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25–441 PDF 2006

IRAQ: PERCEPTIONS, REALITIES AND COST TO

COMPLETE

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

EMERGING THREATS, AND INTERNATIONAL

RELATIONS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

OCTOBER 18, 2005

Serial No. 109–106

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

JEAN SCHMIDT, Ohio

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING THREATS, AND INTERNATIONAL

RELATIONS

CHRISTOPHER SHAYS, Connecticut, Chairman

KENNY MARCHANT, Texas

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

JON C. PORTER, Nevada

CHARLES W. DENT, Pennsylvania

DENNIS J. KUCINICH, Ohio

TOM LANTOS, California

BERNARD SANDERS, Vermont

CAROLYN B. MALONEY, New York

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

LAWRENCE J. HALLORAN, Staff Director and Counsel

R. NICHOLAS PALARINO, Senior Policy Advisor

ROBERT A. BRIGGS, Clerk

JEFF BARAN, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on October 18, 2005 .......................................................................... 1

Statement of:

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

Howard J. Krongard, Inspector General, U.S. Department of State;

Joseph Christoff, Director, International Trade, U.S. Government Accountability Office; Thomas Gimble, Acting Inspector General, U.S.

Department of Defense; Joseph Farinella, Acting Inspector General

for Audit, U.S. Agency for International Development; and Joyce Morrow, U.S. Army Auditor General ................................................................. 33

Bowen, Stuart W., Jr. ............................................................................... 33

Christoff, Joseph ........................................................................................ 54

Farinella, Joseph ....................................................................................... 101

Gimble, Thomas ......................................................................................... 81

Krongard, Howard J. ................................................................................. 46

Morrow, Joyce ............................................................................................ 112

Habeck, Mary, the Paul H. Nitze School of Advanced International Studies; Judy Van Rest, executive vice president, International Republican

Institute; and Les Campbell, senior associate and regional director,

Middle East and North Africa, National Democratic Institute ................. 156

Campbell, Les ............................................................................................ 174

Habeck, Mary ............................................................................................ 156

Van Rest, Judy .......................................................................................... 165

Letters, statements, etc., submitted for the record by:

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

prepared statement of ................................................................................... 36

Campbell, Les, senior associate and regional director, Middle East and

North Africa, National Democratic Institute, prepared statement of ...... 177

Christoff, Joseph, Director, International Trade, U.S. Government Accountability Office, prepared statement of ................................................. 56

Farinella, Joseph, Acting Inspector General for Audit, U.S. Agency for

International Development, prepared statement of ................................... 103

Gimble, Thomas, Acting Inspector General, U.S. Department of Defense,

prepared statement of ................................................................................... 83

Habeck, Mary, the Paul H. Nitze School of Advanced International Studies, prepared statement of ............................................................................ 159

Krongard, Howard J., Inspector General, U.S. Department of State, prepared statement of ........................................................................................ 48

Morrow, Joyce, U.S. Army Auditor General, prepared statement of ........... 114

Shays, Hon. Christopher, a Representative in Congress from the State

of Connecticut, prepared statement of ........................................................ 3

Van Rest, Judy, executive vice president, International Republican Institute, prepared statement of .......................................................................... 168

Waxman, Hon. Henry A., a Representative in Congress from the State

of California:

Minority report .......................................................................................... 6

Prepared statement of ............................................................................... 21

(1)

IRAQ: PERCEPTIONS, REALITIES AND COST

TO COMPLETE

TUESDAY, OCTOBER 18, 2005

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING

THREATS, AND INTERNATIONAL RELATIONS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:05 a.m., in room

2154, Rayburn House Office Building, Hon. Christopher Shays

(chairman of the subcommittee) presiding.

Present: Representatives Shays, Dent, Kucinich, Maloney, Van

Hollen, Lynch, Higgins, and Waxman, ex officio.

Staff present: Lawrence Halloran, staff director and counsel; J.

Vincent Chase, chief investigator; R. Nicholas Palarino, Ph.D., senior policy advisor; Robert A. Briggs, clerk; Marc LaRoche, intern;

Phil Barnett, minority staff director/chief counsel; Jeff Baran and

Michael McCarthy, minority counsels; David Rapallo, minority

chief investigative counsel; Earley Green, minority chief clerk; and

Jean Gosa, minority assistant clerk.

Mr. SHAYS. A quorum being present, the Subcommittee on National Security, Emerging Threats, and International Relations

hearing entitled, ‘‘Iraq: Perceptions, Realities and Cost to Complete,’’ is called to order.

It is as true in Biloxi as in Baghdad: People without electricity,

clean water or basic governmental services are understandably impatient to rebuild their lives, their homes and their communities.

They don’t want empty promises. They rightly demand tangible results.

In Iraq, that progress has been slow, hampered by volatile security that disrupts and delays reconstruction while sapping fiscal resources. Initial estimates of security costs have nearly tripled, from

less than 10 percent of total project expenses to almost 30. Naive

planning assumptions, weak performance metrics and limited

project oversight have also slowed infrastructure repairs, training

of security forces and efforts to nurture civilian governance. Frequent leadership changes and a legacy of Saddam-era corruption

divert still more resources from Iraq’s renewal as a prosperous

democratic nation.

As a result, the U.S. reconstruction effort in Iraq shows symptoms of suffering the same spiral of delays, reduced capabilities

and cost overruns that plagues major weapons programs at the

Pentagon. Planned electricity generation and water purification

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projects are scaled back, while estimates of the cost to complete

them escalate.

That cycle of rosy estimates and stunted outcomes exact high political costs as well. Limited visible progress improving basic services frustrates Iraqis, who wonder why a liberating coalition that

conquered their nation in less than 2 months can’t keep the lights

lit after 2 years.

Similar problems beset the critical program to train Iraqi security forces. Culturally off-key assumptions about the transferability

of Western law enforcement and military doctrines to the Iraq security mission wasted limited training time. Classes in handgun etiquette had little relevance to police and soldiers facing an insurgency armed with AK–47’s.

At the same time, efforts to build civil society, the rule of law

and democratic institutions have been far more successful, propelled by the inspiring courage of average Iraqis who voted in January and on Saturday. But democracy is no silver bullet against

entrenched Ba’athists and imported jihadists. Voting hours have to

result in increased kilowatt hours or the killers will have all the

time they need between elections to feed the insurgency on popular

discontent and factional discord.

U.S. support for reconstruction, security and governance programs has helped the Iraqis make undeniable progress toward a

better future. But the billions of appropriated dollars being spent

in Iraq are an investment by the American people in their security

as well. We in Congress have a fiduciary obligation to continually

assess the execution and sustainability of our investment strategy.

Major aspects of that assessment have been vigorously pursued

by the Special Inspector General for Iraq Reconstruction, the Government Accountability Office and the Inspectors General from

other departments and agencies active in Iraq. Their findings and

recommendations provide a detailed view of the strengths and

weaknesses of our stewardship of Iraqi sovereignty. Other witnesses this morning will offer unique perspectives on security strategy and on the just-completed constitutional drafting and ratification process.

We appreciate the time, dedication and expertise of all our witnesses, and we welcome their testimony.

At this time, it is the pleasure of the chair to recognize the ranking member of the full committee, Mr. Waxman.

[The prepared statement of Hon. Christopher Shays follows:]

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Mr. WAXMAN. Thank you very much, Mr. Chairman, and thank

you for holding this hearing today.

The efforts to rebuild Iraq are failing. The Bush administration

has spent literally billions of taxpayer dollars on reconstruction in

Iraq, yet progress has been limited or nonexistent, and much of

that money has been squandered.

Today I am releasing a report that compares the administration’s

rhetoric with the reality on the ground 21⁄2 years after the invasion. The report finds that the administration has failed to deliver

on its promises in three of the most important reconstruction sectors in Iraq: oil, electricity and water.

[The information referred to follows:]

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Mr. WAXMAN. Today’s testimony by Mr. Bowen, the Special Inspector General for Iraq Reconstruction, confirms these findings.

He, too, has concluded that there is a great chasm between what

the administration has promised and what it has delivered. Mr.

Bowen calls this the ‘‘Reconstruction Gap.’’

Well, how big is the ‘‘Reconstruction Gap?’’ Here is what we

found in our report. In the oil sector, the administration said 2

years ago that it would restore prewar oil production levels so that

Iraq could finance its own reconstruction. Remember when we were

told this wouldn’t cost us anything, Iraq will pay for the reconstruction efforts out of their oil revenues?

But today Iraq’s oil production and export levels are still well

below prewar levels. We have spent over $2 billion, and the situation is actually worse than when we arrived. According to Mr.

Bowen’s testimony, Iraqis don’t even expect to reach prewar production levels by January 2006.

In the electricity sector, the administration promised to increase

Iraq’s peak electricity output to 6,000 megawatts. Two years later,

after spending $4 billion, peak output remains stagnant at about

4,600 megawatts, nearly the same as what it was before the war

began. In fact, embassy officials in Baghdad told our staffs in August that we will never meet demand.

In the water sector, the administration promised that 90 percent

of Iraqis would have access to clean, drinkable water. But despite

spending over $1 billion, we are nowhere near this goal. Today, a

third of Iraqis still lack access to potable water, close to the prewar

conditions, and these figures, which come from our embassy in

Baghdad, may be overly optimistic. The Government Accountability

Office asked for documentation of any progress in providing clean

water to Iraqi families, but the administration could provide none.

How did this happen? Why is the reconstruction failing?

In my view, there are several reasons. First, the administration

failed to provide a secure environment for the reconstruction. This

has caused long delays and soaring security costs. GAO found the

security costs exceeded 25 percent of spending under some contracts, which forces billions of dollars to be diverted from reconstruction projects. The administration argues these security costs

were unexpected, but they were warned repeatedly about the likelihood of a vicious, lengthy insurgency.

The administration’s failure-flawed contracting approach has also

contributed greatly to the Reconstruction Gap. Instead of maximizing competition, the administration opted to award enormous costplus monopoly contracts to favored contractors like Halliburton.

Then it turned over key oversight responsibilities to private contractors with blatant conflicts of interest.

The administration’s failures in the reconstruction effort have

very real consequences. We are not building what needs to be built

to meet the basic everyday needs of Iraqis. Our Nation’s credibility

is further eroded and American taxpayers are losing confidence in

the entire enterprise.

Despite these horrendous efforts and failures, the administration

presses on, apparently in a state of denial. Vice President Cheney

said just this month that progress in Iraq was superb. This stateVerDate 11-MAY-2000 12:32 Jan 25, 2006 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 D:\DOCS\25441.TXT HGOVREF1 PsN: HGOVREF1
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ment is totally disconnected from reality; it is not based on any

real measurement of progress.

The first step toward reform must be transparency and accountability. That is why I hope the report we are releasing today and

the testimony of the expert witnesses before us will contribute to

a greater understanding of the problems crippling the reconstruction effort.

When Hurricane Katrina hit, the President and other senior administration officials told the public that everything was under control and that the response was proceeding smoothly. But because

the hurricane struck a major American city and the pictures of devastation were broadcast on TV sets around the Nation, the public

could see how hollow these reassurances were. The difference, however, between Biloxi and Baghdad is that American TV crews can

get to Biloxi and New Orleans, but outside of Baghdad and even

in that city itself, the country is so far away that security concerns

make it hard for the most intrepid reporters to cover the story. Few

people fully understand how disastrous our reconstruction efforts

have been.

This hearing is one step in providing a measure of accountability,

and I commend the chairman for his efforts. And I look forward to

the testimony of today’s witnesses.

[The prepared statement of Hon. Henry A. Waxman follows:]

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Mr. SHAYS. The Chair would now recognize the distinguished

gentleman, the ranking member, Mr. Kucinich, of this subcommittee.

Mr. KUCINICH. Thank you very much, Mr. Chairman. I want to

thank you and Ranking Member Waxman for the opportunity to be

here today and to congratulate Mr. Waxman on the release of that

report, which I am sure is going to be of interest to every Member

of Congress. I want to bid the members of the panel, good morning.

It is tempting for some to tout the successes of this past weekend’s referendum on the draft Iraqi constitution, as there were earlier reports of high voter turnout and for the orderly conduct of

Iraqis at the polls. But yesterday, the Independent Electoral Commission of Iraq stated that it would audit the unusually high numbers and results coming from those provinces. The commission’s

statement came after Sunni lawmaker Meshaan al-Jubouri claimed

fraud had occurred in the vote, including instances of voting in

hotly contested regions by pro-constitution Shiites from other

areas.

Democracy will not be successful in Iraq—or anywhere else, for

that matter—unless it is proven to be without fraud. Furthermore,

democracy will not succeed unless the reconstruction efforts that

underpin democracy are realized and are sustainable. The Iraqi

people need statecraft, not stagecraft.

The Bush administration has claimed that economic reconstruction would contribute to stability in Iraq, that goods and services

would help the Iraqi people. On the surface, it appears there is

much activity. Congress has allocated some $30 billion in assistance for reconstruction efforts. We are helping to restore water,

sanitation and other infrastructure, and we are rebuilding schools

and communities, providing medicine and foods, helping to restore

ports and vital sectors of the economy, efforts that are eerily parallel to those so desperately needed in our own country in the wake

of Hurricanes Katrina and Rita.

Yet more than 2 years after our troops entered Iraq, the truth

is that most Iraqis still do not have reliable electricity throughout

the day. They still do not have adequate health care or clean water

and sanitation. Childhood malnutrition is on the rise and so is disaffection with U.S. companies receiving the bulk of reconstruction

contracts.

This doesn’t seem like much progress to me, and as the course

of Inspectors General and Auditors will attest to today, the reality

on the ground is that reconstruction of Iraq is dependent on security, not the other way round. It seems to me we are great at building Potemkin villages, but not so good at rebuilding Iraqi society.

The panel of witnesses here today will testify to the enormous

obstacles and costs of reconstruction in Iraq. They will illustrate

the serious mismanagement, the shoddy recordkeeping, the looting,

and the serious cost overruns, constant delays and underperforming reconstruction projects that the American taxpayers are footing

the bill for.

In fact, 25 to 50 percent of the costs for any reconstruction

project in Iraq goes straight toward providing security for the site

and the workers. In fact, it seems that the only people who are

prospering in Iraq are the Halliburtons and Blackwaters of the

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world. It is truly a Faustian deal that the administration has

struck.

Now we have learned that the DOD IG is MIA. The Department

of Defense Inspector General office has not had any auditors in

Iraq in over a year. Are we to conclude that no one is watching the

$141 billion worth of military spending in Iraq, no one is preventing waste, fraud and abuse on behalf of the American taxpayers?

The fox, Halliburton, is guarding the henhouse, while declaring

it has lost its taste for chicken. Violence is surging. The lives of

over 1,900 American soldiers have been lost thus far, and there are

estimates that over 42,000 soldiers have been wounded. By some

counts, 100,000 innocent, noncombatant Iraqis have been killed.

How many more lives will be lost before this administration gets

the message?

Mr. Chairman, as you know, I have never supported the use of

force in Iraq, and I continue to believe that our occupation in Iraq

has been counterproductive. The American people are correct when

increasing numbers of them are disaffected from this war. The

prospects for a representative Iraqi Government remain dim at

best. The prospects for the breaking apart of Iraq into separate

pieces are rising, particularly without Sunni Arabs buying into the

process. Throwing more U.S. money into Iraq or more and more

American soldiers into harm’s way will not right the wrongs.

I hope that today’s hearing will shine some light on the truth of

the situation in Iraq. Furthermore, I hope the experts here today

will provide a realistic projection of how much it will take to reconstruct Iraq.

Thank you.

Mr. SHAYS. Mr. Dent, you have the floor.

Mr. DENT. Thank you, Mr. Chairman.

I would like to thank Chairman Shays for holding this important

hearing on the status of the U.S. support for the Iraqi Government’s reconstruction and security programs. I think it is important to take note of the progress that has been made in the rehabilitation of Iraq.

In August, I joined a four-member congressional delegation to

Iraq, and I had the opportunity to witness some of the reconstruction efforts down in Basra, up in Kirkuk. I saw the generating facility that was being established up there. I think it was referred

to as ‘‘the mother of all generators,’’ and I was quite impressed by

the capabilities of many of our people, not just military, but civilian

personnel, in their efforts to reconstruct that nation.

