpayers $9 billion. 

Again, not to say that there shouldn’t be an accounting of that 

money just like we shouldn’t expect there shouldn’t be an accounting of all the money in the Oil-for-Food scandal which also had a 

lot to do with the regime in Baghdad. 

Finally, let me note that from my experience, and I don’t know 

if any of you served in Vietnam or any of the other conflicts that 

we have been in. I know that when I was there for a short period 

of time in a non-military position I noted the corruption there. My 

father noted the corruption in Korea and in World War II. 

The corruption itself and profiteering does not negate the moral 

basis of conflict. Usually these things, Mr. Chairman, are brought 

up after the conflict is over because it tends to dishearten the public when they are losing their children’s lives. 

Do you think that there is any more profiteering or corruption 

going on proportionately than there has been in any other conflict 

the United States has been involved in, and have you seen, Mr. 

Bowen, corruption and profiteering at any large scale by American 

companies during this conflict? That is my question. 

Mr. BOWEN. I don’t have any data to give you the comparative 

analysis you have asked for, but what I can say is that fraud and 

corrupt practices are not a pervasive component of the current Iraq 

reconstruction enterprise. 

There were clearly egregious acts by those who took advantage 

of a chaotic situation particularly during CPA. My job is to track 

them down, hold them accountable and ensure they are prosecuted 

and sent to prison. I am committed to doing that. 

We have about 80 cases ongoing right now. Seventy-five percent 

of them, three-quarters of them, have to do with conduct that primarily occurred during the early phases of the reconstruction program when there was a lack of oversight. 

Mr. ROHRABACHER. During a time of total chaos? 

Mr. BOWEN. That is correct. Well, an incipient and growing insurgency whose lethality came to be known quickly after November 

2003 in the attack on the UN. 

I will say that the Chairman was right in saying that aggressive 

oversight makes a difference. I don’t think it is an accident that 

there is perhaps a coordination between the time that SIGIR really 

stood up a significant oversight effort and the drop in wrongful conduct. 

43

Mr. JEFFREY. If I could just add, there is a great deal of corruption in Iraqi Government institutions and in the private sector. 

This hurts the Iraqis, sir, and it hurts us. 

I can tell you that 33 years ago when I was in Vietnam there 

was a great deal of corruption there. It did not stop the war effort. 

It did not stop the South Vietnamese from standing up an armed 

force that in the end did defeat the Viet Cong insurgency, stop the 

North Vietnamese in 1972 and under slightly different circumstances would have stopped it again in 1975. 

At that time, throughout east and southeast Asia in countries 

very similar to South Vietnam there were massive levels of corruption. Since then they have become known as the Little Tigers of 

Asia with booming economies, very, very broad democratic rights 

and civil liberties, and our efforts to support them are a proud 

chapter in our history. 

Mr. ROHRABACHER. And the corruption in Korea was overwhelming as well. 

Mr. KUNDER. Sir, just one brief comment. Buried in what might 

not otherwise indicate any effort to battle corruption, when we are 

asking for some funding in the supplemental for 2006 and 2007 to 

build national capacity, kind of an anodyne term, but this is the 

kind of issue we are trying to look at is building up Inspectors General within the Iraqi ministries, building up accounting systems 

within the Iraqi ministries. 

That is critical both because that is something we can leave behind that will protect the American investment, but to Mr. Ackerman’s point when he was asking for the kind of analysis as to what 

is our investment worth today, we are investing both in hardware 

and software in Iraq. Some of the best investments we can make 

are these anti-corruption efforts, these Inspectors General to leave 

behind a more democratic participatory government. 

Thank you. 

Chairman HYDE. Before we get to Mr. Delahunt, do you want to 

ask questions, Ms. Lee? Okay. All right. 

Mr. Tancredo, let us recognize you because you haven’t spoken 

yet. Mr. Tancredo. 

Mr. TANCREDO. Thank you, Mr. Chairman. I will be very brief. 

I have one question only, and that is in the constitution, in the 

new Iraqi constitution, what structure, if any, has been established 

for an actual tax system to take shape rather than a reliance solely 

on oil revenues for every conceivable expenditure of the government? 

Mr. JEFFREY. I will take that one, sir. After considerable searching, I did find enough bits and pieces in the constitution to justify 

if I were asked—of course, this is an Iraqi decision—that the Central Government does have a taxing authority. 

It is in negative terms saying laws for taxes would have to have 

such and such, but we drew back from that the argument that the 

Central Government does have tax authority, and certainly there 

are also authorities for taxing at the regional level as well, but this 

is an important point, and it is one that the Iraqis are going to 

have to tackle along with many other things as they move out with 

the constitution because they cannot support their entire economy 

and particularly these huge subsidies with oil revenues. 

44

They need to get rid of the subsidies, and the IMF is telling them 

that. They need to develop a better basis to fund their transfer payments and their own bureaucracy than the oil revenue, which we 

would think should go either to the people or to capital projects to 

improve the economy as a whole. 

Mr. TANCREDO. And what you found to be a reference to their 

ability to do so, is there any actual outline of the structure of that 

kind of tax system? 

Mr. JEFFREY. We have worked with them, particularly the banking sector and the Ministry of Finance, on ways that they could 

have funds transfers and controls and such. 

What we have seen, and we have a lot of experience in the payment of the military, the Iraqi military, which is of course very important to us, that the absence of electronic funds transfers, the absence of the kind of financial systems that we take for granted here 

in the United States with mortgages, insurance companies and all 

of this, throughout much of Iraq makes it very difficult to move immediately into a tax system. It is very difficult beyond the most 

basic sales tax to evaluate how much income people have and that 

kind of thing. 

They are working on that. We have a variety of projects to help 

them on electronic funds transfer, fiber optics, so that they can 

communicate funding information and other information for their 

ministries, and over time they will develop that capability. 

Mr. TANCREDO. But right now there is not even a sales tax. Is 

that correct? 

Mr. JEFFREY. There are a few taxes at the provincial level, and 

they gain I think 5 percent of their government income is non-oil. 

Some of that is tariffs and import payments, I suspect the bulk of 

it, but there are slight tax earnings. 

Mr. TANCREDO. Thank you, and thank you, Mr. Chairman. 

Chairman HYDE. Ms. Lee? 

Ms. LEE. Thank you, Mr. Chairman. 

Let me ask a couple questions. First of all, I believe that the 

American taxpayer believes that it is our duty and responsibility 

to help fix what we destroy, to help reconstruct what we have 

bombed and to help the Iraqi people move on with their lives. 

I don’t believe, however, that the American taxpayer wants us to 

redevelop the entire country when we have infrastructure problems 

here at home we need to repair, schools that are dilapidated, a 

healthcare system, 44 million with no health insurance. Where 

does reconstruction of what we destroyed end and development or 

redevelopment of the entire country begin? 

Secondly, with regard to the security contracts we have general 

knowledge or believe that most of the security contracts or the security forces now or a large number of them are privatized. I wanted to find out what the percentage is of private security forces 

versus our young men and women in terms of providing for security. 

What type of contracts are these? Are they no-bid contracts, or 

are they competitive bid contracts for the security contracts? Just 

in general, could you list those contracts? 

Finally, Mr. Bowen, maybe you could answer or respond to something that you said with regard to it being time now to 

45

multilateralize the whole effort of reconstruction because initially 

we all remember that the Administration said for those countries 

that did not support us in the war and in the bombing and invasion they shouldn’t participate really in the contracts and in the reconstruction efforts. 

Where are we now with regard to that policy of bringing in countries that didn’t support us, companies from those countries, to 

help with the reconstruction efforts? 

Mr. JEFFREY. Sure. Particularly on the third one I think I may 

have some help from Mr. Kunder and Mr. Bowen. 

On developing the whole country, our reconstruction program 

that we did jointly with the Congress, the IRRF I and the IRRF 

II, was not designed just to fix what we had bombed. In fact, we 

destroyed very little of the infrastructure in 2003. We deliberately 

didn’t target the infrastructure. 

There was some damage still from 1990–1991 when we liberated 

Kuwait and had the 6-week bombing campaign. That was one of 

the contributors, along with Saddam’s various laws and 30 years 

of mismanagement to a totally dilapidated infrastructure that we 

discovered when we came into the country. 

At the same time, whatever was left of that infrastructure was 

largely looted and trashed by Iraqis who were angry at their government or were frankly trying to find copper or other things to 

earn a living. That was the situation that we had when we found 

ourselves in Iraq in April and May 2003. 

Our goal was never to reconstruct the country, and I want to emphasize that as I have in my written comments. The World Bank 

estimates that would take approximately $55 billion or more. 

In our IRRF I and our IRRF II, because we had many other purposes for the IRRF—even though we call the whole thing reconstruction, there is $5 billion for the security forces, there are billions of dollars for democracy and rule of law programs which, as 

Mr. Kunder said, are soft programs. Probably there is about $10–$12 billion of actual brick and mortar reconstruction in that money, Congresswoman Lee. Therefore, 

that would only be a small percent of the $55 billion that Iraq 

needed per the World Bank. 

Now, where would that come from? Well, you hit the nail on the 

head. The Iraqis themselves, as I mentioned earlier, the Iraqis 

have in this year’s budget $6 billion for capital projects so they are 

going to have to start spending it themselves, but also the international community, $13.5 now, as Mr. Bowen said, with another 

almost $1 billion. 

About $14.5 billion for reconstruction is a fairly significant 

amount; not as much as we have put in and not as much as the 

Iraqis need, but if that money starts flowing, and we discussed this 

earlier why it hasn’t flowed at least from the Middle East, then we 

will see a substantial plus up of Iraqi infrastructure capabilities. 

In terms of the security forces, first of all let me be clear that 

both the United States Government, the civilian side of it such as 

the State Department and USAID, and American contractors in 

Iraq use civilian what are called PSDs, personnel security details, 

for their close-in security. We also rely, of course, on the United 

States military for general area security and the Iraqis. 

46

These PSDs, for example, we have associated with the Embassy 

about 3,000 plus personnel either to secure our installations or to 

in particular accompany us when we are traveling in dangerous 

areas. These people are highly professional. 

I review every single incident and have been for the last 2 years 

where they fire a weapon or are engaged in an action, which they 

often are. They are very, very professional. They are very careful. 

They have very tight rules of engagement, but they are also very 

effective. 

They are competitively bid. We know this because sometimes the 

team that you have out with you, that have saved your life twice, 

suddenly disappears because they lost the contract, but so far we 

haven’t suffered any major consequences from that. 

On the last one I will turn to your——

Ms. LEE. Mr. Bowen had mentioned it was time now to 

multilateralize the effort. 

Mr. BOWEN. Exactly right. The reconstruction program is really 

in three phases. The first phase is United States-led and, as Ambassador Jeffrey said, it was really to get the Iraqis started on 

what is going to be a long relief and reconstruction process. That 

is a $30 billion first phase in grants, which, as you know, fundamentally are market distorting. They don’t promote market development, which this next phase should. 

The next phase is going to be multilateralized. Most of this $14 

billion is loans, not direct grants that the United States engaged 

in. Indeed, I think that is appropriate. Iraq needs to come out of 

the phase of debt forgiveness and free money, so to speak, and into 

the phase of operating in a real economy if they are going to be a 

free market democracy. 

The third phase is going to be the long phase—the second phase 

should be relatively short—and that is an Iraqi funded, Iraqi driven, Iraqi led relief and recovery process. 

Ms. LEE. Mr. Chairman, may I have just an additional 30 seconds, please? 

With regard to the countries that did not support the United 

States in the war effort, are these efforts now and their companies 

part of this new multilateralization of the reconstruction process? 

Mr. BOWEN. That, I believe, is true. 

Mr. JEFFREY. Some of them are, but there are two different 

issues here. The first issue, which was very active in 2003, was 

would these countries get the major contracts that we were giving 

out with our IRRF monies. There was a lot of back and forth. 

We are way beyond that, Congresswoman Lee, partially because 

these companies in many cases didn’t have the ability to mobilize 

and particularly go into a war zone. Thus, we relied first on United 

States companies, some of them these famous initial contracts then 

cost plus, but then increasingly we decided that we would start 

contracting directly with the Iraqis; that that got the best bang for 

the buck, and it also helped them develop their capacity. I think 

we are pretty much beyond that discussion. 

Ms. LEE. Thank you, Mr. Chairman. 

Chairman HYDE. I am going to turn the chair over to Ms. RosLehtinen to finish the hearing. The three of you have been superb, 

and I congratulate you. 

47

I just want to make a couple of statements. I think one thing, 

you three are non-political. You are professionals. You don’t have 

an axe to grind. You are not working for one candidate for President or another one. You are professionals calling them as you see 

them in a very tough job, and you should have credibility. You have 

it with me. What you say carries a lot of weight. 

A statement was made by one of my friends on the opposite side 

that we invested a lot of money in Iraq and have nothing to show 

for it. I will tell you what you have to show for it. Three elections. 

Three elections. How many would stand out in the broiling sun and 

risk assassination just to vote? They do it, and they have done it 

three times. That is something heroic. That is something to show 

for our efforts over there. 