I was also struck by the number of auditors over there. It was

my understanding there is ratio of about one-and-a-half construction managers to auditors. It seemed like quite a high number. I

would like to find out today during this hearing if there is a coordination between all the various inspector generals from DOD, State

and all the Army, everywhere else. There seemed to be inspectors

just about everywhere. I would really like to get some insight as

to the coordination of that effort.

That said, again, I was struck by the progress that was made up

in Kirkuk with generators. I saw some interesting sites down in

the port of Umm Qasr near Basra, and, again, I just appreciate the

efforts of all involved.

31

I realize we have a tremendous and daunting objective there in

Iraq trying to rebuild a country and establish representative government, all under very difficult—while fighting insurgency is

clearly a daunting objective.

I look forward to hearing your comments today.

Mr. SHAYS. I thank the gentleman.

Mr. Lynch.

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

Ranking Member Waxman for your continued willingness to examine U.S. efforts to stabilize and rebuild Iraq. I also want to thank

the panelists for helping this subcommittee with our work.

On the heels of Saturday’s referendum, I appreciate the opportunity to discuss the progress of, as well as the prospects for, Iraq

reconstruction, security and self-governance. In addition, I am interested in following up on some the issues that arose before this

subcommittee back in June as we conducted the first congressional

hearing on the administration’s management of the Development

Fund for Iraq, which is the successor to the United Nations Oil-forFood program. We talked about a number of outstanding issues.

For instance, we talked about the indictments of a former Halliburton procurement manager and a general manager of the Halliburton subcontractor, stemming from a kickback scheme that saw

the U.S. Government overcharged by about $31⁄2 million. It is also

the indication there may be other cases of a similar nature out

there.

We also discussed thousands of pages of documents subpoenaed

from the Federal Reserve Bank of New York by this subcommittee,

indicating there was an 11th-hour spending spree in the final days

of the Coalition Provisional Authority’s existence with nearly half

of the currency shipped into Iraq under U.S. discretion and direction, totaling more than $5 billion flowing into the country, in the

final 6 weeks before control of the Iraqi Fund was returned to the

interim Iraqi Government in June 2004.

Regrettably, the extent of financial waste we are seeing here, as

well as fraud and abuse, has amounted to a lost opportunity to

help the Iraqi people. It has frustrated our overall policy in Iraq,

an effort for which we have sacrificed a great deal financially and,

more importantly, in the lives of our men and women in uniform.

Accordingly, I would very much like to hear the witnesses’ perspectives on where we are in terms of tracking the flow of up to

$20 billion that has been either stolen or misallocated, and implementing safeguards to ensure greater transparency and accountability in contracting as we continue toward the stabilization and

reconstruction of Iraq.

A few weeks back, I concluded my third visit to Iraq and had an

opportunity to review some of the construction going on. In particular, we are building a port of entry, rebuilding a port of entry, in

al Qaim, which is right on the Syrian border. There is extensive

construction there, and it was good to finally see some Iraqi security forces controlling their own borders.

As someone who spent 18 years in the building trades, I know

my way around a constructionsite, and I have to say I was very

disappointed with the quality of the materials that were there. We

went through most of the building materials. I don’t think I could

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find a straight 2 by 4 on that job site. They tell me it was supplied

by an Indian contractor. Just on a threshold basis, I could see that

the quality of the materials was not up to par. It is not something

that we would be proud of.

The American taxpayer is paying for this effort, and it is bad

enough what the situation over there is now. I just look forward

to the day when we withdraw. I would hope that the work we have

done there and the American taxpayer has paid for is of top quality. Otherwise, our reputation and image suffer even further, which

is deplorable given the quality and nature of the sacrifice we are

making in Iraq right now.

So I would like to hear about what our efforts are in terms of

overseeing the construction there. If we are getting ripped off, I

would rather be ripped off by an American contractor than an Indian contractor. If we can’t stop it, I would rather have the money

flowing into this country and keep it in our economy.

But obviously I think the answer is to stop the corruption, stop

the sub-par and shabby construction, and make sure we do a good

job over there; and try to get out of there as soon and as safely as

possible.

Thank you, Mr. Chairman. I appreciate your courtesy.

Mr. SHAYS. Mr. Higgins, would you like to be recognized?

Mr. HIGGINS. No.

Mr. SHAYS. I just didn’t know, you were so far back over there,

if it meant you didn’t want to.

Let me just take care of some housekeeping here.

I ask unanimous consent that all members of the subcommittee

be permitted to place an opening statement in the record and the

record remain open for 3 days for that purpose. Without objection,

so ordered.

I ask further unanimous consent that all witnesses be permitted

to include their written statements in the record. Without objection, so ordered.

Let me just announce our panel. It is an extraordinary group. We

are very grateful to each of you. I am sorry you are so kind of

closed up here.

We have the Honorable Stuart W. Bowen, Jr., Special Inspector

General for Iraqi Reconstruction. We have the Honorable Howard

J. Krongard, Inspector General, Department of State. We have Mr.

Joseph Christoff, Director, International Trade, U.S. Government

Accountability Office. We have Mr. Thomas Gimble, Acting Inspector General, Department of Defense. We have Mr. Joseph

Farinella, Acting Inspector General for Audit, U.S. Agency for

International Development. And we have Ms. Joyce Morrow, U.S.

Army Auditor General.

As you know, this is an investigative committee, and we swear

in our witnesses. We invite you to stand to be sworn.

Is there anyone else that might respond to a question that we

might ask you that you might prefer for them to speak? If so, if

they could stand to be sworn in, that way we don’t have to do it

twice. Is there anyone you would ask on your staff?

[Witnesses sworn.]

Mr. SHAYS. Note for the record that every one of our witnesses

has responded in the affirmative.

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Before inviting testimony, I want to say that we want a very candid conversation. We don’t want you to leave this room without

saying what needs to be put on the record. If we fail to ask the

question, then tell us, and we will ask you what your question is

that you can answer. But we want everything on the table.

I would just say that I believe as I am going to look at this, I

am looking at the political, the security and the reconstruction. As

I look at the political, my view is it has been significant progress.

One of my measures is, if the press doesn’t talk about it, it must

have been a success.

Second, on security, having been there 10 times, I have seen the

ebb and flow, and from my perspective, in April 2003, I think we

dug a huge hole by disbanding the army, police, border patrol and

their government.

We have been coming up. Compared to where we are in 2003,

maybe not as much progress; compared to the hole we dug, significant progress.

In reconstruction, I have some very real concerns: thousands of

schools, lots of money spent. I am particularly interested in your

comments on that.

So you do have a pretty diverse view on this subcommittee. You

are going to be asked, I think, some very tough questions, and we

want very honest answers.

With that, we will go in the order that you are at. We have a

large panel. I will allow you to go over 5 minutes, but I don’t want

you to go to 10. I just want to make sure it is on the record.

Mr. Bowen.

STATEMENTS OF STUART W. BOWEN, JR., SPECIAL INSPECTOR

GENERAL FOR IRAQ RECONSTRUCTION; HOWARD J.

KRONGARD, INSPECTOR GENERAL, U.S. DEPARTMENT OF

STATE; JOSEPH CHRISTOFF, DIRECTOR, INTERNATIONAL

TRADE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE;

THOMAS GIMBLE, ACTING INSPECTOR GENERAL, U.S. DEPARTMENT OF DEFENSE; JOSEPH FARINELLA, ACTING INSPECTOR GENERAL FOR AUDIT, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT; AND JOYCE MORROW, U.S. ARMY

AUDITOR GENERAL

STATEMENT OF STUART W. BOWEN, JR.

Mr. BOWEN. Thank you, Mr. Chairman.

Mr. SHAYS. Is your mic on and is it near enough to you? We need

you to project fairly loudly.

Mr. BOWEN. Thank you, Chairman Shays, Ranking Member

Waxman and members. I thank you for the opportunity to address

you today on the oversight of U.S. reconstruction efforts in Iraq

provided by my office, the Special Inspector General for Iraq Reconstruction [SIGIR]. I am charged with auditing and investigating operations funded by the Iraq Relief and Reconstruction Fund [IRRF].

This hearing is timely, coming just 12 days before the release of

our seventh quarterly report on the reconstruction oversight in

Iraq, and in it we will provide 10 new audits, 12 new inspections,

and an update on substantial progress we have made on the investigative front.

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In September, I returned from my ninth trip to Iraq since my appointment as Inspector General, and I was encouraged during that

trip by the progress that I see that Ambassador Khalilzad and his

team are making. They are exerting strategic control over the reconstruction program by focusing on what I see are the most important issues before them now.

One, sustainment. Sustainment means ensuring that both what

we provide and the overall Iraqi infrastructure are well planned to

endure, both after we turn over those projects and after we leave,

that there is an infrastructure in place that will provide power,

light, water—potable water.

That was not something that was well thought out ahead of time,

but in the last months, is being addressed aggressively. In the

course of our audit, we recommended they create an office of sustainability. They took that suggestion, the Ambassador’s office, the

Iraq reconstruction management office, and they are formulating a

formal policy to ensure that there is coordinated sustainment

across the board as we move forward.

We have seen much progress, over 2,000 projects completed, but

we are facing continuing challenges. Mr. Waxman referenced the

‘‘Reconstruction Gap,’’ and that is an issue that we address in detail for the first time in this report. It is not a new issue; it has

been developing over this year, and it is a consequence of cost-tocomplete, or the lack of adequate cost-to-complete data. Cost-tocomplete is not budget-to-complete; it is how much it is going to

cost to finish the projects you start.

The bill that created the IRRF required that cost-to-complete

data be reported quarterly to the Congress, and that mandate has

not been consistently, or even met since then, but I believe that we

are there now and that IRMO has developed a good plan for pushing forward more detailed cost-to-complete data.

We have invested over $30 billion in appropriated funds for Iraq

reconstruction. As of today, only 7 percent of these funds are yet

to be committed. Substantial portions of this funding has been used

to provide for security against insurgent attacks, which obviously

has left less funds available than planned for construction activities; thus, the ‘‘Reconstruction Gap’’—one of the causes at least.

The ‘‘Reconstruction Gap,’’ in simplest terms, are what was the realistic scope of projects we intended to complete in the 2004 plan,

what are we actually going to complete, what is actually, realistically achievable at this point.

There has been substantial descoping because of reprogramming

and shifting of funds to security. Those are necessary shifts; not

criticizing those shifts, but what I am saying is by forwarding that

plan in 2004, we made an effective promise of a level of infrastructure we would provide, and we are going to provide something less

than that. That needs to be addressed, whether through donor

funds, World Bank loans or subsequent appropriations.

My staff is advancing our audit and investigative inspections

work rapidly in Iraq. We have 45 personnel assigned to Baghdad;

half of them are auditors, 10 investigators and inspectors. We have

completed, to date, 26 audit reports, and we have 16 more audits

under way. I have auditors and criminal investigators working here

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in Arlington, as well following up on the issues that are raised in

Iraq.

We are working together with other inspectors general, in particular the Department of State IG, on an audit of the INL appropriation. We have continued to engage the Iraq Inspector General’s

counsel, addressing Mr. Dent’s point, which seeks to coordinate

and, among the IGs who provide oversight in Iraq, to ensure that

there is deconfliction of audit objectives and that all audit areas

are being addressed.

SIGIR is a temporary organization, and thus I want to ensure

that our oversight is real-time. By that, I tell my auditors to get

out; when they find a problem, to not play hide the ball, but to

bring it to management’s attention and achieve solutions. The

sustainment office is an example of that.

Our award fee correction during the course of the audit is another one. I am pleased with the responsiveness of management

over there as we identify problems. They have been responsive.

We continue to work hard over there, and we recognize that

there is much left to be done. We expect and hope that the revision

in our statute will be forthcoming and that over the next 2 years

we will continue to exert effective oversight and help promote program success in Iraq.

Thank you.

Mr. SHAYS. Thank you, Mr. Bowen.

[The prepared statement of Mr. Bowen follows:]

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Mr. SHAYS. Mr. Krongard.

STATEMENT OF HOWARD J. KRONGARD

Mr. KRONGARD. Mr. Chairman, members of the subcommittee,

thank you for the opportunity to discuss the Office of Inspector

General’s oversight of Department of State programs affecting Iraq

reconstruction, governance and security, all of which are critical

elements to ensuring stability in Iraq.

With limited resources during the past year, OIG has conducted

high-valued projects that identify and recommend ways in which

programs can operate more efficiently and economically. This has

facilitated the Secretary of State’s vision for transformational diplomacy. Obviously, the complexities involved for achieving stability

in Iraq are formidable, the amount of resources need is unprecedented and the demand for accountability is imperative.

OIG’s Iraq oversight has included eight program and management assessments, seven audits and supervision of three DCAA audits. Our assignments have resulted in recommendations for enhancing offsite support, reducing security vulnerabilities, improving training and staff effectiveness and identifying potential cost

recoveries for the U.S. Government. However, the recently completed compendium of Rule of Law programs in Iraq and the joint

assessment of the DOD OIG of the Iraqi police training programs

are projects most relevant to today’s hearing.

OIG was aware of some 19 entities, including U.S. Government

agencies, NGO’s and private contractors, as well as foreign countries and multinational organizations, that were contributing in

one form or another to ‘‘Rule of Law’ activities in Iraq. We set out

to create an inventory of such activities, to identify overlaps and

duplication and to find gaps that might exist.

While there is no commonly agreed upon definition for ‘‘Rule of

Law,’’ we take it to mean a broad spectrum of activities, including

a constitution, legislation, a court system and courthouses, a judiciary, police, lawyers and legal assistants, due process procedures,

prisons, a commercial code, and anticorruption activities. To successfully implement an emerging Rule of Law, these activities must

proceed somewhat sequentially and not randomly. Exclusive of approximately $1 billion, which was allocated for po- lice training, OIG identified approximately $400 million of U.S.-

funded multiple agency programs, all of which come under the general supervision of Embassy Baghdad. Of that amount, $300 million fund major bricks-and-mortar programs for building the physical justice infrastructure, and the remaining $100 million provides

for a variety of capacity-building programs.

OIG noted that security requirements and logistics must be heavily factored into the current cost of doing business in Iraq, since security expenditures for individual projects range from 6 percent to

as much as 80 percent of the total cost. Security issues detract

from the efficiency and productivity of all project activity and can

occasionally call into question the value of proceeding with an activity at all.

Our report, which will be issued this week, and is based on work

performed over a 9-week period in Washington, Baghdad, Basra,

Fallujah, Mosul and Hilla, includes numerous observations and

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more than 20 recommendations. Overall, OIG observed that most

of the ‘‘Rule of Law’’ funding appeared to be well spent. However,

a fully integrated strategic plan does not exist and is critically

needed if Iraqi governance is to be effectively promoted and

achieved. Moreover, a new phase is beginning, and its defining

characteristic must be the successful transition from a U.S.-funded

and directed program to a sustainable Iraqi-directed program.

As you are well aware, a successful democracy in Iraq will require an effective anticorruption regime. OIG found that a trio of

institutions were taking hold: the Commission on Public Integrity,

a system of inspectors general in each of 29 Iraqi Government ministries and agencies, and the Board of Supreme Audit. However, we

also noted that the first two are totally new to Iraq; collaboration

is imperfect and competition among them exists, which, by the

way, is not uncommon in a democracy.

We urged that the United States encourage and support Iraqi efforts to design and establish a training facility for all three

anticorruption institutions. Our report should provide a valuable

framework from which those numerous entities participating in

‘‘Rule of Law’’ activities in Iraq can go forward in a more integrated

and effective manner.

OIG also conducted a joint review with the DOD OIG to assess

Iraqi police training programs in Iraq and Jordan. This onsite assessment was self-initiated by both OIGs after recognizing a need

for conducting the work. In light of the difficult circumstances that

exist, our team concluded that Iraqi police training programs have

achieved a qualified success. The police performed well during the

January election. The visibility of police on Iraqi streets increased

and polls indicated a growing public respect for and confidence in

the police force.

If police training programs are to succeed, the Iraqi Government

must take full ownership of the program and assume responsibility

for leadership and management of the force the Coalition is helping

create.

The two OIGs made a number of recommendations to strengthen

the role of the Iraqi Ministry of Interior in these respects. By the

time of the report’s issuance, improvements in cross-communication

between coalition leaders and the Ministry of Interior were already

evident. Whatever the problems and misgivings, we recognized a

consensus that the Iraqi police were improving and more capable

as a result of Coalition training.

Mr. Chairman, with your indulgence, I would like to point out

that our OIG was able to perform the foregoing oversight activities

because we received a $1.7 million supplemental appropriation in

2005 specifically for Iraq activities. We have no such funds for 2006

at the present time and do not have resources to continue these

oversight activities in Iraq. The principal activity currently being

planned, as Mr. Bowen indicated, is a joint review with his office

of major INL programs to determine INL has adequate controls to

ensure funds are properly expended in accordance with Federal

regulations.

Thank you, Mr. Chairman. I will be pleased to answer questions

at the appropriate time.

[The prepared statement of Mr. Krongard follows:]

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Mr. SHAYS. Mr. Krongard, what is the amount that you need to

have next year to have the similar amount you had this year?

Mr. KRONGARD. Roughly the same amount, slightly higher, between $11⁄2 million and $2 million for Iraq.

Mr. SHAYS. A special allocation. Thank you.

Mr. Christoff.

STATEMENT OF JOSEPH CHRISTOFF

Mr. CHRISTOFF. Mr. Chairman, members of the subcommittee,

thank you for inviting GAO to this important hearing.

Over the past 3 months, GAO has issued several reports on security costs and reconstruction issues in Iraq, and my testimony

today is based on those reports. I will first discuss who is funding

Iraq’s reconstruction, and then describe the key challenges the

United States faces.

First, the funding: For the past 21⁄2 years, the United States has

served as the chief protector and builder in Iraq. Through August

2005, the United States provided about $30 billion and disbursed

about $13 billion to rebuild Iraq’s infrastructure and train and

equip its security forces. International donors have provided $2.7

billion of the $13.6 billion they pledged for reconstruction efforts.

Most of the remaining pledges are in the form of loans that the

Iraqi Government has just begun to tap.

Iraqi funds have been used primarily to support government operations. Food and fuel subsidies account for 40 percent of the $28

billion in planned expenditures for 2005. As a result, the Iraqi Government’s ability to contribute to the rebuilding efforts has been

constrained.

More importantly, these collective efforts may not be enough to

rebuild and stabilize Iraq. Initial needs estimates assume that reconstruction would take place in a peacetime environment and,

therefore, did not include additional security costs. Iraq’s infrastructure was more severely degraded than originally estimated

and widespread looting and sabotage compounded the problem.

Further, the initial estimates assumed that Iraqi revenues and

private sector financing would cover Iraq’s long-term requirements.

However, these sources of financing may not meet the needs. In the

oil sector alone, the Iraqi Government estimates that it will need

$30 billion over the next several years to achieve its oil production

goals.

The United States faces three key challenges in stabilizing and

rebuilding Iraq. The first is security. The continuing strength of the

insurgency has made it difficult for the multinational force to

transfer security responsibilities to Iraqi forces and draw down

U.S. forces.

We reported in March that the Coalition faced challenges in developing the force structure, readiness and leadership of Iraqi

troops. Since then, the multinational force has begun to embed

training teams within Iraqi units and develop measures to assess

troop readiness.

DOD reports that one Iraqi battalion is at readiness Level 1, that

is, fully capable of conducting counterinsurgency operations without Coalition support. Thirty-seven units are capable of conducting

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operations with Coalition support, Level 2; 78 units are partially

capable, Level 3.

Iraqi forces have made progress in developing the skills needed

to assume control of counterinsurgency operations. However, they

will not be able to operate independently for some time because

they need logistical capabilities, ministry capacity and command

control and intelligence structures.

GAO’s forthcoming classified report on Iraq’s security situation

will provide the Congress information on the capabilities of Iraqi

security forces and the conditions for drawing down U.S. forces.

The second challenge the U.S. faces is measuring impact. Most

U.S. measurements are output oriented and do not assess how U.S.

efforts are making a difference in the lives of the Iraqi people. In

the electricity sector, the U.S. tracks the number of megawatts

added to the power grid, but it is not tracking the number of hours

of uninterrupted service Iraqis receive daily. In the water sector,

the United States reports the number of projects completed rather

than the amount of clean water reaching Iraqi households.

GAO has recommended that the State Department establish outcome measures to assess how U.S. efforts are in rebuilding Iraq.

The third challenge is sustainability. The Iraqi Government has

not been able to sustainably rebuild infrastructure due to shortages

of power, trained staff and supplies. As of July 2005, $52 million

in water and sanitation projects were not operating or were operating at low capacity due to these problems.

In the electricity sector, some power plants are using low-grade

oil to fuel turbine engines designed to operate on natural gas. This

requires additional training to operate and maintain them, which

Iraqi power plant officials told us they did not receive. Additional

training and preparation are needed for the Iraqis to successfully

operate and maintain U.S.-built facilities.

Mr. Chairman, that concludes my statement. I would be happy

to answer the subcommittee’s questions.

Mr. SHAYS. Thank you.

[The prepared statement of Mr. Christoff follows:]

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Mr. SHAYS. Mr. Gimble, if you would, in your statement, just explain, one, if it is true that DOD has not been looking at Iraq in

the last year, and, if so, why not, sometime during statement.

STATEMENT OF THOMAS GIMBLE

Mr. GIMBLE. Yes, sir.

Mr. Chairman, members of the subcommittee, thank you for the

opportunity to appear before the subcommittee today to discuss the

DOD IG oversight role related to Iraq reconstruction, governance

and security efforts. My testimony today will describe our activities

with respect to that role, which includes providing oversight to

other DOD audit and investigative organizations.

Congress initially established the Special Inspector General for

Iraq Reconstruction with the specific responsibility to oversee the

$18.4 billion Iraq Reconstruction and Relief Fund. In support of

this mission, the DOD IG provided on a full or part-time basis a

significant number of staff members to SIGIR and its predecessor,

the Coalition Provisional Authority Inspector General. Recognizing the SIGIR responsibility pertaining to the $18.4 billion, the DOD audit community has focused its efforts on the additional emergency supplemental appropriations of $65.2 billion for

fiscal year 2004 and of $76 billion for fiscal year 2005 to support

the Global War on Terror and U.S. operations in Iraq and Afghanistan.

Specifically, as of August 31, 2005, the Defense Contract Audit

Agency had issued 622 reports with significant cost questioned, deficiencies and, in some cases, referrals for investigations of possible

fraud. The service audit agencies collectively have issued 14 audit

reports and have 16 ongoing efforts.

The DOD IG limited its audit role to preclude duplicative efforts

because of the extensive oversight already provided by SIGIR, the

DOD audit community and the Government Accountability Office.

However, we do provide an oversight role with respect to the service audit agencies and the Defense Contract Audit Agency. Overall,

the DOD IG, as shown in the attachment to my prepared statement, has issued 31 audit reports and has two ongoing efforts pertaining to the Global War on Terror.

Further, our office also regularly participates in scheduled meetings with the Iraq Inspectors General Council, which has representatives from SIGIR, GAO, the Inspectors General of State,

AID, Defense Contract Audit Agency, Army Audit Agency and the

Army Corps of Engineers.

With respect to investigative oversight, the DOD IG Defense

Criminal Investigative Service, as a part of the Department of Justice Task Force, is involved in the review of allegations pertaining

to matters that have occurred in Iraq.

Also, beginning in May 2003, DCIS provided two special agents

to conduct criminal investigations in support of the CPA in Baghdad. This effort was increased to three special agents in November

2003 due to the magnitude of the work and remained at that level

until the operation terminated in November 2004.

Investigative support to the CPA resulted in numerous recoveries

and dismantling of criminal operations, to include a multimilliondollar counterfeiting operation involving Iraqi dinar. It also inVerDate 11-MAY-2000 12:32 Jan 25, 2006 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 D:\DOCS\25441.TXT HGOVREF1 PsN: HGOVREF1
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cluded multiple seizures of weapons and explosive devices destined

to be used against the Coalition forces.

Prior to the establishment of SIGIR, at the request of Ambassador Paul Bremer, the DOD Deputy Inspector General for Intelligence served at First Interim Inspector General for the CPA. Further, as a result of a DOD recommendation, the Ambassador established an Inspector General system in the Iraq Government on the

U.S. statutory Inspector General System. One of our senior staff

members remains in Baghdad to advise the Minister of Defense

and senior military officials and his IG staff on maintaining an effective Office of Inspector General.

Also, from the beginning, we have worked with the Department

of State and SIGIR to define how best the U.S. Government can

support the IG element of the Iraqi anticorruption system. To this

end, the DOD IG has proposed to the Iraq Reconstruction and

Management Office the Principle Governance Initiative, a plan that

includes the establishment of an IG academy, an assessment of the

Iraqi IG system and deployment of advisers to each of the 31 Iraqi

Inspectors General.

In October 2004, the Inspector Generals of the Department of

Defense and State initiated an interagency project to fully examine

the processes and organizational relationships associated with

training of the Iraqi police service. On July 15, we issued a joint

report of the results of that review.

Our study of the training program is a snapshot in time taken

between February and March 2005. The snapshot reveals systemic

issues that should be addressed in order to create a viable and selfsustaining Iraqi police service. We have noticed significant progress

in implementing many of the 30 formal recommendations, and we

intend to conduct a followup review of the Iraqi police training effort in the spring of 2006.

To go back to your question about, do we have people in country,

we do not have auditors on the ground in Iraq. Most of the contracting offices and the work we are doing deals with the

supplementals, and those contracting officers are back here in the

United States, as are many of the plants that were doing it, and

we have a number of audits ongoing covering those as well as other

issues.

That concludes my statement.

Mr. SHAYS. Thank you.

[The prepared statement of Mr. Gimble follows:]

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Mr. SHAYS. Mr. Farinella.

STATEMENT OF JOSEPH FARINELLA

Mr. FARINELLA. Mr. Chairman, subcommittee members, thank

you for the opportunity to discuss my office’s program to review

USAID operations in Iraq. I will focus on IG oversight relating to

reconstruction and governance since those are the areas you say it

is involved in.

Our Baghdad office performs audits and investigations of USAID

activities in Iraq. We also use the Defense Contract Audit Agency

to conduct financial audits of Iraq activities whose reports we then

issue to USAID with recommendations for corrective action. We

also provide fraud awareness training to USAID and its contractors.

We have conducted 19 investigations involving Iraq activities.

The two open cases currently ongoing involve allegations that

USAID contractors either submitted fraudulent costs associated

with their work in Iraq or solicited kickbacks in exchange for

awarding subcontracts. The closed investigations included similar

allegations, as well as employee integrity issues.

On the audit side, we have issued 26 performance audits and 65

financial audits. While security concerns have often prevented us

from performing as many site visits as we would normally like to,

we have been able to perform alternate tests to accomplish our

audit objectives. I will now discuss some of the audits and recommendations we have made in the area of reconstruction.

Our March 2004 education audit found that for eight reported results, six were actually underreported. For example, number of

textbooks printed and primary teacher kits delivered were underreported. However, the number of schools rehabilitated was overreported. While USAID reported that 1,500 schools had been rehabilitated, we were able to verify that only 1,356 were.

Consequently, we recommended improvements in how USAID reports its results.

Our May 2004, summary audit report on the contract award

process found that USAID generally complied with Federal regulations in awarding contracts using other than full and open competition. However, we recommended improvements in documenting

that process.

Our June 2004, infrastructure audit found that 64 of 72 projects

were on schedule. For example, a bridge bypass, satellite and telecommunication projects and a sewage treatment plant. For the

eight projects behind schedule, USAID was taking steps to resolve

performance problems; and we also made recommendations to improve project management.

Our June 2005, electrical power sector audit found that 15 of 22

projects we selected for review were achieving intended outputs.

However, the remaining projects were not. Reasons included open

hostilities, deteriorating security and a lack of host government cooperation. We recommended steps to insure that newly furbished

infrastructure is properly maintained and operated after being

turned over to the Iraqis.

Last, our June 2005, water and sanitation audit found that 30

of 34 projects were achieving intended outputs. However, four

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projects were not achieving intended outputs primarily due to ownership issues and security concerns.

We see two major challenges regarding future reconstruction efforts. The first, lack of security, is endemic and largely outside of

USAID’s control. The second challenge, and one that USAID can do

something about, is to help insure sustainability. However, the

problems involved in doing so are numerous and complex. Our

power sector audit, for example, recommended that USAID needs

to develop a multi-year strategy to strengthen the Iraqi Ministry

of Electricity’s capacity to insure the proper operation and maintenance of a rebuilt power sector. This strategy should address adhering to prescribed maintenance and operational systems, developing plant level accountability, maintaining inventory systems

and developing a rational fuel strategy.

To date, two of our audits have addressed, at least in part,

USAID governance activities, which I will now briefly discuss.

Our September 2004, audit of USAID’s Economic Reform Program determined that only 10 of 38 planned activities had been

completed, and another 6 had been canceled. Completed activities

included drafting commercial laws and establishing a governmentwide information technology strategy, but the security situation

was a major factor regarding activities not completed as it impacted on contractor implementation, USAID monitoring, and also

increased security costs. To help USAID monitoring, we recommended improvements in records management and contractor

reporting.

Our January 2005, Community Action Program audit found that

98 percent of intended outputs were achieved, including citizen

participation in its own governance and the generation of local employment. We did, however, make one recommendation to improve

USAID’s data-gathering process.

Future challenges in the areas of governance did not differ significantly from those in reconstruction. Continuing its work with

local community organization and all levels of the Iraqi government

will depend on the support USAID and its implementers receive

from their Iraqi counterparts as well as the security situation on

the ground. We will continue oversight of USAID Iraq activities

with our staff in Iraq, including the areas of reconstruction and

governance.

Thank you for the opportunity to testify. I would be happy to respond to any questions you may have at the appropriate time.

Mr. SHAYS. Thank you.

[The prepared statement of Mr. Farinella follows:]

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Mr. SHAYS. Ms. Morrow.

STATEMENT OF JOYCE MORROW

Ms. MORROW. Mr. Chairman and distinguished members of the

subcommittee——

Mr. SHAYS. Move the mic a little closer. We are hearing you pretty well, but just move it a little closer. No, closer than that.

Ms. MORROW. Closer.

Mr. SHAYS. Yes.

Ms. MORROW. Thank you for the opportunity to appear before

you today to describe our work in support of the Army’s role in reconstruction of Iraq.

As the Army’s Auditor General, I am responsible for the worldwide operations of the U.S. Army Audit Agency. We support the

Army’s total force of quality soldiers and civilians by providing objective and independent auditing services that help Army leaders

make informed decisions, resolve issues, use resources effectively

and efficiently and satisfy statutory and fiduciary responsibilities.

Army Audit is a member of the Iraq Inspector General Council.

We coordinate with other audit inspection organizations to share

information and to avoid duplication of effort. We currently have

13 add auditors in Iraq and 5 in Kuwait.

Our work supporting the Army’s mission in Iraq has focused on

the concerns of Army leadership and includes four areas which I

will briefly summarize.

The first area is program management and fund accountability

in support of Iraq reconstruction. Working primarily through the

Project and Contracting Office, which I will prefer to as the PCO,

the Army provides acquisition program management and financial

management support for most of the $18.4 billion Iraq Relief and

Reconstruction Fund that Congress appropriated during fiscal year

2004.

Several audit organizations reported high-risk areas related to

program management and contracting in Iraq. In July 2004, we

started an audit to determine whether the PCO had controls and

sound business processes in place to mitigate previously identified

high-risk areas. We found that the PCO had put many controls in

place to mitigate risk. However, additional actions were needed to

strengthen controls and to increase assurance that the Army was

executing the funds in the best possible manner.

We issued our final report on this audit in May 2005. The PCO

said it had taken or would take corrective actions based on our recommendations.