There is a tidal wave—I was going to say a tsunami, but I don’t 

want to get too PC—of negativity in all of these discussions, and 

I have watched it debilitate or deteriorate from the opening guns 

so to speak until where we are now, calling the President a liar, 

saying he motivated us to get into a war overseas because Halliburton needed a contract. It is just negative, negative, negative, 

negative, and the aroma of politics suffuses all of these discussions. 

In any event, there is nothing more important right now. It is 

life and death. I think the contractors and civilian employees deserve equal credit because they are in a very dangerous position, 

and they are over there voluntarily, so I salute them, I salute you, 

and most happily I turn the chair over to Ms. Ros-Lehtinen. 

Ms. ROS-LEHTINEN [presiding]. Thank you, Mr Chairman. 

Mr. Burton is recognized for his questions. 

Mr. BURTON. Thank you very much. You know, I have been 

proud of Mr. Hyde, Chairman Hyde, for a lot of reasons, one of 

which was he held George Mikan, I was just reminded, to one point 

when he was playing basketball for Georgetown. I don’t know if 

you know who George Mikan was, but he was one of the outstanding NBA players back in the 1940s. Henry held him to one 

point. Henry, congratulations for that. 

I would also like to congratulate him for his statement. There 

has been so much political rhetoric about what has been going on 

over there. 

I am sorry I wasn’t here for the early part of the meeting. I have 

one question to ask you, but I would just like to make one brief 

statement, and that is there have been three elections. They now 

have a government. It took the United States of America 9 years 

from the Articles of Confederation to our Constitution, and they 

have done it in 3 years. It is in large part to your efforts and other 

people’s efforts, as well as the Iraqi people’s efforts. I think you can 

be justly proud of that. 

Now we have gotten Mr. Zarqawi, the prince of terrorists according to Osama bin Laden. That lets every terrorist know around the 

world that they are not safe wherever they hide. If they are watching, they now know that the United States can get the top guy, and 

if they keep it up we will get them as well. 

I would just like to ask you this question. I heard what the President said today. I watched his statement. I thought it was very 

good, but I would like to know, Ambassador Jeffrey, since you are 

48

the chief advisor to Secretary Rice, from your perspective, what 

does Zarqawi’s death mean? 

Does this mean a deterioration in the terrorist activities, or 

should we expect more terrorist activities? What do you think this 

does to the leadership of Iraq as far as how they feel about the terrorist threat? 

Mr. JEFFREY. We don’t have a settled position at that level of detail in the Administration, Mr. Burton. My personal belief from my 

time there and continuing on to the current time is that Zarqawi 

and his role in this whole thing has been critical and that he has 

in some respects diverted much of the insurgency into an horrific 

and acronistic nihilistic attack on any sort of civilization that has 

made it very hard for the political process, which we are all working so hard to bring in people. 

I watched in Fallujah in 2004, and then again in the last few 

months in Ramadi, how Zarqawi and his henchmen went out after 

folks who had been insurgents, but were also willing to at least 

talk with us and in some cases, for example, in the elections in December cooperated to ensure that those elections would take place. 

He hunted them down one after the other. 

Obviously organizations are more than the individual, but particularly with terrorist organizations don’t underestimate the importance of a single dynamic evil leader like him. We will have to 

see, but this cannot be a bad thing for us. Let me put it that way. 

Mr. BURTON. I think this is a good day for President Bush and 

his stick-to-itiveness, and I think that everybody in the Congress, 

regardless of our political persuasions, congratulations our military 

and the leadership over there on getting the job done and getting 

that guy. Now on to Osama bin Laden. 

Thank you very much. 

Ms. ROS-LEHTINEN. Amen. Thank you. 

I am so pleased to yield to the gentleman from New York, Mr. 

Engel, for his questions. 

Mr. ENGEL. Thank you very much, Madam Chairwoman. Before 

I ask my questions I just want to say in response to our Chairman, 

you know, not everything that is being said is being said for political reasons. I think that we all have to understand that there is 

a very much heartfelt feeling in America that we have gone off the 

wrong track with the war in Iraq. 

That is a feeling that many of us feel, including someone like myself who voted to authorize the President to use force. People always say if you knew then what you know now would you have 

done the same thing? If I am honest with myself, I have to really 

say no, I would not have done the same thing because it isn’t so 

much that there were no weapons of mass destruction found. It 

isn’t so much that Saddam Hussein, his was a brutal dictatorship 

and the Iraqis are better off with him deposed. No doubt about 

that. We are moving toward a democracy in Iraq. 

The way this war has been conducted, it seems to me, that the 

Administration didn’t seem to know what they would encounter. 

We were told that we would be welcomed as liberators, not conquerors. Polls now in Iraq have shown that every side wants us 

out. The Administration didn’t seem to have any kind of exit strategy. They didn’t send enough troops, in my opinion, to secure the 

49

borders. General Shinseki said that we would need a quarter of a 

million troops. His remarks were dismissed, and then he was dismissed. 

What we now have, this so-called insurgency, are really foreign 

jihadists coming in from Syria and other places across the border. 

Once that sort of took hold it was impossible to get rid of it. 

We fired every one of the Ba’ath Party so we had hundreds of 

thousands of disgruntled, essentially, civil servants angry, without 

a job and without any kind of help for their families, so it turned 

large segments of the population against us. 

Here we are 3 years later. We are still trying to get it right. I 

am happy that Zarqawi was killed today, and I really hope that we 

can right the course, but I think that for people to say that the opposition to what is happening in Iraq is just simply political, it is 

really not fair to say that. I think there are a lot of us who are 

scratching our heads and saying you know, the Administration 

didn’t seem to know what they would encounter and are really 

struggling to get it right. 

I think the problem is with infrastructure is people on the 

ground there don’t see any improvement in their lives and so they 

blame us for it. Since the President declared an end to combat operations 3 years ago, the standard of living of the Iraqis has not 

really risen appreciably. 

In the most recent report to Congress, the Special Inspector General for Iraqi Reconstruction said that more than 75 percent of oil 

and gas reconstruction projects begun with United States assistance still remain incomplete. More than 50 percent of electricity reconstruction projects are still unfinished, and approximately 40 

percent of water and sanitation reconstruction projects remain incomplete. 

I guess my question to the gentlemen on the panel, and of course 

I know Ambassador Jeffrey from his other life in Albania, are we 

wrong in being so frustrated? I mean, I don’t want to be negative, 

but I have to be realistic when my constituents say to me, ‘‘What 

is going on in Iraq?’’

Mr. JEFFREY. We are all a bit frustrated that we haven’t been 

able to move forward faster. The President recently talked about 

his own mistakes on this. Secretary Rice talked about the famous 

quote of a thousand tactical errors. 