Likewise, our ongoing work on fund accountability is focused on

making sure the Army and PCO have effective controls and processes in place to properly account for the fiscal year 2004 Iraq Relief and Reconstruction funds that DOD activities execute. We are

currently staffing our tentative conclusions and recommendations

with Army leadership.

A second area I will discuss is audit work we have done for the

Multi-National Security Transition Command—Iraq. We have completed two audits and have a third ongoing related to funds totaling about $280 million it received under the Commanders’ Emergency Response Program and Quick Response Fund.

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Our first audit covered fiscal year 2004 transactions. We found

that the Security Transition Command administered funds according to applicable guidance and program intent but needed to better

document transactions and approvals.

During our second audit, we looked at fiscal year 2005 transactions processed from October 2004, through April 2005, and followed up on recommendations in our first report. We confirmed

that command’s corrective actions had fixed the conditions we had

previously identified. We also identified several additional actions

command needed to take to gain oversight over funded programs

to better track the status of military interdepartmental purchase

requests and to reconcile cash overage. Again, command was very

responsive to our recommendations and said it had taken or would

take corrective action.

We are now reviewing fiscal year 2005 transactions processed

from May through September 2005, and are following up on the

recommendations in our last report.

A third area we looked at was accountability over vested and

seized assets. We found that the Army properly secured and accounted for seized assets and metal bars. However, the Coalition

Provisional Authority and Coalition forces didn’t adequately control

and protect the majority of noncash, seized assets; and adequate

audit trails didn’t exist to support the on-hand balances in the

vested and seized asset accounts. The Army took immediate action

on our recommendations to improve controls.

The fourth area we are working is the Logistics Civil Augmentation Program [LOGCAP]. Our work, which is ongoing in Iraq and

Kuwait, is focusing on contractor logistics support services to Coalition forces in support of Operation Iraqi Freedom. Since 2003,

Army estimated costs under this contract are about $22.7 billion.

We are working with the affected commands and DOD agencies

and the prime contractor to improve program management, contract administration and management of functional areas such as

food service operations, supply distribution and vehicles used by

the contractor. We will issue a series of reports on this program.

I appreciate the opportunity to testify before you today, and will

be glad to respond to your questions.

Mr. SHAYS. Thank you.

[The prepared statement of Ms. Morrow follows:]

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Mr. SHAYS. Let me give you a sense of what the Chair’s intent

is. We have primarily Democratic Members, and I am going to go

right down the list. We will have 10-minute times, not 5, even

though we have a large number of members, because it’s the belief

of this subcommittee that you really start to learn more if you can

pursue the question. In order, I have Mr. Waxman and Mr.

Kucinich, Mr. Lynch, Mr. Higgins and Mr. Van Hollen.

I am going to say to those of you responding to questions, Members will state fact, what they believe to be fact and opinion. I particularly would like to make sure, if a fact is stated that is incorrect, that you correct the record. If I say 20 million was this and

it was 18.5, then I want that record corrected. If it’s not, we will

make an assumption you agree with the statement.

Obviously, if it’s an opinion about money being misused or not,

that is an opinion, you can decide to weigh in on that or not. But

one fact we would like to particularly make sure our information

is accurate. I would just say that in a number of cases you told us

what you were working on, not necessarily your findings, and we

appreciate that you were working on these issues, but we want to

kind of get at your findings.

I would say to all of you, bureaucracies work more efficiently

when someone is looking over their shoulder, and we know you

were working, looking over their shoulder. You will have found

things that you didn’t like, but I am assured that, had you not been

looking, there would have been worse things taking place. So we

thank you for what you prevented from happening, as well as those

things that you have uncovered that need to be improved.

So, with that, Mr. Waxman, you have the floor for 10 minutes.

Mr. WAXMAN. Thank you very much, Mr. Chairman.

The idea of reconstructing Iraq was so that we could provide

some stability in that country so that there could be some security

and that people could move toward democracy and become a model

for the Middle East. I just want to mention that context. So we

have committed billions of dollars to this effort, billions of dollars

from the taxpayers of the United States for this effort. I want to

ask some questions to evaluate what we have achieved, especially

in light of the goals that we are set out by the administration.

The administration had an objective in the beginning, in one

area that I want to first pursue, to restore the oil production in

Iraq to prewar levels. There wasn’t a lot of damage because of the

war itself on the Iraqi oil fields, but there was a lot of damage because of looting after the overthrow of Saddam Hussein.

Mr. Bowen, has the administration fulfilled its promise of restoring oil production to prewar levels in Iraq to what it was under

Saddam Hussein?

Mr. BOWEN. We have not——

Mr. WAXMAN. Your mic is not on.

Mr. BOWEN. We have not reached the goals that we originally

set, but I think there are several reasons for that, if I may. First

of all——

Mr. WAXMAN. Well, before you go through the reasons, I want to

know whether we have achieved the goal. The goal was to restore

oil production to prewar levels. Has that been achieved?

Mr. BOWEN. We are not there yet.

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Mr. WAXMAN. OK. In fact, Iraq produced in March 2003, 2.6 million barrels of oil per day. By August 1, 2005, production levels

were below 2.4 million barrels of oil per day. Is that accurate?

Mr. BOWEN. I can’t testify to the accuracy, but I have seen similar figures.

Mr. WAXMAN. Mr. Christoff, GAO also looked at this issue. Did

you also reach the same conclusion?

Mr. CHRISTOFF. Yes, we have not reached the prewar levels for

oil production.

Mr. WAXMAN. In the electricity sector, the administration said it

would increase peak electricity output to at least 6,000 megawatts,

and it spent over $4 billion in an attempt to meet this objective.

Mr. Christoff, GAO looked at this sector, too. Has the electricity

reconstruction achieved the objectives that Congress was promised

in 2003?

Mr. CHRISTOFF. Let me just use a statistic that I think is helpful.

The goal was to achieve about 110,000 megawatt hours of additional capacity. We briefly achieved that for a couple of weeks over

the past summer but only after we lowered the goal in May from

120,000. We haven’t reached it yet.

Mr. WAXMAN. Mr. Bowen, do you agree with that conclusion?

Mr. BOWEN. I have seen similar figures, but I can’t testify to the

accuracy of the numbers.

Mr. SHAYS. Mr. Bowen, your mic is not working well. Just pull

it closer to you. If you are not reading a statement, you can do

that.

Mr. BOWEN. As I said, I can’t testify to the accuracy of Mr.

Christoff’s numbers, but the general principle, yes, I agree with.

Mr. WAXMAN. So, what we tried, there are reasons for it, but we

tried to reach a level of electricity. Even when we reached that

level of electricity for a while, weren’t there interruptions in service, Mr. Christoff?

Mr. CHRISTOFF. Well, there were standard interruptions of service because of insurgent attacks but also because there is certain

maintenance downtimes that have to occur naturally with electrical

power plants.

Mr. WAXMAN. In the water sector, the administration said it

would make sure that 90 percent of Iraqis had access to drinkable

water, and to meet this objective it spent over $1 billion. Mr.

Bowen, has the administration achieved this objective?

Mr. BOWEN. Well, we have looked at more precise issues, for instance, several water treatment plants in the Baghdad vicinity as

well as water transfer plants. Our focus has been on inspecting the

efficacy of the construction at those plants, and it’s been a mixed

bag. In some cases, those construction efforts have been productive

and effective and in others they have been subpar.

Mr. WAXMAN. Embassy officials told our staff in August that only

about 66 percent of Iraqis have access to potable water. That is

hardly better than the 60 percent of Iraqis who had potable water

before the war. Mr. Christoff, GAO tried to audit the water reconstruction. You asked the administration if it could document how

many Iraqis were now receiving clean drinking water as a result

of the reconstruction efforts. Can you tell us whether the administration was able to achieve its goal?

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Mr. CHRISTOFF. We had asked the State Department to try to

give us a better accounting of the number of projects and where

they were located within the water sector, and they were not able

to provide that detail.

Let me make a comment about water. I think one of the challenges in the water sector is that we don’t really have good measures, outcome measurements to begin with. We can generate a lot

of good, clean water at these facilities that we are rebuilding, but

by the time it reaches the Iraqi household with enormous leakage,

as well as the contamination, because sewage pipes are right next

to the water pipes, we really don’t have a good indication of how

many people actually receive potable water.

Mr. WAXMAN. Mr. Bowen, your team went out to a few of these

water project sites. They found serious problems with three of the

four projects that were examined. Can you describe some of the

problems you found?

Mr. BOWEN. Yes. Let me begin with a global comment about the

water sector as well. The water sector in the original allocation was

assigned just over $4 billion in reconstruction funds. After several

reprogramings, which began over a year ago, the transfer of money

from water security amounted to about $3 billion. They were reduced to about $1.2 billion, so almost a three-quarters cut. So if

you want to talk about a reconstruction gap, we probably should

evidently look at water first, because it was substantially cut.

One of the consequences of the lack of cost to complete, related

to the reconstruction gap, is the tendency to descope projects. When

funds begin to run short, then in order to reach completion the

original outcome of the project is descoped, and that occurred with

respect to the three water projects you are referring to that we

went out and inspected.

The water transfer facilities did not have completed pipelines,

and they were inadequate water treatment container facilities as

well. There were walls that were incomplete or failing; and so, fundamentally, there were engineering and structural deficiencies that

led us to reach our negative conclusions about those particular

projects.

Mr. WAXMAN. Thank you. I want to go into some of the reasons

for failure to meet these objectives. But does anybody on the panel

disagree with the premise that we failed to meet the administration’s stated objectives in the oil, the electricity and the water sectors? Does anybody disagree with the statements that have been

made that we failed to achieve the objectives?

Mr. CHRISTOFF. I would like to just put it in context somewhat.

I think these output goals in terms of increasing electricity and oil,

we haven’t met them. That is true.

Our reconstruction dollars were never intended to deal with all

the problems within Iraq. They were intended as being the first important thrust to try to rebuild the infrastructure with the anticipation that the international community, donors would kick in, and

Iraqis would have the capacity to also contribute to their reconstruction needs.

Mr. BOWEN. If I might followup——

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Mr. WAXMAN. The goals I took were from the documents that the

administration set out and told Congress they were going to

achieve.

Mr. CHRISTOFF. Right.

Mr. WAXMAN. Now, obviously, one of the reasons is security.

Mr. CHRISTOFF. Absolutely.

Mr. WAXMAN. Because of the insurgency, we have had to redirect

money for security purposes.

But I would like to ask whether there’s another major factor that

is often overlooked, and that is the administration’s flawed contracting strategy. Instead of maximizing competition, the administration opted to award no-bid cost-plus contracts. Halliburton’s Restore Iraqi Oil contract is the prime example. Under this no-bid

cost-plus contract, Halliburton was reimbursed for its costs and

then received an additional fee which was a percentage of its costs.

This created an incentive for Halliburton to run up its costs in

order to increase its potential profit.

Mr. Bowen, do you think it made sense to award no-bid cost-plus

contracts with literally billions of dollars to rebuild Iraq?

Mr. BOWEN. For the security reasons that were at stake in December 2002, January 2003, as the war was being planned, I think

that there had to be contingency contracting undertaken in a classified environment.

Because the companies worldwide that are capable of addressing

the kinds of problems that were expected, namely those that we

saw in the first Gulf war, I think that Kellogg, Brown & Root was

an effective choice.

Mr. WAXMAN. Well, they started to rely on big monopoly contracts over sectors of the economy in Iraq. Iraq was divided geographically and by economic sector into a handful of fiefdoms. Individual contractors were awarded these monopoly contracts, and for

all of the work within that fiefdom—and these monopoly contracts

were awarded before specific projects were identified—there was no

actual price competition for more than 2,000 projects. Don’t you believe the tipped use of these monopoly cost-plus contracts encouraged or hindered progress?

Mr. BOWEN. You are addressing two different phases of contracting. The contracting that was prewar contracting, that I think the

sole source, classified situation was apropos. The second one is the

contracting phase that followed 108, 106, the allocation of the $18.6

billion. I think you raise a valid question about whether the $500

million IDIQ cost-plus contracts to cover every conceivable project

large and small was the right way to go, and that is something we

are looking at. Indeed, we have a lessons learned initiative. We will

be looking at this, bringing in everyone who is involved in that

process in a December panel to analyze your exact question.

Mr. WAXMAN. Just for those who don’t know, will you say what

IDIQ means?

Mr. BOWEN. Indefinite quantity, indefinite demand—delivery, I

am sorry, indefinite delivery. What it effectively means is you have

an open checkbook to go out and pursue—because there’s a lack of

information to be able to adequately calculate fixed-price costs—so

to pursue a fixed-price contract. It’s when you were working in an

environment when it’s impossible to ascertain real costs.

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Mr. SHAYS. I thank the gentleman.

Mr. Kucinich, you have the floor for 10 minutes.

Mr. KUCINICH. Mr. Bowen, in the work that you do, where you

identify what is to be reconstructed, I would just like to go over

what is being constructed. I would just like to go back. Could you

describe for this subcommittee the types—just generally, the types

of facilities that are being rebuilt?

Mr. BOWEN. Sure. It’s divided into four sectors now, electricity,

water, oil and facilities and transportation, previously eight, now

four. Just at what we have looked at, we have an extra report, inspections of electrical facilities, five substations in Basra. We are

looking at the al Fatah bridge, a number of the pipe—the oil transfer facilities that are being reconstructed and sensitive pipeline

transfers.

In this report, we will point out that those substations in Basra

were well done, that they are effective, but I think it is emblematic

of the sustainability problem, while, as substations alone, they are

well constructed and presumably for our money’s worth, they are

not yet tied into the electrical grid through needed wiring. That

was because that is not part of the contract. So the issue of sustainability and overall coordination of how what we construct fits

within the Iraqi infrastructure is the most pressing issue.

Mr. KUCINICH. OK. Thank you.

When you look at infrastructure that is being rebuilt, do you also

make notations as to how that infrastructure was damaged or destroyed and when it occurred?

Mr. BOWEN. We don’t. Because when we go look at a project we

are looking at a project that is near complete. For instance, the al

Fatah Bridge, that is a good question. The al Fatah Bridge was destroyed in a famous video that people may recall. It also took with

it the oil transfer pipeline that went underneath it. But that is not

something that we necessarily use within our analysis as to whether the reconstruction of that pipeline has been effective.

Mr. SHAYS. If the gentleman would yield and I not take off his

time. It’s clear to me so far the question is to Mr. Christoff and to

Mr. Bowen. The others of you who are here, if you would take

notes on any issue you want to elaborate, you have an expertise—

not to interrupt the question—but I am going to ask you at the

end, is there anything that you would have responded to any of the

other questions. So I am just saying, I would like to make sure that

you do take notes on any issue that you think is important to

share.

I have taken about 10 seconds off the gentleman’s time, I will

give more than that back.

Mr. KUCINICH. Thank you very much, Mr. Chairman.

I think it would be interesting for this subcommittee to know,

since the American taxpayers are paying the bill for reconstruction,

how it is that these facilities that we are reconstructing became

damaged or destroyed.

Mr. BOWEN. You are pointing to the issue that is a significant

one, what part of the infrastructure is being repaired because of

war damage and what part is being repaired because it had fallen

into decay through 25 years of neglect. I presume is what you are

asking.

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Mr. KUCINICH. Well, I am particularly interested in what was destroyed because of war damage. It would be particularly interesting

for this subcommittee to know that, Mr. Chairman. Is that within

your responsibility?

Mr. BOWEN. No, sir. My jurisdiction is to be sure that the $18.6

billion is properly spent.

Mr. KUCINICH. Is that within your responsibility, Mr. Gimble?

Mr. GIMBLE. No, sir, it is not.

Mr. KUCINICH. Is that within your responsibility, Mr. Krongard?

Mr. KRONGARD. No, sir.

Mr. KUCINICH. Mr. Christoff.

Mr. CHRISTOFF. I think we can provide commentary, certainly, on

it.

Mr. KUCINICH. Can you provide facts, as far as this was destroyed in the war?