We are aware that not everything has been perfect, and we put 

it in writing. It was difficult under the best of circumstances, and 

this is a very, very tough one, and it is going to take perseverance. 

It is going to take more time. 

I would say that you are right that the perception of the people 

on the ground, and we all have heard this being on the ground ourselves. You Americans can put a man on the moon. Why can’t you 

get the water on? 

Several reasons for this. First of all, in some respects it is not 

correct. Today, the Iraqi income is double that of several years ago. 

The country is growing. Unemployment has dropped substantially 

in the past year. I don’t want to give the specific figures because 

I don’t trust the specific figures, but it is a proportional drop. It is 

significant. 

50

We do have 3 million more Iraqis consuming potable water than 

we had before the war. Stuart and I disagree and we are having 

a hard time figuring out what the level was before, but we are in 

agreement that there are 3 million more. It is the same thing with 

5 million more people have access to sewerage. 

There are 6 million cell phones in Iraq. There were almost none 

before we liberated the country. Internet cafes have sprung up everywhere. Around Iraq we talk about electricity problems all of the 

time largely because we focus on Baghdad, and there are several 

reasons for that, but in the rest of the country, sir, there is much 

more electricity per day than there was before 2003 because Saddam cut electricity in much of the rest of the country to keep Baghdad burning 24 hours a day. 

There has been perceptible, measurable increases in a variety of 

areas. These are not enough to satisfy the Iraqi people, who have 

suffered under a terrible tyranny for 30 years and are thirsty to return to the era when Iraqi per capita income was that of Spain. It 

is now one of the lowest in the world. 

We have a long way to go. We are very, very cognizant of that. 

We are impatient ourselves. Thank you, sir. 

Mr. ENGEL. Can I just say that the former director of USAID, 

Mr. Natsios, made some public statements recently, and he said 

that the Coalition Provisional Authority really has been inept in 

overseeing the reconstruction of Iraq. 

He cited the CPA’s hiring of ill-qualified personnel, the use of illqualified or corrupt contractors and the lack of proper management 

and accountability systems to oversee the reconstruction. 

I am wondering if anyone can tell me what measures the Administration has been undertaking to prevent the incompetence that 

was prevalent under the CPA to ensure that the current reconstruction efforts are being managed properly? 

Ms. ROS-LEHTINEN. Thank you, Mr. Engel. That is an excellent 

question, and perhaps in the next round of questions with the ones 

who follow Mr. Engel you can answer that. 

I am pleased to yield to Mr. Delahunt for his questions. 

Mr. DELAHUNT. You know, my understanding is that some are not concerned about the $9 billion that is missing. It is still $9 billion. If it is Iraqi money, some would suggest that is okay as long 

as it is not American dollars. 

I don’t think that is your position, Mr. Bowen, because that $9 

billion could have been utilized in a very effective way and move 

things along, so I would suggest that those who say well, that is 

not American taxpayers’ money, I think that is a real error because 

maybe if we had $9 billion we would be further along in terms of 

the reconstruction and getting out of there. Would you agree with 

that, Mr. Bowen? 

Mr. BOWEN. I would agree with it, and I issued the audit because 

I was concerned about the issue. 

Mr. DELAHUNT. I know. I read the audit. Great work, okay? 

The Ambassador indicated earlier that we had to go in there because I think he said something like the UN asked us to. Well, I 

don’t think it was the UN that asked us into Iraq to begin with. 

I don’t want to misstate your words, but——

Mr. JEFFREY. No. I didn’t mean it that way. 

51

Mr. DELAHUNT. Okay. 

Mr. JEFFREY. On the money, you are absolutely correct. This is 

money that was given to us. It was Iraqi money. We were responsible for it. 

Mr. DELAHUNT. It came from the Oil-for-Food Program, correct? 

Mr. JEFFREY. Right. We were responsible for it. 

Mr. DELAHUNT. We were responsible for it, and we should be investigating it. I applaud the Special Inspector General for his report despite the fact that some appear to be disappointed with it. 

Mr. JEFFREY. If I could add——

Mr. DELAHUNT. I don’t have a lot of time, Ambassador, but let 

us be very clear that it was the United Nations that initially 

brought the issue of the missing $9 billion to the attention, I understand, of the Administration. 

Mr. BOWEN. No, that is not true. 

Mr. DELAHUNT. No? Okay. 

Mr. BOWEN. This was entirely——

Mr. DELAHUNT. I thought it was the IAMB that raised the issue. 

Mr. BOWEN. No, they did not. We brought it to their attention 

actually, and it was simply the product of hard work by SIGIR 

auditors in Iraq. 

Mr. DELAHUNT. Very good. 

Mr. BOWEN. I mean, the audit speaks for itself, but we interviewed nine senior advisors who were the effective ministers at the 

time, and it catalogs a series of issues that led to the conclusion 

that there were insufficient controls. 

Mr. DELAHUNT. Thank you. Just let us not dismiss it as $9 billion missing. 

You know, Mr. Kunder, you indicated in your response to Mr. 

Lantos’ statement about fraud, mismanagement and abuse, I presume then that you disagree with the former Administrator of 

USAID, Mr. Natsios, who cataloged what I would only describe as 

his frustration with the Administration in terms of the operation 

of the reconstruction phase for a year. Do you agree or disagree 

with Mr. Natsios? 

Mr. KUNDER. I am glad whenever Mr. Bowen puts anybody in 

jail who is a crook. The point I was making earlier, sir, I thought 

we had lost the bubble between the $9 billion and the appropriated 

funds and what could reasonably be criticized as not being effectively spent, on the one hand, versus waste, fraud and abuse. I was 

just trying to draw the distinction. 

Mr. DELAHUNT. Fine, but I would suggest that when Mr. Lantos 

spoke about waste, fraud and abuse he wasn’t just referring to Mr. 

Bowen’s report. He was referring to people within the Administration such as Mr. Natsios. 

Mr. KUNDER. And what Mr. Bowen has just testified, sir, is that 

overall waste, fraud and abuse has not been a major problem in the 

appropriated funds. That is what he just testified to. 

Mr. DELAHUNT. Let me add the noun ‘‘mismanagement’’ then. Do 

you agree with Mr. Natsios’ assessment or do you disagree? 

Mr. KUNDER. Mr. Natsios has now left the Administration. He 

can write whatever he wants. He was my former boss. We had policy disputes on many of the issues. 

Mr. DELAHUNT. Do you disagree with Mr. Natsios? That is all. 

52

Mr. KUNDER. I disagree with his current assessment, yes. 

Mr. DELAHUNT. Okay. Thank you. 

I would like to get to the issue of the donor nations. My understanding is that according to reports recently Iran is prepared to 

participate in the reconstruction. 

In fact, I thought it was interesting that the new Prime Minister 

indicated that—let me quote—‘‘Iran has a right to develop nuclear 

technology, and the international community should drop its demands that Tehran prove that it is not trying to build nuclear 

weapons.’’ I find that kind of an interesting development. 

Do you care to comment, Ambassador, and do we welcome the 

Iranian participation in the reconstruction of Iraq? 

Mr. JEFFREY. The Iranians are contributing with $10 million as 

a Madrid pledge in the Iraq reconstruction facility. As Secretary 

Rice said last week in talking about our policy toward Iran, we look 

forward to the day when they do responsible things, and we 

will——

Mr. DELAHUNT. Ambassador, were you surprised somewhat by 

his comment relative to let us lay off Iran and pressing them on 

the nuclear weapons issue? 

Mr. JEFFREY. I was not totally surprised because I think that the 

Iraqis have to live with a big and potentially very aggressive neighbor, and I think that we will work with them to ensure that in the 

future——

Mr. DELAHUNT. So we don’t have a problem if Iraq supports the 

Iranian position in terms of the development of enriched uranium? 

Mr. JEFFREY. I wouldn’t characterize it that way, but if Iraq did 

we would certainly have a problem, sir. 

Ms. ROS-LEHTINEN. Thank you, Mr. Delahunt. 

Mr. Sherman, I apologize for bypassing you. You have 3 extra 

minutes for that. Thank you. I apologize. 

Mr. SHERMAN. I don’t know whether I will afflict all of our colleagues here with a full 8 minutes, but we will see how it goes. 

I want to associate myself with Mr. Lantos’ comments about how 

Iraq’s fellow Arab states should be doing more. I know the response 

focused on efforts the Administration is undertaking to get the 

Arab states to at least forgive some of the debt. It would sure be 

nice to see some cash as well. 

I think you are right to focus on debt forgiveness because most 

oil rich countries do their development not from aid, but from borrowing, and the amounts of aid that Iraq will receive no matter 

how we put it together going forward at least from there were extraordinary amounts of aid that Congress provided in the first 3 

years after the liberation, but, going forward, an awful lot of the 

development of Iraq is going to be with borrowed funds. 

The problem is Iraq can’t borrow if it still has enormous debts. When the first supplemental came to Congress, some $17 or $18 

billion, many of us argued that at least half of that should be 

loaned, and the Administration was vociferous in saying no, it must 

all be aid because Iraq can’t afford to borrow. They already have 

too many debts. 

Now, the Paris Club has forgiven some debts. The Arab states 

haven’t. Is that correct? I am seeing a soft yes from the Ambassador. He is nodding his head. I will call that a yes. 

53

Now, our troops have shown great courage, but winning this war 

cannot be done just through the military. It must also be done 

through development, and the most important part of financing development is the Iraqi Government’s ability to borrow. 

The question is whether there will be courage in the State Department approaching some small percentage of the amount of 

courage that we see from our troops on the field because we see 

the Arab states asserting some $64 billion of debt from Iraq, perhaps even more, and $57 billion of this debt which is hanging over 

the Iraqi Government preventing them from borrowing and developing and providing the electricity and whether there is electricity 

in Baghdad. 

That is not just a utilities issue. Hundreds of American soldiers 

will live or die based on whether there is electricity in Baghdad, 

based on whether there is development, based upon when we feel 

that we can pull out, so we are talking about lives here. 

That $57 billion from just two countries, $30 billion from Saudi, 

$27 billion from Iraq, is the big debt that is hanging over the Iraqi 

Government. Now, with Iraqi borrowings they can kind of be divided into two categories. Some of the Paris Club members provided money to build infrastructure that helps, for example, the oil 

come out of Iraq to pay for those debts. Some of that infrastructure 

is still there. 

What did Saudi Arabia and Kuwait lend the money for? They 

lent the money for a war of aggression and debt launched by Saddam Hussein against Iran. They did so because they thought it was 

their own geopolitical interest. 

Well, what has been the world’s attitude toward lending money 

to finance wars of aggression? Were Hitler’s debts repaid? Were 

Genghis Khan’s debts repaid? This gets to the courage part. Why 

does the State Department not have the courage to simply announce that it is U.S. policy that the debts of Saddam Hussein are 

null and void and, in particular, those debts to countries which for 

their own geopolitical reasons financed the debts of close to millions of people in the Iraq/Iran war should not be repaid? 

That would lift $57 billion of debt just to Saudi Arabia and Kuwait, another $4 billion to Qatar, another $3.8 billion to the United 

Arab Emirates, countries that feared Iran and were all too happy 

to finance Saddam’s war of aggression. 

Why does the country of Kuwait, that owes its existence to the 

courage of American soldiers, now see them die on the battlefield 

in Baghdad and throughout Iraq because of its own intransigence? 

Most importantly, why is the State Department so silent that 

some midlevel bald congressman from California has to be the one 

bringing this issue up? Why is the President of the United States 

holding hands with the, I believe it was then-Crown Prince, now 

King? Why is he not standing up and saying the blood of Americans should not be shed to provide for the repayment of these loans 

to Saddam Hussein? 

Ms. ROS-LEHTINEN. Never doubt your ability to use up the time, 

Mr. Sherman. Thank you. 

Mr. JEFFREY. To answer that briefly, and I will be on solid 

ground on one part of it and maybe on thin ice on another. The 

54

President feels exactly the same way. He has charged us to get this 

debt removed just as the debt in the Paris Club was removed. 

He has engaged himself I know with the GCC states in this regard. He has sent Secretary Rice out, and we are going to be 

launching a new effort now that we have the Iraqi Government set 

up, and I think that is an important prerequisite, frankly, to put 

additional emphasis on this. 

The one thing, and this is where I am on a bit of thin ice here, 

as I understand the conflict, the debts that flowed to Saddam were 

not to fund the aggression per se. Saddam, on his own, with money 

that he had built up, invaded Iran. Very quickly he was thrown out 

of Iran. Much of that 8-year horrific war took place as the Iranians 

moved into Iraq and attempted to take over the south of Iraq, particularly the area around Basra. 

Most of the money that the Arab states gave Saddam was because they feared that the Iranians under that very, very dictatorial leadership would seize the southern Iraqi oil fields. That was 

their logic in doing it. 

Mr. SHERMAN. I would just comment in this case time isn’t 

money. Time is lives. I hope you act quickly. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Sherman. 

Mr. Payne? 

Mr. PAYNE. Thank you very much. I am also pleased that there 

is a hearing that is being held. I was here earlier and did hear the 

discussion about the lack of a hearing. 

I have never seen an issue that is so important to this country 

that has had so few hearings to deal with the situation. It is almost 

disgraceful. Twenty-four hundred deaths almost, billions and billions of dollars spent, and we have had one or two hearings sort 

of like it is just a little something that is going on in another part 

of the world. 