Mr. CHRISTOFF. I think the level of detail that you want to try

to——

Mr. KUCINICH. Mr. Farinella.

Mr. FARINELLA. No, sir.

Mr. KUCINICH. Ms. Morrow.

Ms. MORROW. No, sir.

Mr. KUCINICH. OK. So we really don’t have any declared responsibility on the part of anyone who has testified here today that they

can provide us with certainty information as to the degree to which

the facilities that have been damaged or destroyed in Iraq as a result of the war can be identified. We might assume that from news

accounts, but we really don’t know.

I think it’s an important question, because it relates to the responsibility of the administration for a tax on Iraq which has destroyed infrastructure. I think we need to know that.

The fact that the Department of Defense Acting Inspector General, whose job it ought to be to do that, cannot in any way vouch

for the responsibilities raises some serious questions. So I would

like to go directly to Mr. Gimble. I would like to ask you about the

Defense Department Inspector General’s oversight work in Iraq.

With the billions of dollars of taxpayers’ moneys being spent in

Iraq and reconstruction of military operations, DOD Inspector General presence is essential. I think most members of the subcommittee would agree. We have heard news reports about abdication. I

am wondering, Mr. Gimble, for the record, how many Department

of Defense Inspector General auditors and investigators are currently assigned to Iraq?

Mr. GIMBLE. There are none in country. We are working on the

supplementals back in the United States, back in the contract offices.

I would like to make just a comment on your——

Mr. KUCINICH. Well, this is my time, so if you could answer the

question, I would appreciate it. I will be respectful.

Mr. GIMBLE. The answer to the question is we have none in

country at the present. We have four ongoing audits doing the supplemental back in the States in the contracting offices.

Mr. KUCINICH. I have to say, Mr. Chairman, it is incredible that

we have this major undertaking in Iraq, and the Department of Defense Acting Inspector General has just said that they don’t have

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any auditors or investigators assigned to Iraq. I want to say again,

you know, I would call that missing in action.

Now, who has the primary oversight responsibility for Department of Defense funds in Iraq? Who has the primary responsibility?

Mr. GIMBLE. For the supplemental, we would have the responsibility, the Congress on the aid, the Iraqi reconstruction, the DOD

appropriations has been assigned to Mr. Bowen’s unit, and he does

oversight with that.

Mr. KUCINICH. But you do have the primary responsibilities for

DOD funds in Iraq. Why has DOD IG abdicated its responsibility?

Mr. GIMBLE. We have continued to work on contract operations,

and also we have some stuff, some joint small arms work that we

are doing. We are doing a number of audits that are affected or

funded by the supplementals. However, we still do not have anybody in country at present.

Mr. KUCINICH. You know, you mentioned before about other people looking at some of these things. Now DCAA and other auditors

can look at some of these issues but not all of them.

For example—and this is something this subcommittee has

talked about, Mr. Chairman. There has been a serious lack of body

armor for our troops and a shortage of armored Humvees. This is

about the protection of our troops. It’s a huge problem. This isn’t

numbers crunching that the DCAA can handle. It’s a management

problem for the Inspector General. What are you doing about that?

Mr. GIMBLE. We don’t have a project ongoing with that. That

would not be done in country, though. That would be done back

here and through the procurement system, contracting system.

Mr. KUCINICH. Well, that says a lot to the parents of troops

about what the government is not doing to make sure that our

troops are protected.

Mr. GIMBLE. Could I interject, unless your time——

Mr. KUCINICH. I am not going to debate you here. I am just asking you a question.

Mr. GIMBLE. I am just happy to give the gentleman more information.

Mr. KUCINICH. I am not.

Mr. SHAYS. I will be happy to give more than 10 minutes. We are

going to go a second round. It is not like we have 5 minutes. If the

witness has something to say on the issue, I would like them to be

able to respond to it. But if you feel you need more than 10 minutes because——

Mr. KUCINICH. Mr. Chairman, keep in mind now, he has just testified that they don’t have anybody on the ground looking at these

things. That is what most Inspector Generals are about.

Mr. SHAYS. But why don’t we find out what he wanted to say and

that maybe will answer a part of your question, maybe it won’t. If

it won’t, it will be self-evident.

Mr. KUCINICH. OK, Mr. Chairman. I am just not into filibusters

here.

Mr. SHAYS. No, but the gentleman will get more time if he needs

it.

Mr. Gimble.

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Mr. GIMBLE. I just wanted to make the additional comment we

do have a number of investigations that we are assisting on

through our criminal investigation that will deal with body armor

issues.

Mr. KUCINICH. But do you have anyone on the ground asking

troops whether they have what they need?

Mr. GIMBLE. No, sir.

Mr. KUCINICH. Another key issue here, Mr. Chairman, is the

treatment of detainees. There have been egregious examples of

cases of abuse in Iraq, Afghanistan and Guantanamo Bay. This

isn’t oversight that can be done from Washington, DC. Does the

DOD, Mr. Gimble, Inspector General, have investigators on the

ground assessing the treatment of detainees?

Mr. GIMBLE. We had people looking at the issue. We had two

projects being done currently that are being finalized. The work is

being done here. Our investigative policy group is reviewing some

50 cases.

Mr. KUCINICH. Are they on the ground?

Mr. GIMBLE. They are not on the ground in Iraq.

Mr. KUCINICH. Mr. Chairman, this is a very important exchange

here. Because if you would—can we ask the stenographer to play

back his initial response? Because, you know, we are kind of

equivocating here. I want to make sure that we are very precise.

Because I asked the question about whether they had investigators

on the ground, and his first response seemed to indicate they did.

I pressed forward, and his second response seemed to indicate that

they didn’t. Could I have——

Mr. SHAYS. Let me just say we won’t do that here. I am more

than happy to have you keep asking your questions. His comments

were made just a few minutes ago.

Mr. KUCINICH. OK. He has now stated for the record that they

don’t have anyone on the ground assessing the treatment of detainees. It actually is hard to believe that the DOD IG isn’t looking at

the issues that I have just discussed. With the reconstruction effort

failing and the insurgency continuing unabated, we need more

oversight, not—instead of increasing its oversight efforts in Iraq,

the DOD IG has abandoned its responsibilities. So I will say it

again. They are missing in action. You can’t tell me that you can

check out events in Iraq from here in Washington.

One of my colleagues, Mr. Lynch, just stated this. He was in

Iraq, and he saw that the building materials weren’t up to par.

Now, you can’t even do that. This is ridiculous, Mr. Chairman, that

we can have an IG represented here, and you are not performing

your responsibilities. You are not doing what you are supposed to

do to protect the troops, and you are not doing what you are supposed to be doing to protect the U.S. taxpayers.

Mr. SHAYS. Do you need more time?

OK. Thank you.

At this time, the Chair will recognize Mr. Lynch—excuse me, I

am sorry. We have Mr. Dent. I apologize.

Mr. LYNCH. Absolutely, I yield.

Mr. DENT. Thank you, Mr. Chairman.

As I mentioned, I was in Iraq this summer, in August. I just

want to clarify a point Mr. Kucinich made about up-arming the veVerDate 11-MAY-2000 12:32 Jan 25, 2006 Jkt 000000 PO 00000 Frm 00133 Fmt 6633 Sfmt 6633 D:\DOCS\25441.TXT HGOVREF1 PsN: HGOVREF1
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hicles. Maybe somebody could correct me if I am wrong. I want to

talk about the need for precision. The vehicles coming out of Kuwait are up-armored. Can anybody answer that question? That

point was made—it is not the point of this. If not, I would like to

get an answer to that. It is my understanding that all those vehicles are up-armored coming out of Kuwait. I witnessed that operation down there near Camp Arafjan in August.

Mr. SHAYS. Can anybody speak to that issue? If you can’t, that

is fine.

Mr. CHRISTOFF. I can speak to the issue that is one of the engagements that we are pursuing right now, the team that is going

into Iraq in 2 weeks. One of the six areas that we are looking at

is the up-armor situation. So we are definitely looking into that situation.

Mr. DENT. It was my understanding that every vehicle going into

convoy out of Kuwait into Iraq is up-armored.

Mr. CHRISTOFF. It is not near that yet.

Mr. BOWEN. I cannot speak to that either, but I can tell you that

we have an audit on up-armored vehicle purchase that will be out

in our next vehicle report, and it finds it was substandard.

Mr. DENT. Thank you.

Mr. Bowen, it is my understanding that various agencies involved in auditing and reviewing Iraq reconstruction, including

separate GAO, Army Audit Agency and the Defense Contract Agency agreed to coordinate their activities. Furthermore, those two

oversight committees have been established to coordinate activities

between these two agencies, the Iraq Inspectors General Council

[IIGC], and U.S.-Iraq Accountability Working Group [IAWG], in

Iraq. That said, it is my understanding that the SIGIR auditors to

reconstruction and reconstruction project managers is about 1 to

11⁄2, to about 11⁄2. In your opinion, Mr. Bowen, is that too many

auditors? What would be an appropriate number of auditors? One

to five? One to 10? What is the number?

Mr. BOWEN. The appropriate number is the appropriate number

that is currently there, which is 16 to 1. Thank you for raising that

question, because it’s a myth that’s been floating around that is not

true. PCO has about 73 managers; DRD, 518; IRMO, 80; JCCI has

44. That is 715 managers.

We have, when we are fully staffed, 28 auditors. DCAA also has

in country 15 auditors. That is about 44 auditors. 715 managers to

44 auditors is about 16 to 1.

What that doesn’t address either is something that was alluded

to earlier, and that is a substantial portion of the management

within PCO has been contracted out. I am sure you saw that.

There’s a government lead in the sectors. But most of the managers

are contractors.

So I think that perhaps, first of all, it’s a myth, that it perhaps

surfaced by those who would rather not have oversight. Second, it’s

also fundamentally inaccurate on the raw numbers. Third, I think,

circumvents a significant issue, and that is much of the management has been contracted out. That was the structure chosen 2

years ago to do this.

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Mr. DENT. Is the current structure effectively allowing for the

avoidance of duplicative efforts among all the various Inspector

Generals in Iraq?

Mr. BOWEN. Yes, it is.

The IAGC meets quarterly. We specifically call everyone to the

table to talk about what they are doing and what they are planning

on doing. There have been specific instances in the course of those

meetings where we discovered that agencies are—different agencies

are aiming at the same target and we deconflicted on it. Either one

or the other have stood down.

Mr. DENT. Are there any questions that any of you may want to

answer? There may have been some statements made or questions

asked that some of you didn’t have an opportunity to answer. Is

there anything any of you might like to answer, Mr. Farinella or

Ms. Morrow, comments or questions on anything that was previously stated here today?

Mr. Bowen, if not—as you know, there are currently several

agencies overseeing the reconstruction in Iraq, including the DOD

IG, Department of State’s IG, USAID’s IG, and GAO, the Army

Audit Agency. Can you help us with the justification for the proposed extension of the termination date of SIGIR of 2008 and possibly well beyond, given all this?

Mr. BOWEN. Sure. Actually, it wouldn’t be 2008. It would be

changing the statute from terminating SIGIR 10 months after 80

percent of the IRRF is obligated up to 10 months after 80 percent

of the IRRF is extended, which, as what the Comptroller of the

GAO said, is the way that should have been done in the beginning,

and it makes sense. IG should look at how money is spent, not just

at how it is contracted.

DOD IG, as you know, is not looking at the reconstruction effort.

The Congress has specifically tasked us to look at it. It’s an extraordinary undertaking, and thus Congress deemed that it required special oversight. The issue is, when will—where are we in

the reconstruction process vis-a-vis expenditure of funds? And it

certainly looks like that we are going to need oversight on the use

of those funds for the next 2 years.

Mr. DENT. Thank you.

I yield back the balance of my time, Mr. Chairman.

Mr. SHAYS. I would like to maintain that time and claim it for

my own, if you don’t mind. I want to be very clear that there’s

nothing that has been said or asked that no one wants to respond

to. I am pretty surprised by that.

Ms. Morrow, you have no comment to make based on any of the

questions or answers.

Mr. Farinella, no comment.

Mr. Gimble, this is your chance to have made comments. You

have the floor.

Mr. GIMBLE. I do have one comment.

Mr. SHAYS. Mr. Krongard, is there any comment that you wish

to make? Any information you wish to correct? Otherwise, it stands

on the record as stated in this hearing.

Ms. Morrow, I would like to start with you. Is there anything?

Ms. MORROW. No, I have no corrections to make. The Army is

making progress. There are certainly challenges. We are working

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with them to try to make improvements, strengthen controls. So

certainly there are a lot of challenges ahead, but I believe Army is

making progress.

Mr. SHAYS. I would like some specific information other than everybody is trying to do a better job. I don’t mean to be disrespectful, but, I mean, you are in the trenches. If there is nothing that

you want to add in specifics, I guess, that is OK, but you have been

given the opportunity.

Ms. MORROW. Well, certainly some of the things we had found,

a lot of them deal with controls, but insuring there’s adequate

audit trails, documentation, approval level is written.

Mr. SHAYS. And there have not been adequate audit trails?

Ms. MORROW. In some cases, we found that they were not. Again,

those areas, as we point those out, the Army is taking action to

strengthen those, to provide the audit trails, to show that the funds

are properly accounted for and the projects are meeting our intended purposes.

Mr. SHAYS. Mr. Farinella.

Mr. FARINELLA. Well, nothing to correct for the record.

Regarding the work that we have done in Iraq and are finding,

I guess a common theme could be—and I believe it was unavoidable—the rush to move into Iraq to get things set up on the

ground, which I think, in the beginning, had a lot to do with the

firm, total and complete control systems in place, that were some

of the problems that were the cause of what we found when

projects were behind schedule, when things were not getting done,

other issues with coordination between the different parties, between USAID.

Mr. SHAYS. Let me go to Mr. Gimble.

Mr. Gimble.

Mr. GIMBLE. I just had one clarification I would like to put on

the record. That was the issue if we had people on the ground in

the Iraqi detainee abuse issue.

We did have people there, a person there, early in the investigations. That work has since rolled back in, and we are doing the

final touches on that—actually, two projects. One is actually the review of the investigative, quantitative investigative reviews; and

we also have another assessment that is due. It was 12 major reviews of issues dealing with detainee Iraqi abuse, and there were

400 recommendations for following on those recommendations.

That is all being done here. We did have——

Mr. SHAYS. You have become the Acting Director as of when?

Mr. GIMBLE. September 9th.

Mr. SHAYS. Of this year.

Mr. GIMBLE. Correct.

Mr. SHAYS. So the decision not to be in Iraq was not your decision; is that correct?

Mr. GIMBLE. That’s correct.

Mr. SHAYS. I hope you are not just being a good soldier, though,

in the sense that you are going to argue for a bad policy. I don’t

understand why you didn’t have some people on the ground in Iraq.

I will just say that to you.

Let me just make another point. I understand that we have tremendous oversight in Iraq, and you don’t want to duplicate the duVerDate 11-MAY-2000 12:32 Jan 25, 2006 Jkt 000000 PO 00000 Frm 00136 Fmt 6633 Sfmt 6633 D:\DOCS\25441.TXT HGOVREF1 PsN: HGOVREF1
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plication of the duplication. But there, it seems to me, had to have

been some areas where your folks had some expertise where they

could have been helpful.

Having said that, you know, when a colleague of mine berates

someone for not being in Iraq, and they have never been in Iraq

but berate what we are doing in Iraq, I have some challenges with

that as well. I know that every time I have gone to Iraq, I have

learned good things and bad things. I have learned things that

have distressed me and things that have encouraged me. I wouldn’t

have learned them had I not been to Iraq.

So I am—it goes both ways in this business, and I just want you

to know that.

Mr. Krongard, any comment?

Mr. KRONGARD. Sir, as to the fact, I don’t have any specific comment. Words, like failure, are subjective determination.

Mr. SHAYS. A little closer to the mic, sir. Your mic—both of yours

are not good. No, don’t grab the other one. Just bring it closer.

Mr. KRONGARD. Is this better?

Mr. SHAYS. Yes.

Mr. KRONGARD. I said, to the facts that were stated, I don’t have

anything to correct; and words such as failure are subjective determinations that I am not here to make judgments on.