It seems to me we should be having monthly hearings about 

what is going on. I wonder how many of the 133,000 troops will 

have to stay there longer? I wonder what is happening with the 

263,400 supposedly Iraqi security forces? I wonder what this 

117,900 operational military force under the Ministry of Defense is 

supposed to be? 

I am concerned about this so-called 145,500 police commandos 

trained under the Ministry of the Interior that is supposedly 

325,000 ISFs that are supposed to be on board by August 2007. 

I have never seen something so important to the United States 

of America have such little public airing other than what you read 

in the newspaper. It is almost like there is a great silence going 

on. It is just something that if you don’t talk about it, you know, 

it just will go away. 

I haven’t heard. What about the Coalition of the Willing? Where 

are they? Is it growing? Do we have more willing people? Of course 

not. The so-called Coalition of the Willing, which was so-called, is 

even diminishing. The Italians are leaving. The Spanish are going. 

The couple of hundred that we have from maybe one of the central 

independent states, new independent states in eastern Europe, are 

leaving. 

We are pleased that we were able to get the top terrorist and 

eliminated him, and that is excellent. Of course, there is a $25 milVerDate Mar 21 2002 11:00 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6601 F:\WORK\FULL\060806\27990.000 HINTREL1 PsN: SHIRL
55

lion reward, so we have to put up for the next guy I guess maybe 

$15 million to try to take out the next head of the terrorists. 

You know, we got into something ill-advised, didn’t have to be, 

tied out to al-Qaeda up to Saddam Hussein when the two weren’t 

even connected. Of course, once Saddam was gone they found certainly breeding grounds to build al-Qaeda up, but Saddam didn’t 

go forward with that stuff. Anybody that acted up on that Islamic 

fundamentalist stuff, he would throw them in jail or maybe just I 

guess eliminated them. 

So now we have the breeding ground, 2,400 deaths, thousands 

wounded, and I don’t know whether we are winning so that we can 

leave by August 2007. I just wonder if someone could tell me just 

in a general sense. I guess it will be another year and a half or 

so before we have an opportunity to talk about this again at a Full 

Committee hearing. 

Mr. Ambassador, how do you think we are doing? Are we going 

to be able to get our troops out? Will the Iraqis be able to provide 

security for them? I remember when Saddam Hussein said you 

know, the inspectors, Hans Blix and the inspectors, can go anywhere they want to go because the bluff was over. He knew he 

didn’t have the weapons of mass destruction and biological and 

chemical weapons. He bluffed the world, but the bluff was over. Let 

them go around because he knew they would find nothing. 

Our President said do you know what, inspectors? We will give 

you 48 hours to get out of Baghdad, get out of Iraq, because we are 

going to have shock and awe. Do you know what, we are just going 

to be there for 6 or 7 months, and then we are gone. 

You know, they would have confirmed as we know now that 

there were no weapons of mass destruction and, secondly, that it 

wasn’t Saddam Hussein that went into our World Trade Center 

that I could see from my house in New Jersey every day when it 

was there when we should have been in Afghanistan after the alQaeda people that did it. We don’t even hear that guy’s name anymore. 

We should have put 300, 400, half a million, as many as we 

needed into Pakistan and found that murderer and eliminated him, 

but we decide we are going to go into Iraq. He is still around making tapes somewhere. 

I have people in my district, hundreds and hundreds and hundreds because they leave Newark by the PATH trains and go right 

to the World Trade Center. I saw one of the widows just last week 

at a graduation of an elementary school, a 5- and a 7-year-old. 

That is where we should have put all of our might to get Osama 

bin Laden and those murderers that killed people in my district. 

We are stuck over there now with these numbers that make no 

sense. 

Does anybody have a response? 

Mr. JEFFREY. Yes, we are winning. We cannot give you a time, 

Congressman, when we will finish the job, but we know why we 

are there now. 

Regardless of what happened in 2003 or 2004, al-Qaeda is in Iraq 

in a large presence, and we can’t leave that country with its 

wealth, with its geographic position, to al-Qaeda. Therefore, we are 

going to destroy al-Qaeda in Iraq. 

56

Our goal is not to do this indefinitely with our forces, but with 

the Iraqi forces. You gave the numbers accurately. I can assure you 

this is not anything other than a crude measure of confidence, but 

they are dying at a rate two or three times greater than the coalition forces. 

The coalition troops themselves, the non-American, are still at 

20,000. We had a soldier from the coalition who died just yesterday 

or the day before. The British have lost nine people killed out of 

their contingent in the last month alone, so they are fighting, and 

they are dying, and they are staying the course. 

The Italians eventually will leave, and that is something that we 

recognize. You will remember countries started reducing their presence when we reduced our presence back in December from 17 to 

15 brigades. Countries saw that as an indication that if their area 

was quiet they could start reducing their forces. 

By and large, other than the British in Basra, the areas where 

most of these coalition forces are are quiet. On the other hand, the 

Albanian troops in Mosul, we have troops from a number of countries in Anbar Province, the most dangerous in the country actually 

in Haditha, for example, and in other places, and those folks are 

staying on because we need them there. 

I am pretty sure that we can count on this coalition of troops into 

the future, and I think that they are doing this because they believe that America will protect them and be their ally in the future 

as they are our ally now. 

Ms. ROS-LEHTINEN. Thank you, Mr. Payne. 

Mr. Crowley? 

Mr. CROWLEY. Thank you, Madam Chair. I want to thank the 

Chair for holding this hearing, the second ironically in the last 

month on this issue of Iraq, but I also want to agree with my colleague from New Jersey that we have not had enough hearings, 

and we ought to have a more regular scheduled set of hearings. We 

hope that this is an indication that in the future we will have more 

regular hearings on the issue of Iraq. 

It is somewhat difficult to talk more about mundane issues with 

obviously the success of the elimination of al-Zarqawi having been 

announced today, but I think it is important just to go back to a 

couple issues. If they have already been addressed forgive me because I was outside the room. 

According to recent statistics that I have seen, Iraq reportedly 

has nearly 600 billion barrels a day refining capacity at eight refinery facilities. Because of looting, sabotage, deferred maintenance 

and an unreliable source of electrical supply, refinery operations 

have been insufficient for domestic needs, therefore requiring Iraq 

to import additional refined resources costing the country $200 to 

$250 million per month, not including government subsidies that 

result in a 10 cent per gallon pump price. Now, the DOE estimates 

that direct and indirect fuel subsidies cost Iraq $8 billion per year, 

and I quote, ‘‘with no indication as to when this problem might be 

resolved.’’