I would point out that in my testimony, with respect to what we

found in the rule of law area as well as what we found in the joint

assessment of the Iraqi police training programs, that in both of

those cases—and first we said that the funds appeared to be well

spent, and in the second we determined that it was a qualified success. So I have testified to those.

As far as coordination, which Congressman Dent asked about, I

also mentioned that our assessment was joint with DOD. That

speaks well for the coordination amongst the IGs. I mentioned the

joint program that Mr. Bowen’s office and my office are planning

with respect to I&L. So I think the coordination amongst this group

is very good.

Mr. SHAYS. I won’t test the patience of my colleagues. I was

using Mr. Dent’s time, and I haven’t used my own time yet.

Mr. Lynch, thank you for your patience.

Mr. LYNCH. No, not at all. Thank you.

Mr. Chairman, just to followup on Mr. Dent’s remarks about the

Humvees, when I was there several weeks ago in al Assad and in

Baghdad, we actually had some up-armoring facilities that were

moving along with the rearmoring and so-called up-armoring process with those vehicles. My understanding at this time is that all

vehicles that are being used in circulation, that is off base, have

been up-armored.

We do have some problems with—maybe it is something we can

address in a future report, Mr. Bowen, regarding transmissions

now burning out because we have added 1,300 pounds or 3,800

pounds to the troop carriers, 1,300 pounds to the Humvees, and

now the transmissions can’t handle that extra weight. So maybe we

could look at that.

I also heard from the troops that they were very happy to see

the air conditioners added to the Humvees. 130 degrees heat over

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there. I guess the air conditioners lower that to about 80 degrees,

and they were quite pleased with that.

I do want to talk about the whole auditing process. My understanding, in talking to folks on the ground over there, is that the

managing of the contracts is more prospective, making sure that

stuff gets built, that troops get the supplies they need, that we

move forward. The auditing process is more looking back or trying

to measure where we are at a certain point in time in terms of the

goals that we have and the expenditures that we have made. So

I don’t necessarily include the number of managers, Mr. Bowen.

By the way, thank you for your service to our country. All of you,

you have difficult jobs, and we don’t dismiss that in any respect or

degree. We understand you are doing your best. That is a given.

In our positions, experience agrees with reason in this case that we

have seen a tremendous amount of waste and, in some places, corruption.

We had the experience with the Iraqi Oil-for-Food program where $20 billion was available and $8 billion was stolen. So we

know the possibilities there are on the ground for corruption and

for misallocation, let’s call it. But you are in a very real way our

line of defense so that the American taxpayers money are spent

wisely and effectively, so we have to ask these questions.

I direct my question to Inspector General Gimble as well as Mr.

Bowen; and, Ms. Morrow, you can jump in if you wish.

On March 17th, the Justice Department announced that Jeff

Mazon, a former Halliburton procurement manager, and Ali Hijazi,

a general manager of La Nouvelle, a trading and contracting company, which is a Kuwaiti firm, and a Halliburton subcontractor had

finally been indicted for a kickback scheme for which La Nouvelle

overcharged the U.S. Government of about $31⁄2 billion. I have been

asking questions of every committee on this, and it took a long

time to get the names of these individuals, and it’s been like pulling teeth to get some information around these indictments. Specifically, the indictments allege that Mr. Mazon received a $1

million payment from La Nouvelle in exchange for helping the firm

reap more than $51⁄2 million from a LOGCAP 3 subcontract that

should have cost less than $2 million. Now, back in June, during

this subcommittee’s first hearing on the development fund for Iraq,

I asked Bill Reed, the Director of Defense Contract Audit Agency,

whether, in light of those indictments that have come down in this

case, I asked him, are we going through the defense contracts that

La Nouvelle was involved in and that these two individuals are involved in, to find out whether this is just a one-time event or

whether there might be a pattern or practice of corruption involving contractors and subcontractors.

Mr. Reed assured me that DCAA was in the process of auditing

the La Nouvelle contracts. Now, Inspector Gimble, can you update

the committee on the status of those La Nouvelle audits?

Mr. GIMBLE. Those are still ongoing investigations, and I can’t

really get into any more detail, but they are ongoing.

Mr. LYNCH. That is it. They are just ongoing.

Mr. GIMBLE. Yes, sir. The U.S. attorney has asked me not to

make any comments on it.

Mr. LYNCH. Have you reviewed?

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Mr. GIMBLE. The contracts? We are in the process.

Mr. LYNCH. I do have to agree with the chairman and Mr.

Kucinich that boots on the ground—you know, you can give me all

the reasons why you don’t have boots on the ground as far as auditors, but I have to tell you, how many defense contracts are we

managing in Iraq right now? Thousands, right?

Mr. GIMBLE. Yes. I don’t have the number. I will say——

Mr. LYNCH. It’s astounding. All I am saying is that, with that

much going on, there’s no reason why you can’t have someone on

the ground or you shouldn’t have someone on the ground. If I could

humbly suggest, you need to get some people on the ground in Iraq

from the Defense department.

Mr. GIMBLE. Sure.

Mr. LYNCH. Even just to save face. That is a tough position to

defend, to hand off the responsibilities to Mr. Bowen or Ms. Morrow or anybody else. When DOD has such a huge exposure over

there, to have no one on the ground is just inexcusable, sir.

Mr. GIMBLE. Sir——

Mr. LYNCH. You may respond.

Mr. GIMBLE. Our investigators are actively involved in that task

force. That is our people doing that work. It is just that the work

is not on the ground in Iraq. It is in other places, but those questions are being addressed by our people.

Mr. LYNCH. It’s a tough environment over there. It’s a tough environment. You can’t manage it from Baghdad, never mind manage

it from Arlington. You have to have people around there, whether

in Mosul or al Assad or Balad, you know, Ramadi. You have to

have people where the work is going on in audit to audit and—

whether or not the work is—progress is being done, where we are.

You know, I am a former iron worker, 18 years. You know, I

have done enough construction to know that in order to guarantee

the quality of the work and that the money is going in the right

place and you don’t have waste that you have to have people there,

to hold people accountable. All I am saying is the Defense Department should be on the ground. That is just my recommendation.

The other point I have is, according to Halliburton, it was the

company’s own internal rigorous system of checks and balances

that led them to the irregularities and informed the Defense Department, Justice Department, assuming this was the case, of any

additional financial controls that have been put in place to insure

that we are the first to know in the event that such fraud is taking

place. Have we made any changes in light of what is going on here?

Mr. GIMBLE. We have active involvement in the ongoing criminal

investigations of both of those.

Mr. LYNCH. OK. So there is nothing you can tell the Congress

that we are doing differently in light of what we have seen here

with these folks and the kickback scheme is going on there?

Mr. GIMBLE. You mean—well, the U.S. attorneys have asked us

not to be discussing the cases. That is I guess about where I have

to be with it.

Mr. LYNCH. Well, certainly the facts are on the indictment, and

the problem that exists there with kickbacks is you don’t need to

know the details of that case to take steps against other opportunities for corruption. You don’t turn a blind eye to kickback schemes

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just because you have an active one going on. I mean, that is

just——

Mr. GIMBLE. In that regard, we do have some other audits ongoing that were looking at controls of contracting and so forth.

Mr. LYNCH. There you go. Can you tell us more about those?

Mr. GIMBLE. As a matter of fact, I can. We have two audits ongoing, one on the Air Force, other appropriations, that is basically

looking at the tracking of the funds, supplemental funds going to

the global war on terrorism; and we have another one on Army appropriations, appropriations Army.

We have two contract audits that are just about to be ending up.

One is the contracts with the Corps of Engineers that were examining the requirements, determination and work procedures for selected contracts and contracts awarded by the Army Corps of Engineers for the global war on terrorism. That is in a draft audit, so

they should be released here, probably final, sometime the first of

the year.

We have another audit ongoing that we are looking at trying to

determine whether the government provides sufficient contract

oversight for service contracts to ensure that the contract is performed in accordance with the contract specifications.

We have also been looking to see whether they have appointed

people to monitor contracts, if persons had been appointed to monitor contract performance and the work has been adequately monitored and being performed in accordance with the contractual obligations. That is also in the draft statement, and we will be issuing

that out.

Mr. LYNCH. All right. Well, sir, all I can say is that it would help.

I don’t believe that, with the thousands of contracts we have on the

ground in Iraq, that 45 people can handle it, with all due respect.

All I would say is that I think that the Defense Department has

a primary responsibility to be on the ground in Iraq to police that.

I can say it from my own observations there, and I can say it also

within the context of Mr. Bowen’s earlier remarks about falling

short of our goals and that there being a gap.

If folks are going to come back to Congress and ask for an additional appropriation, the fact of whether we have or we don’t have

an accountability there and a reliable accounting system and auditing system will have definite consequences on how folks vote. I

know it will have a consequence on how I vote on future appropriations, knowing that we have a reliable auditing system in place, so

that the American taxpayer don’t get—we don’t get robbed.

OK. Thank you. I appreciate your testimony.

Mr. SHAYS. Mr. Van Hollen.

Mr. VAN HOLLEN. Thank you, Mr. Chairman. Thank you for

holding these hearings. I want to thank all the witnesses for their

testimony.

Mr. Waxman, in his questioning, talked about the fact that we

had not hit a number of the goals that we set out at the beginning

with respect to the reconstruction effort. What I would like to focus

on a little bit is being able to sustain operations in those areas

where we have met our goals, whether it is water, infrastructure,

electricity, the oil sector, because obviously if we are investing hundreds of millions, billions, of dollars of taxpayer money in this reVerDate 11-MAY-2000 12:32 Jan 25, 2006 Jkt 000000 PO 00000 Frm 00140 Fmt 6633 Sfmt 6633 D:\DOCS\25441.TXT HGOVREF1 PsN: HGOVREF1
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construction effort, we want to make sure that when we complete

the job and walk away, the Iraqis are in a position to maintain

those efforts. Otherwise, I think we would all agree, that investment would have gone for naught.

So if I could just start, Mr. Christoff, I know you have looked at

this and GAO has looked at this, as have others. In your testimony,

you talked about a number of sectors, the water sector, the electricity sector.

With respect to the water and sanitation sector, you point out that more than a quarter of the projects, $52 million of the $200

million in completed, large-scale water and sanitation projects,

were either not operating or were operating at lower capacity due

to looting of the equipment and shortages of reliable power, trained

Iraqi staff and lack of required chemicals and supplies.

If you could talk about that specific case, but also more broadly

about what we are doing or not doing with respect to sustaining

the investments that have been made.

Mr. CHRISTOFF. I think sustainability is definitely one of the key

challenges that we face. It is one of the areas that we have to begin

addressing.

Let me just give you an example. In addition to the water and

sanitation sector and the electricity sector, I had a chance to talk

to, it must have been about 15 or so, power plant operators who

really expressed their frustrations at not getting the kind of training that they needed to try to operate some of these gas turbine

engines that we put in place at power plants.

I think that just reiterated the importance of not just turning

things over. You just don’t turn over, but you have to provide a

sustainment framework. You have to go beyond the 90-day warranty and maybe provide an additional year of training for the

Iraqis in how to operate the power plants, how to operate the water

and sanitation facilities. It is really a critical issue.

Mr. VAN HOLLEN. Are U.S. resources being spent in this way

now?

Mr. CHRISTOFF. Moving in that direction, I think, is not only the

attention that SIGIR has brought to this, but also the attention

that we brought to it and the USAID Inspector General, where the

State Department and others are trying to take moneys from some

projects and try to focus more on sustainability.

There is a discussion right now, I think, within the administration as to whether or not you go beyond this 90-day period of providing the Iraqis with additional knowledge and training and perhaps extending it to a full year.

Mr. VAN HOLLEN. Mr. Farinella, you also addressed this issue in

your testimony, and you talked specifically about your audit and

recommendations with respect to the electricity sector and that you

recommended the USAID adopt a multiyear strategy.

Can you tell me what progress, if any, USAID had made toward

implementing that kind of strategy?

Mr. FARINELLA. Well, since we have issued the report, they are

addressing those issues of sustainability that are important. For

example, one of the things they are addressing regarding the power

sector is a power plant maintenance program whereby, as part of

the project, the contractor, Bechtel, is providing something like

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60,000 hours of technical and management training to Ministry of

Electricity, Iraqi Ministry of Electricity staff, to bring them up to

speed, to be able to—once these activities are fully within their

power and area of responsibility, to be able to maintain these going

forward.

Mr. VAN HOLLEN. What is your assessment now? Let us just take

the electricity sector. What is your assessment now of the Ministry

of Electricity’s ability and competence to maintain the operations?

Mr. FARINELLA. I would say that at this point it is a work in

progress. I would say at this point it is a work in progress. It is

not something that we could definitively state that, going forward,

the sustainability of this is ensured.

Mr. VAN HOLLEN. All right.

Mr. Bowen, you also addressed this issue and identified it as an

issue in your testimony. What is your assessment of how prepared

we were for the sustainability phase? It sounded like these contracts originally did not envision a sustainability component; it was

more of a turnkey operation.

What amount of additional resources are going to be necessary

across all these different industries in order to meet the goal of

sustainability in terms of training, equipment? What more are we

going to have to put in in order to meet these challenges?

Mr. BOWEN. It is an excellent question.

First, SIGIR has been raising sustainability issues since the

spring. It was the foremost issue we highlighted in our July report,

and we announced with that report a sustainability audit, which

we will issue in this next report in 12 days.

The pressure exerted on the sustainability issue has resulted in

action, and the Director of IRMO, in response to our initial audit

findings, created an Office of Sustainability to coordinate.

So, first off, there needs to be within the Iraq reconstruction program a coordinated sustainability effort. Stovepiping or haphazard

approaches don’t work. It has been a burden throughout. But this,

going forward, as you rightly point out, is perhaps the most significant issue. What we hand over has to endure for democracy to endure there.

How much is it going to cost is your second question, and

through the course of our audits, we were able to identify, IRMO

identified—Iraq Reconstruction Management Office identified $350

million to $400 million that is available for allocation on sustainability issues.

That is an important start. But the ultimate cost is unknown, because it was not budgeted for at the outset. It has been addressed

gradually over the course of this year, but we are still playing

catch-up in ensuring that both the planning and the funding are

in place.

It is not just United States; let me emphasize, it can’t be U.S.

funding that makes this work. There are two components. There is

operations and maintenance sustainability and there is legacy sustainability. Legacy is how this thing is going to work in the long

run, and they have to change the way—they, the Iraqi Government—has to change the way they budget, because they don’t

budget for sustainability.

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That is a message that has to be sent through IRMO to the senior consultants to the ministers and ultimately to the Minister of

Finance to be sure there are adequate funds to run the system.

Mr. VAN HOLLEN. Thank you.

Mr. Chairman, I have a really quick followup on one point. You

say in your testimony that IRMO currently does not have the authority to address this issue. Could you speak to that point right

now?

Mr. BOWEN. About——

Mr. VAN HOLLEN. With respect to, IRMO has responded by creating the office to lead coordinated efforts to address and sustain the

issue. However, IRMO needs authority it does not currently have

to accomplish this objective.

Mr. BOWEN. Well, essentially what I am asking for there is that

the Ambassador—who is, according to the NSPD, in charge of the

overall reconstruction program—empowers through delegation of

authority to IRMO and, thus, to that office to coordinate

sustainment across DOD, USAID, State Department, all other operating entities with IRRF dollars in the country.

So there has been an issue of coordinating among departments

in Iraq over time.

Mr. VAN HOLLEN. This isn’t legislative authority. The Ambassador today could issue IRMO that authority, right, if he took your

recommendation?

Mr. BOWEN. That is correct.

Mr. SHAYS. The gentleman had time.

Under most of my life, going back from Johnson to Nixon to Ford

to Carter to Reagan to Bush to Clinton to Bush, the DOD budget

has not been auditable. It blows me away. So I know you have

more than enough work to do, Mr. Gimble.

The number that we are hearing about not being auditable is

this $8 billion stolen. Could someone provide a little bit more insight as to ‘‘stolen’’ versus the $8 billion?

Mr. BOWEN. Yes. I think you are referring to our January 30th

audit of the management of DFI.

The Development Fund for Iraq was created in U.N. Security

Council Resolution 1483. It essentially transferred the Oil-for-Food

account in the Southern District Federal Reserve Bank of New

York into a DFI account which became the operating capital for

CPA’s management of the government.

Mr. SHAYS. So this was Iraqi dollars?

Mr. BOWEN. That is correct. It is not appropriated dollars.

Mr. SHAYS. Basically, Iraqi money to be spent by Iraqis?

Mr. BOWEN. Correct, for the management of the interim Iraqi

Government.

Mr. SHAYS. Not U.S. taxpayers’ dollars?

Mr. BOWEN. Exactly right.

Mr. SHAYS. But then, go on. Was it stolen?

Mr. BOWEN. It was not stolen. As our audit makes clear, we addressed the lack of effective accountability measures so as to provide information to the Administrator and to the CPA, which had

charge of the money and charge of managing the Iraqi Government

at that time, to know exactly where that money was going.

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It raises concerns. If you don’t have feedback on how the billions

you are transferring to a fledgling government that, as we discovered early on, was in a bit of a chaotic state, then you are not going

to have assurances, which is our job, accountability assurances in

IG, that money, which we had charge of, is properly used.

Let me just make one other point. The Commissioner of Public

Integrity in Iraq——

Mr. SHAYS. That is the Iraqi Government?

Mr. BOWEN. Yes. He is the FBI counterpart, the Iraqi FBI, a

good man whom I have met with on a number of occasions. Each

time I go, I meet with him a couple of times; Judge Radi and, really, the point of the spear on the anticorruption effort has announced indictments of Ministry of Defense officials for embezzlement or fraudulent misappropriation of billions of dollars of DFI

dollars that were transferred.

So the point I am making is, we cannot conclude that money was

stolen or fraudulently misappropriated in any way. What we did

say is, we are not sure; there wasn’t enough feedback. You remember in our audit that we went out and we looked at some

security——

Mr. SHAYS. The bottom line is, you can’t trace the dollars because

there is not a paper trail?

Mr. BOWEN. Correct. And now we have downstream significant

indictments coming up on the Iraqi side of the ledger regarding

this.

Mr. SHAYS. So some of that money was clearly taken?

Mr. BOWEN. By Iraqis, correct.

Mr. SHAYS. Mr. Lynch.

Mr. LYNCH. Mr. Chairman, I just want to jump in. We were the

custodian, though, of that money——

Mr. BOWEN. That is right.

Mr. LYNCH [continuing]. To be spent on behalf of the Iraqi people, knowing full well that we were going to have a deficiency here

where our money, our tax money, is basically filling in that gap

that the Iraqis can’t pay for themselves. The more money we use

of Iraqi money that doesn’t get stolen is money we don’t have to

draw down from the American taxpayer.

So we were the custodians for that reservoir of funds, and we

should have had the protections and the infrastructure there basically to make that transference without getting robbed. All I am

saying is that we failed in that measure.

Your report, if I read it correctly, doesn’t say the money wasn’t

stolen, it is just we can’t figure out what happened to it. There is

$8 billion there that, OK, maybe it went here, maybe it went there,

but—that is a hell of a way to run a system though.

Mr. BOWEN. Well, let me make clear, we didn’t say it was stolen.

It was misreported on many occasions in the press that we did.

What we said was, there should have been better accountability

measures in place regarding the stewardship of those dollars that

were transferred by the CPA to the Interim Iraqi Government for

their operations.

Mr. LYNCH. We are not talking about a couple of thousand dollars here; we are talking about $8 billion.

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Mr. SHAYS. We can agree that some of $8 billion was taken, and

the question is how much.

Mr. BOWEN. Yes, eventually.

Mr. SHAYS. I totally agree with your assessment that particularly

before the transfer of power in June, we had an extra responsibility

to make sure the money was well spent. So I don’t want my colleague to think that I am in any way passing judgment on his concern about this issue.

Mr. LYNCH. Understood.

Mr. SHAYS. And I thank him for his fairness in this whole process.

One of the other interesting issues I wrestle with this: They have

no checking system in Iraq. Soldiers get paid, they literally go

home to provide it to their families. But the other part that is kind

of amazing to me, and I would like someone to speak to this.

In Iraq, the generals would say how many soldiers they had, and

they were given envelopes of payment. If they said they had 2,000

and they only had 1,800, there were 200 envelopes with cash in

them that, who knows where it went?

How is Iraq now trying to deal with that issue? Can someone

speak to that? My understanding is the Iraqis themselves have

impaneled this.

Mr. Krongard, can you speak a little to that issue?

Mr. KRONGARD. Well, some of us have mentioned the so-called

‘‘troika,’’ the three parties that are engaged in anticorruption activities in Iraq. Each of the ministries and agencies, the 29 ministries and agencies, has an Inspector General that is an Iraqi Inspector General. That was instituted during the Coalition Provisional Authority. It was based on the American experience; Inspectors General were not traditionally or previously in Iraq.

In addition, you have the CPI, which, as Mr. Bowen said, is the

counterpart to the FBI. They are very actively engaged in

anticorruption activities. Then you have the third, which is the

Board of Supreme Audit, which has existed in Iraq for many years.

So the Iraqis are proceeding in a manner that has the appearance of fighting corruption. The details and what the court cases

will show, I mean, I couldn’t possibly forecast that. But the structure is there. Whether it will work out, I couldn’t say.

Mr. SHAYS. Mr. Christoff, do you want to make a comment?

Mr. CHRISTOFF. My comment relates a lot to just building up the

capacity of the different Iraqi ministries, their accounting capacity,

their ability to keep track of even their own employees.

If you look at DOD’s report from last Thursday, they talk about

the Ministry of the Interior that is responsible for the police functions, and they are trying to figure out all the ghost employees,

those employees that are still being paid, but they are not really

doing policing work.

So I think it is important to focus, as agencies are trying to do,

on building up the accounting capacity, building up the ability of

all the different Iraqi ministries to come into a 21st century form

of accounting.

Mr. BOWEN. In the latest 2207 report to Congress, the State Department noted that the Iraqis are pursuing a national ID measure

and biometric data to address the ghost employee issue. We raised

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it in our January 30th report, and we found in the various

samplings we made, almost half the employees didn’t exist that

were being paid.

I am afraid that was epidemic—it was endemic to the system.

Mr. SHAYS. Where was that?

Mr. BOWEN. That was in the January 30th——

Mr. SHAYS. Half of the employees where?

Mr. BOWEN. It was in security details and in certain ministries.

It was the Ministry of Transportation. We actually got a report

from a CPA employee whom we asked to go out and document how

many were actually there getting paid. There were roughly—I can’t

remember the number; there were 1,800 salaries being paid, 600

people showed up to collect the money.

Mr. SHAYS. One of my observations in my 10 visits is that some

Iraqis still don’t know whether we are going to stick with them, so

some haven’t decided which side they want to be on. Because they

watch CNN and others who are reporting what they are reporting,

and they are saying, you know, we may leave them.

There is an incentive when you have that kind of environment

to try to get something in the short run. The more we can convince

them that this is a long-term effort, the more we can convince them

that there will be a legitimate government that they can become

part of.

I hope some of what we see changes, but obviously it is a culture

that has allowed for a lot of this kind of stuff to go on.

Mr. BOWEN. Mr. Chairman, I have seen exactly the same thing.

There was a question on their side about our commitment, particularly to anticorruption, which is why, when I met with Ambassador

Khalilzad during my last trip, I urged him to be forthright and emphatic in his support of the anticorruption foundations in Iraq and,

more specifically, to call an anticorruption summit; bring in the

CPI Commissioner, bring in the chairman of the Board of Supreme

Audit, bring in all the IGs, and endorse their efforts and do what

we can to help fund the training academy that Mr. Krongard referred to and do what we can simply to bolster that. Because without integrity at its core, the democracy program could founder.

Mr. SHAYS. Let me just cover this. We invited all of you here because I think it is rather impressive that we have this kind of oversight and because you have the knowledge to tell us what the facts

are. If you leave now, I leave a bit confused about some issues.

Mr. Christoff, you might have a more overall view; or maybe you,

Mr. Bowen; or others as well. And that is, we are talking literally

of hundreds of billions of dollars that have been spent in Iraq.

Mr. Bowen, you folks own $181⁄2 billion of it?

Mr. BOWEN. IRRF I and II, about $22 billion.

Mr. SHAYS. Mr. Krongard, what do you focus on? Is it out of the

18 or just that related to State Department?

Mr. KRONGARD. It is just the State Department, but Mr. Bowen

really has the oversight of the IRRF funds. We have some responsibilities, but what we tend to look at is more of the management.

The embassy over there has oversight responsibilities. We look at

the efficiency, the management.

Mr. SHAYS. It is a huge embassy, we have 600-plus, give or take.

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Mr. KRONGARD. Yes, and we have done a number of reports

which is attached to my statement, which indicate what we have

looked at in terms of trying to bring efficiency, trying to bring coordination.

Mr. SHAYS. I am going to come back to you, Mr. Christoff.

Mr. Gimble, as Inspector General, you basically have a huge

amount. Is it your view that when you look at the hundreds of billions over which you have oversight that it is in salaries?

Explain to me your mind-set that tells me you don’t need to be

in Iraq. There is an answer. I don’t know if I will agree to it.

Mr. GIMBLE. Let me clarify a couple of things.

We have been in Iraq, just not very much. We have a team going

over the first week in November with Mr. Krongard. We have had

people over there doing the joint police assessment.

Mr. SHAYS. I guess before you go there—and I will give you a

chance—I want to make sure you are hearing at least what I am

trying to ask you, that is, your job is to audit all of Defense, correct?

Mr. GIMBLE. Correct.

Mr. SHAYS. Are you auditing the troops and the allocation of

moneys going to the National Guard, going to the Reservists, going

to our active duty forces? You are continuing those audits. They

may be in Iraq or may not be.

Mr. GIMBLE. That is correct. Because we have things like payroll

audits. We do those routinely as a part of our financial statement

audits. Those would cover all of the Army, for example, on military

pay appropriations.

We just completed stuff like the DOD patient movement system.

It is a little bigger than Iraq, but it definitely has impact.

We have a number of——

Mr. SHAYS. Let me just cut to the chase: How much DOD money

is spent in Iraq?

Mr. GIMBLE. The emergency supplementals right now show to be $65.2 billion and $76 billion. That is not all being spent in Iraq.

That is supporting the Global War on Terrorism, which includes

Afghanistan, and we are doing some work in Afghanistan also.

I cannot make a good case of why we have not had a bigger presence in Iraq. I am not trying to make that case. I am just saying

there is a lot of oversight there; we have tried to coordinate and

not duplicate.

Should we have been there in a little more presence? The answer

is probably yes, we should have.

Mr. SHAYS. Mr. Farinella, what do you audit?

Mr. FARINELLA. We audit the USAID moneys.

Mr. SHAYS. How much?

Mr. FARINELLA. It is roughly about $5 billion that was awarded

for contracts——

Mr. SHAYS. In addition to, or in conjunction?

Mr. FARINELLA. As part of those IRRF funds.

Mr. SHAYS. In conjunction with. Mr. Bowen, it is the same dollars, correct?

Mr. BOWEN. Yes, that is right.

Mr. SHAYS. In other words, in some cases we almost have duplication?

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Mr. BOWEN. That is what the IIGC does.

Mr. SHAYS. I know what it is, but I want you, for the record, to

say what it is. Not the initials, sir. You audit——

Mr. BOWEN. I am sorry, the Iraqi Inspector General’s Council.

Mr. SHAYS. You have a council. You get all these folks together

and then, what, you divide up the workload?

Mr. BOWEN. We coordinated actually with USAID. The week I

was appointed, I went and met with Everett Mosley; then I said,

look, we have oversight of your piece of the pie now. We need to

coordinate. You are already providing oversight. Let’s marshal our

resources and ensure there is not duplication of effort.

So we coordinate with USAID on how they are overseeing their

portion of the IRRF and review their product.

Mr. SHAYS. Because I want to give Mrs. Maloney time here, Ms.

Morrow, the Army is only one part of our effort obviously in Iraq.

What do you audit? The Reservists? The National Guard? Do you

have a specific mandate?

Ms. MORROW. As it relates to our work in Iraq, the Army is the

executive agent for some of the funds, so we are——

Mr. SHAYS. You mean, of all the military? So even money spent

by other branches is funneled——

Ms. MORROW. Not funneled, but in terms of having visibility,

having some program oversight, the Army’s Project and Contracting Office.

Mr. SHAYS. And how many dollars are we talking about?

Ms. MORROW. The DOD portion of that is about $13.1 billion of the $18.4 billion. It is part of——

Mr. SHAYS. And not added to?

Ms. MORROW. No, sir. It would be part of those funds; the IRRF

funds, it is part of that. That is the work we are doing as it relates

specifically to Iraq.

There is a lot of other work we look at, all the functions that the

Army has, to include the National Guard, the Reserves and a

whole host of various areas.

Mr. SHAYS. Let me go to you and end with you, Mr. Christoff.

You may have more of an overview, given you are not an Inspector

General with one area.

Do you have confidence that we are covering the whole gambit

of our expenditures in Iraq? Do we need an Inspector General to

check out the Inspector Generals?

Mr. CHRISTOFF. Oh, absolutely not. I think the one——

Mr. SHAYS. Are we covering the bases here, sir?

Mr. CHRISTOFF. I think we are covering the bases. And if I could

continue, I think what GAO also offers is the fact that since we

have the authority to look at all appropriations and all U.S. Government activities, to sit back and look at how the different agencies—USAID, PCO, State Department, the Department of Defense—are working together and collaborating together to deal not

just with reconstruction issues, which seems to be the focus, but

also the important security issues too, the training and equipping

of Iraqi security forces.

Mr. SHAYS. You were comfortable saying under oath, in this subcommittee, what about the overall effort to look at how money is

spent?

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Mr. CHRISTOFF. I am never going to disagree that more oversight

is not needed. More oversight is always needed, particularly given

the billions we are spending in Iraq.

I think Mr. Bowen is correct. We have been trying earnestly to

coordinate all of the activities that the different Inspectors General

are doing with the Special Inspector General and with the GAO as

well.

Clearly, you all have an important responsibility as well with the

kinds of oversight hearings and continually asking the hard questions I think we are trying to ask as well.

Mr. SHAYS. Thank you.

Mrs. Maloney, you have the floor for 10 minutes plus.

Mrs. MALONEY. First of all, I would like to thank the chairman

for his continued oversight and concentration and focus on Iraq. It

has been very helpful to Congress and, I think, the Nation.

I would like to get back to policing, since every time we have

been to Iraq together, the chairman and I, the focus has always

been if we can get the Army and the police up to snuff, strong

enough, then we can have a strong, independent Iraq.

What I find very troubling is that they keep reporting that the

policing is getting better and stronger. Out of the police, they need

180,000, and we are roughly at 95,000, but many people are saying

they are more like beat cops than real strong police officers. And

out of the Army troops that were required—this is a July 25th report—they are saying we need 100,000, and we have roughly

78,000. That is 20,000 short.

What I find so troubling is no matter, how many resources we

put in it, training in different countries—and I would like to ask

Mr. Farinella and Mr. Gimble whether you think 8 weeks training

is enough. But I would like to say that I am troubled by the fact

that we are focusing so much on it, yet the incidence of brutality,

of attacks on the police, of the ability to keep law and order, it

seems to be getting worse, not better.

I would like DOD, State and Mr. Bowen, anyone who would like

to comment, Mr. Christoff, if you have done any studies on it with

the GAO.

But I find that troubling. They keep saying we are training more,

we are training more, we are training more, yet the level of uncontrolled activity and violence appears to be getting worse.

Mr. Gimble.

Mr. GIMBLE. Our assessment of the training is, the 8 weeks is

probably OK for part of it. However, there needs to be, in our view,

more supervisory training to have the leadership that is necessary

to have an effective police service.

I guess that would be kind of where I would leave it at.

Mrs. MALONEY. Mr. Farinella.