With all the problems that they are facing, how do you suppose 

that rebuilding Iraq can be funded through this process? 

57

Mr. JEFFREY. You have hit the nail on the head, Congressman, 

in terms of the refinery operations. Part of that is bad maintenance. Part of it is an area where the Iraqis need to do more. 

In fact, much of the $3 billion of their own money that they have 

earned through their oil sales that they will be putting into the oil 

sector will go to refinery capacity because, as you said, they can 

save a hell of a lot of money by refining their own oil, which they 

would sell for $70 a barrel, but the amount of product that they 

get by refining that at the cost of importing fuel is a tremendous 

difference. 

Part of the problem is also, however, security. About half or more 

of the refinery capacity is just to the south of Baghdad or to the 

north in Baiji, both areas where we have seen very extensive insurgent intimidation of the people who are working. We lost 11 engineers, for example, in two incidents in Baiji who were killed by insurgents. 

Part of our plan is using Iraqi forces supported by our own to get 

control of the security in that area. We have had some success from 

Kirkuk to Baiji, and we are working from Baiji down to Baghdad. 

It will take some time, but that is an area where after years of not 

seeing much progress we have made progress in stopping the attacks on the lines, and we need to expand that. 

This is something that both we and the Iraqis support at the 

very top of the agenda, sir. 

Mr. CROWLEY. So you are suggesting there has been some 

progress made in terms of addressing the security issues? 

Mr. JEFFREY. Right. What we did or what the Iraqis did was 

from what were called strategic infrastructure battalions. Frankly, 

for the first 9 months of their existence they were part of the problem, not the solution. 

Then General Casey, with a lot of support from the Administration—this went up at very high levels—put Iraqi troops with these 

forces. Our own troops were doing over watch. We have had only 

a couple of hits on the main set of pipelines between Kirkuk and 

Baiji in the north. We now have to expand that with other battalions running from Baiji south to Baghdad because that is crucial, 

and the insurgents are trying to choke off Baghdad. 

I think I was a skeptic 6 months ago. I am now much more optimistic. 

Mr. CROWLEY. What are we doing in terms of encouraging the 

new regime to deal with the issue of the debt that has been incurred by this? Apparently it is my understanding that they have 

been kind of not addressing it at all at this point. 

Mr. JEFFREY. It is not because they don’t think it is important. 

It is just that they don’t service the debt right now. 

As your colleague, Mr. Sherman, said, the debt is crucially important because it is a limiting factor on their ability to take loans 

which in many respects are a more economically efficient way of 

funding their future. 

The debt issue is a very, very important issue. As I said, the 

Iraqis, faced with the kind of problems that we could only hardly 

imagine from here, don’t see the debt as high a priority as we do 

because, as I said, they are not servicing the debt payments. 

58

Nevertheless, we have taken on the task of working with them 

on these countries in the Middle East who are the main holders of 

Iraqi sovereign debt. We were very successful in the private sector. 

We were very successful with the Paris Club. That was about another $40 billion. We need to work to get this mountain down. 

Mr. CROWLEY. Thank you. 

Ms. ROS-LEHTINEN. Thank you, Mr. Crowley. 

Mr. Carnahan? 

Mr. CARNAHAN. Thank you, Madam Chair, and thank you, gentlemen, for being here. There are three areas I wanted to talk 

about—the newly-elected government, the security forces training 

and oil revenue again—and really want to start with now with 

Zarqawi eliminated I thought back to about the time we were in 

Iraq in March of last year, and we met with many of the newlyelected officials. They were very optimistic. 

We met with all the different groups, and they all had some 

great common themes of unity and asking about our system here 

in the U.S. and how they could have a diverse unity government. 

They were all very optimistic. That was one of the things that impressed me most. We got this same feeling from all the different 

groups. 

They have had some rough times since then, but with these new 

ministers appointed I guess I wanted to ask how well do you think 

this government can go forward in terms of finding a national identity versus the sectarian divisions, and at what point if they don’t 

come together do we need to consider things like Senator Biden has 

suggested that maybe we look at some stronger regional governments to really orderly govern the country? 

Mr. JEFFREY. The first part of the question, sir, is one that is impossible for us to judge because in any international or even domestic political situation into the future you can’t tell. You can’t judge 

what is in people’s hearts and whether they understand the magnitude of it. 

I think it is important for us as their friends to make it clear to 

them that they have to make the right choices and that these 

choices are hard. For example, de-Ba’athification, dealing with the 

detainees, dealing with issues of sharing of oil, regional versus 

Central Government. These are all very important political issues. 

Some of them, for example, Central Government versus regional 

powers, were at the heart of our own disputes in the United States 

for the first 90 years of our existence as a national state. They have 

to deal with this. 

Our job I think in part is not only to point out possible solutions 

which in the end they have to decide on, but also to make it very 

clear to them that we can’t subsidize bad decisions in the long run 

because in the end it will not work with or without our forces in 

the international community. They have to take the right choice. 

We do not think that any kind of splitting up of the country or 

Yugoslavization of it is a good choice. We think it would be terrible 

for the country. We think that the countries around the region 

would be extremely nervous, that they would react in bad ways and 

that we would have more rather than fewer problems, so part of 

our mission is to make sure that the Iraqis understand that and 

59

to make them understand that they do have to take these—I will 

be honest—terribly hard decisions from their standpoint. 

Mr. CARNAHAN. The other area I want to ask about is really the 

training of troops and police forces of the Iraqis. 

We toured a very impressive facility in Jordan when we were 

there. They had very aggressive goals of training numbers of troops 

to get them on the ground. My understanding is those goals have 

not been fully reached, and I wanted to ask about where we stand 

with the training. 

Secondly, I understand we have also had some repeated offers 

from Egypt that has training facilities and where we are with those 

offers and again looking at other ways to ramp up and speed up 

the training process. 

Mr. JEFFREY. The training program again is absorbing, assuming 

we get the DoD supplemental, almost $15 billion of United States 

funding since 2003 and certainly well in excess of $5 billion in Iraqi 

money, so it is a major, major effort, and it is producing, as we indicated, 260,000 trained and equipped personnel. 

The army training program, basically to get the light infantry 

units on the ground and replace a lot of our troops, will be finished 

by the end of this year. That doesn’t mean that they will have an 

army as you and I understand it. They won’t have a lot of the logistics. They won’t have much of the heavy armor or indirect fire 

weapons, but that will come later. The key thing that we put our 

priority into was to get their troops out on the ground, and we are 

going to be pretty well finished with that. 

The police frankly are going to take longer, and that is the long 

pole in the tent because police are really important in any 

counterinsurgency. With the Iraqi police it is not just a question of 

training and equipping them, but it is also getting the Iraqis to do 

the job that they need to do. 

The second part of your question, sir, was? 

Mr. CARNAHAN. About the Egyptian offer of training. 

Mr. JEFFREY. The Egyptian offer. We have sent an Iraqi infantry 

unit, for example, in 2004 to Egypt to be trained, but the problem 

with that is, as you can imagine, taking a police squad or an army 

squad or a football team, an offensive line on a football team. You 

can’t take those folks and send them off to five different training 

centers to train with different tactics, to train with different techniques and such and then put them together and form them as a 

team. 

Thus, our belief is that training has to be uniform for the police, 

and training has to be uniform for the Iraqi army because they are 

in a life and death battle. What we are urging people to do is to 

contribute to the training facilities in Jordan, to contribute to the 

NATO effort where we can have control over that training. 

All around the world, and we do it and everybody else does it, 

companies and police units and individuals go to another country 

and they learn how people do things. That is good for building 

interoperability and building good relations, but if you have a life 

or death mission of standing up a large force, you want that force 

to be standardized. Therefore, I think that using these schools and 

using NATO and Jordan is the way to go, sir. 

60

Mr. CARNAHAN. One last question. I think we are wrapping up 

on time. Do we have a strategy to use the potential oil wealth in 

the country and develop it? I know there have been issues and others have asked about it, but to develop that without further U.S. 

contributions and also to be able to leverage private sector financing to get that off the ground? 

Mr. JEFFREY. We have a major oil study underway. We have approached the Iraqis several times with a lot of expertise from the 

international oil private sector. We think that not just in Iraq, but 

particularly Iraq, the way to exploit your oil reserves, the way to 

develop an efficient, modern oil industry is to have international 

private sector participation, investments and that sort of thing. 

We are pushing this every way we can. I have to tell you that 

in the Middle East, as opposed to Central Asia, we have not had 

as much success, and as a result people are not able to use their 

reservoirs as well as they should, but we will keep trying with the 

Iraqis because we think it is absolutely essential. 

Mr. CARNAHAN. Thank you, Mr. Ambassador. 

Ms. ROS-LEHTINEN. Thank you, Mr. Carnahan. 

Mr. CARNAHAN. Thank you, Madam Chair. 

Ms. ROS-LEHTINEN. I would like to make some concluding statements. I thank the witnesses for being with us, an excellent panel. 

As Chairman Hyde said, when we discuss reconstruction we have 

to do so in a balanced way instead of just focusing on the negative. 

There have been so many positive developments in Iraq, and I 

would like to just conclude by reading some of them. 

On the political side, Iraqi leaders achieved a political breakthrough when the Iraqis said we are going to stand up a government. They had a new Prime Minister. He formed a government 

that can respond to the needs of the Iraqi citizens. 

The Prime Minister is committed to making sure that we have 

national unity in Iraq. The Parliament has their nominees for the 

cabinet posts. Just this morning they had their Interior and Defense ministries up. If no agreement is made on the nominees, he 

will exercise his constitutional right to put forward his own nominees for a vote. 

We can’t forget about what happened in Iraq under Saddam Hussein just a few years ago. The misrule of Saddam Hussein has been 

overthrown now. Iraqis have participated in three historic elections, each one with a greater participation of Iraqi citizens with 

less violence and broader political participation from all sects. 

The Iraqi constitution is arguably one of the most progressive 

constitutions in the Arab world, providing a legal framework based 

on a democratic process, based on inclusiveness. The Iraqi people 

will have the opportunity to amend this constitution and make 

more improvements after new government is fully in place. 

On the security aspect, a lot of positive developments in Iraq. 

Trained Iraqi security forces are growing. They are assuming a 

larger role. They are responsible for almost 20 percent of the land 

area of Iraq, including over half of Baghdad. Approximately 

265,000 security forced have been trained and fully equipped. 

The Iraqi Prime Minister is committed to ending the sectarian 

violence that we have been seeing. He has been disbanding private 

militias. He has pledged to implement a new security plan for 

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Baghdad that will address these concerns, along with the statements he has made about international participation. We have 

seen 34 countries and NATO support Iraqi stability operations. 

On the reconstruction and the economic front, Iraq is slowly recovering after 30 years of an evil dictatorship. The Iraqi economy 

is showing some signs of growth, and Iraq is working toward World 

Trade Organization accession. 

Over 3 million Iraqis now enjoy improved access to clean water. 

Over 5 million have improved access to sewage treatment. More 

than 30 percent of Iraq’s schools have been rehabilitated. More 

than 47,000 teachers have been trained. Approximately 8.7 million 

revised textbooks and 3 million school supply kits have been provided to students throughout the country. Ninety-eight percent of 

the children of Iraq under five have been vaccinated for polio. 

USAID has worked to strengthen the independent media in Iraq. 

One example is an independent radio station that has been given 

an independent voice to women. Programming includes music and 

talk shows that seek to educate women. USAID has restored outdoor markets. It has helped to revitalize the economy and permit 

entrepreneurs to expand their own businesses. 

In the field of fraud and corruption, as we have heard, the Inspector General position was created in response to the allegations 

of crime and corruption that took place with Iraqi money under the 

Coalition Provisional Authority, and there are now 70 ongoing investigations into individuals suspected of participating in this 

criminal activity, and a total of $13 million has been recovered. 

In general, more than 39 countries and international organizations have issued public statements of support for the new Iraqi 

Government, and certainly today’s news about al-Zarqawi’s network finally being put down is welcome news for all freedom-loving 

Iraqis and citizens worldwide. 

To get back to the ongoing theme that is so erroneous that this 

Committee has not held hearings on this issue, I would like to just 

read again what the Chairman had said earlier, a summary of the 

oversight on the Iraq war: Nine resolutions of inquiry pertaining to 

the war in Iraq, five Full Committee hearings, including today’s, 

three Subcommittee hearings, a Members only meeting, seven classified briefings and numerous non-classified briefings. 

I think that the best oversight that can be made is to go there 

and see for yourself what kind of progress we are making. As I 

said, my stepson proudly served in Iraq for 8 months as a Marine 

officer. I had the opportunity to come back from another visit to 

Iraq, and I know what great strides we have made, and I know 

how grateful the Iraqi citizens are for the great participation that 

they have gotten from so many strong allies who believe in freedom 

and who are unafraid to fight for that cause. 

With that, the Committee is adjourned. Thank you to the panelists. 

[Whereupon, at 1:16 p.m. the Committee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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MATERIAL SUBMITTED BY MR. STUART W. BOWEN, JR., SPECIAL INSPECTOR GENERAL

FOR IRAQ RECONSTRUCTION


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PREPARED STATEMENT OF THE HONORABLE SHERROD BROWN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF OHIO

Æ


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