Mr. FARINELLA. AID is not involved in that area at all.

Mrs. MALONEY. Mr. Bowen, Mr. Christoff, Mr. Krongard of DOD.

Mr. KRONGARD. DOS.

The first thing is to distinguish between police and military.

Some of the numbers you referred to I think included both those

numbers. The police have a different function. They are just like

the police here; they have an urban mandate which is a little bit

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different from the overall security mandate that the military forces

have.

The 8 weeks is a good starting point as a training. We have recommended that there be additional specialization to determine

where they are going to go afterwards. We have recommended

more involvement by the Iraqi Ministry of Interior both as to recruiting and vetting, as well as to where these people go afterwards.

So there is a lot that needs to be done. It is a difficult environment for them.

On the other hand, the reason we have called it a qualified success, as I referred to in my testimony, is there has been good performance; there was at the time of the election. It may be too soon

to say what happened this past weekend, but the early indications

are that the police activities were fairly good. The respect for the

police seems to have grown.

Police, unlike military, have, just like here, a more direct involvement with the people, so there has to be a better feeling of the people to the people in the police force, and that does seem to have

improved.

So it is a difficult situation. Over 1,600 police have been murdered in various events, and they keep turning up.

Mrs. MALONEY. During the election they had to shut down all the

roads. They had to shut down basically the whole country.

Mr. KRONGARD. Yes.

Mrs. MALONEY. What I find disturbing is that the incidence of violence seems to be increasing even though the level of trained

troops and trained army is increasing and should be focusing on

maintaining order in a more successful way.

Could you comment on that? Why is that happening when you

say we are having success with the training, yet the incidence of

violence and uncontrolled activity, which police and the army and

the military are supposed to control, it just seems to be getting

worse in the number of incidents.

Mr. KRONGARD. Well, I don’t like not answering your question directly, but I was commenting on an interagency assessment of Iraqi

police training that we did along with the DOD. That was not an

assessment of the military forces. So I just don’t feel qualified to

answer your question with respect to the military forces, who have

the overall responsibility for maintaining the countrywide security.

The police have a different mandate and a different job, and my

comments and my experience and expertise through this has been

directed toward the police and not the military.

Mrs. MALONEY. Mr. Christoff, have you done any reports on the

increased incidents or lack thereof?

Mr. CHRISTOFF. Yes. In fact, my statement shows statistics that

DIA declassified for us that indicates that the number of incidents,

violent incidents, against the Coalition infrastructure and the

Iraqis is going up. We did have a decrease in the violence shortly

after the vote, but the violence is continuing to go up.

I think one of the questions that we are trying to get at is that

when you have reports of continuing progress in the training and

the equipping of Iraqi security forces, 192,000 trained and

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equipped, what does it really mean? What does it really mean in

terms of the capabilities of those forces?

We have looked at this number I don’t know how many times,

192,000. No. 1, we know that not all the Iraqi forces have all the

equipment that they need. They have varying degrees of training.

There is absenteeism in the Iraqi forces. There are ghost employees. So you have to peel back these statistics that are being presented as evidence of progress and get behind them.

There is one Iraqi unit that has a capability level of No. 1, that

is, fully capable of operating independently of Coalition forces.

Well, the question is, for how long? Do they have the logistics that

will allow them to sustain themselves? Do they have the maintenance and the operations? Can the Iraqi Government afford the

growing amount of security forces that it is now tasked to provide

for?

Mrs. MALONEY. Well, this increased incidence of violence that

you are tracking, you are tracking that the police and the army are

getting stronger, yet the incidence of violence is increasing too.

Have you looked at why that is happening? Is that more unrest

among the people? Have you tried to understand why the increase

in violence? Even though the amount of policing and military force

is increasing, why is the violence getting more?

Mr. CHRISTOFF. Because you still have a very capable and lethal

insurgency in Iraq.

Mrs. MALONEY. I know, but we had a capable insurgency a year

ago, and yet the violence was not as pronounced as it is now, according to your own study.

I would like to move to another subject very quickly, and that is

the women. The reports I read on the constitution, they are saying

in certain areas of the country, sharia may be imposed, but in

other areas of the country it will not be imposed. This is very troubling to me. I certainly have met with my colleagues on both the

Democratic and Republican sides of the aisle with many Iraqi

women leaders. One was a judge, and they will no longer let her

sit as a judge. I find that very troubling. One was a doctor. They

are no longer letting her sit as a doctor and perform her work.

I would like to hear maybe, have you done any studies on that

at GAO or do you have any information? Can anyone clarify the

status of women? I know the status of the constitution is not clear,

so therefore the status of women is not clear. But if you could, clarify that aspect.

Mr. CHRISTOFF. We have not done specific studies on women’s

issues in Iraq, but I think you point out a good point in the sense

of how is the constitution that is trying to balance the tenets of democracy and the tenets of Islamic law going to allow for previous

rights that women had in Iraq and how is it going to be implemented in the different provinces within Iraq.

Mrs. MALONEY. I think that is an excellent question, and you

stated it, and I don’t think anyone has the answer right now. Anyway, I hope the State Department and DOD remain firm in supporting women and women’s rights.

I just left a committee hearing next door, actually with Mayor

Nagin from Louisiana, and it was on Hurricane Katrina and the

response there. I would say that you have a great deal of experiVerDate 11-MAY-2000 12:32 Jan 25, 2006 Jkt 000000 PO 00000 Frm 00151 Fmt 6633 Sfmt 6633 D:\DOCS\25441.TXT HGOVREF1 PsN: HGOVREF1
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ence now in monitoring accountability in Iraq for government property and for, really, contracting and for other areas.

I know there have been some mistakes, but looking forward if

you could, give our government and the government of the city and

State some insight and direction, some guidance, what steps should

they be taking right now to ensure more accountability for Hurricane Katrina spending than spending in Iraq, where a lack of controls from the outset really allowed for waste and fraud.

Can you give some direction to what we should be focusing on?

And what advice would you give to the leaders responding to Hurricane Katrina, not only to help the people, but to have real accountability and oversight in real time?

Mr. GIMBLE. What we have done is, we have five audits announced, that we are on the way to the various places in that sector. We are also a member of the DOJ task force on the investigative side. In fact, I am going down tomorrow for a press conference

they are having down there in the city with a lot of the Inspectors

General.

I think one of the big things, the lessons learned, is when they

started backing away from the noncompetitive contracts, I think

that was a key lesson we learned, and I think it is good to see the

folks are doing that.

We will have a number of issues to deal with. I think a lot of

the same issues that you say in Iraq are fairly similar. However,

I think it is different from the standpoint that somebody pointed

out earlier that we can actually go down there and move around

in the area, where you can’t really do that in Iraq.

So I think you will see a big presence, at least in the DOD IG

and the DOD community, where we have about 190 people lined

up to go down and do some work in that area.

Mrs. MALONEY. Mr. Krongard, do you have a comment or any advice you would give to the leaders there?

Mr. KRONGARD. My department, the Department of State, is not

actively involved in Katrina because we don’t have many procurement activities or contracting down there for reconstruction. So I

am not participating.

Mrs. MALONEY. From your experiences.

Mr. KRONGARD. I would say that I think this lesson is already

being implemented, which is, it is important to look at the way in

which money is obligated, not just the way it is spent. And I think

that lesson is being learned very quickly, and the IGs are on the

ground down there looking at the way contracts are let, the format,

the selection of winners and so on. I think that is an important

thing, rather than waiting until the money is spent.

Audits are done, looking backward.

Mrs. MALONEY. Would you elaborate? You would suggest that

they look more on what they want to accomplish or how they——

Mr. KRONGARD. Well, both. Are the scopes identifiable? Are the

deliverables identifiable? Do people understand what a contract objective is, not just how it is being let, what the competitive bidding

is—all of those aspects.

Mrs. MALONEY. So you would focus on what you want to accomplish even more than the competitive bidding?

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Mr. KRONGARD. I am not sure I would prioritize them. I think

they are both very important.

Mr. SHAYS. If we could maybe come back to that, I want to do

a second round with everybody. But I would like to make sure that

someone explains to us what is the hang-up with competitive bidding? In other words, do we have in process that competitive bidding takes 9 months or 10 months? If it does, then that is the reason we don’t have it.

The gentleman has time.

Mr. LYNCH. Thank you, Mr. Chairman.

Just in terms of where we are right now, I think we not only

have a Reconstruction Gap, I think that you folks have perhaps a

preexisting auditing gap or accountability gap that you have to

deal with.

I appreciate the fact, Mr. Bowen, that you have only been there

a year in your current position and you have taken some steps in

the right direction, I believe. But we are not there yet.

I keep going back to the point of the end of the CPA, the Provisional Authority, massive amounts of cash coming out of New York,

the Federal Reserve Bank of New York, where the committee has

received documents as to the amount of cash on those planes, all

going into Iraq at the 11th hour. We have accountability supported

by hard documents as to where that money went, up until the

point that it goes over to the interim government and then a lot

of it disappears.

So I just have a lack of confidence that we have the infrastructure in place, the accounting procedures and the auditing mechanisms in place. I just don’t think they are there yet. But I think

we are moving in that direction.

We also have, and I was very happy to hear Mr. Gimble’s remarks about not defending that, defending the fact that DOD has

no one on the ground. I appreciate your honesty, sir.

I have reports of about $34 million in U.S. assets that can’t be

traced on the ground; we sort of lost them. There are vehicles,

there is equipment, but there is about $34 million that is missing.

I suspect it is more than that, but this is what we know is missing.

All this boils down to, really, metrics, and that is what we are

looking to you for. After Saturday, with this election and assuming

that the constitution is ratified and that the elections go forward

in December, our withdrawal from Iraq, getting our sons and

daughters home, really depends on metrics, on measuring the

things that you are responsible for, the ability of the Iraqi security

forces to handle their own security, the ability of the Iraqi police

department, the construction efforts in terms of water and electricity and infrastructure there in Iraq. That is all critical to our

withdrawal and to the success of the future Iraqi Government. So—

it is very, very, very important and we are relying on you, so this

system needs to be tight. It needs to be as accurate as possible, because we are betting everything on this.

There are a lot of us here from both parties that want to get our

sons and daughters home as quickly as possible and to be there not

a day longer than they have to be. That date is determined by

those metrics that you supply us with. So it is critically important,

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not just with the construction effort, not just with the security effort, but our whole involvement here in this country.

We just need to have DOD on the ground, and if it takes 45 more

inspectors, if you need to double the number of auditors to get us

there, then, you know, given the fact of the sacrifices that we are

making right now, that would seem to be a very modest and reasonable request. It is just one that I offer to you.

Again, I appreciate the good work that you are all doing and

your service to this country. I appreciate the chairman continually

working on this issue. I just think there is a way we can all do our

job a little better here.

Thank you.

Mr. SHAYS. We will be closing up just with a few clarifications.

Mr. Christoff, you make me nervous when you give a statistic

that says, or in general—and let me say, you are a very credible

witness, so I have nothing but admiration for the job you do and

your responses. I think you are trying to be extraordinarily fair and

very accurate.

So I just want you to tell me, when you say the violence has gone

up, I look at August and your own statistics—November and January of last year—and they are higher than the highest point since

February. So we are not as high as we were in August last year,

as high as we were in November, as high as we were in January

of last year.

Where we are is at a low point in March, which was significantly

lower than any part up to April last year.

There has been a slow creeping up again; is that accurate?

Mr. CHRISTOFF. Mr. Chairman, I stand corrected. I think those

statistics were characterized to us—and I agree with them—by DIA

is, if you look at them going back to 2003, you see lows, you see

a peak, it is followed by more lows, and then a slightly higher

peak. So there have been ebbs and flows in terms of the violence.

Mr. SHAYS. But there were three high peaks last year that we

haven’t come close to?

Mr. CHRISTOFF. Right. The November one with Fallujah was one

of the high peaks.

Mr. SHAYS. I tend to also want to say that, having been there—

and I say ‘‘having been there,’’ because I get a different feeling

than if I wasn’t. I happen to agree with Mr. Kucinich, you need to

be there; and I would love for him to come with us, because you

see different things.

I could walk in 14 provinces and feel relatively safe except for

organized crime. I can’t be in four provinces. But I hear people saying, Iraq is a mess, and they think that what they see in Baghdad

is what is everywhere. So I get a little sensitive to that.

But with the police issue, I want to be clear that the State Department is involved with the traffic cop part of police work, right?

You are not with the paramilitary——

Mr. KRONGARD. That is correct. I am not sure I would call them

traffic cops, but you are correct.

Mr. SHAYS. That is not fair. That is not fair. Non-paramilitary.

They are on the firing line.

That is a real mistake for me to say that. Thank you for correcting me.

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My understanding is you are in charge of that incredible facility

in Jordan?

Mr. KRONGARD. When you say in charge, yes, the State Department is, INL is, that is right.

Mr. SHAYS. And you are overseeing it in the State Department?

Mr. KRONGARD. That is correct.

Mr. SHAYS. Is there anything any of you want to put on the

record before we get to the next panel? Any issue?

Mr. KRONGARD. The only thing I would say, sir, both yourself

and Mr. Lynch emphasized the question of whether we all thought

that the oversight was adequate, and we all kind of nodded.

I would like to qualify it in the sense—and I did say this before.

I don’t want to overly say it, but the fact is, for 2005, I feel I was

able to provide oversight, do these assessments of Iraqi police

training, evaluate the rule of law programs and do a bunch of audits and other things.

We have zero funding for 2006 in respect of either Iraq or Afghanistan, so I do not feel that we are able to provide the oversight

for this current year.

Mr. SHAYS. If you didn’t say that, it would be a dereliction of

your duty.

Mr. KRONGARD. I think so.

Mr. SHAYS. So it is our job to get you those dollars.

Mr. KRONGARD. Yes, sir.

Mr. SHAYS. Mr. Gimble.

Mr. GIMBLE. I would like to just agree with that. We have not

been plussed up to do any work over there. We can redirect and

we will do some of that. However, what that does is take away

from mission areas in other parts of our responsibilities, of the

other $400 billion of the Defense budget. So we have basically been

flatlined as an organization for the last several years.

The cost per man-year, or FTE, has gone up. Consequently, on

the performance side of our house, on the investigative side, we

have actually lost people over the last several years. So we are resource constrained. I am not saying we don’t have flexibility.

Mr. SHAYS. I understand. You may not look at the A–22 or whatever. There will be other things that won’t be looked at in the process that we as a committee want to make sure you look at. So that

is helpful information as well.

Anything else?

What are we doing, Mr. Bowen, in terms of refunding you for the

next 2 years?

Mr. BOWEN. Yes, the proposal in the Senate bill would transfer

$30 million in IRRF dollars to fund the SIGIR. There is some resistance to that, I think, within IRMO and perhaps OMB. They

don’t see using IRRF dollars to fund our operations as a proper use

of that.

Mr. SHAYS. Then it is up to OMB to tell us where we are going

to get the dollars. It is, because the work needs to continue.

Mr. BOWEN. Yes.

Mr. SHAYS. We had mismanagement and corruption in the Civil

War, we had it in World War I, World War II. Truman was clearly

on top of those issues. It is just a requirement. The fact that people

know you are looking means that money will be better spent.

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I did make a misstatement, though. I said sometimes when you

watch the bureaucracy more, they become more efficient. Sometimes what happens with the bureaucracy is, they tend to cross

their T’s and dot their I’s more and become almost more bureaucratic, when sometimes you need efficiency action. Which gets me

to this very last point, and that is the whole issue of—you started

to smile when I asked the question earlier about the auditing of

dollars. Do you remember what the issue was, both of you?

Mr. BOWEN. The auditing of IRRF dollars?

Mr. SHAYS. No. Give me a second here.

Mr. BOWEN. There is one issue maybe I could address that I

didn’t get to speak to on the insurgency issue, that you were addressing with Mr. Christoff.

Like you, I have spent a fair amount of time over there, 9 of the

last 18 months in Iraq. And you were right; you made the point I

wanted to make that this year, that this year it is not a predictable

pattern. What it is tied to is January 30th, we had a very successful election, and that had a stabilizing effect because there was a

perception of stability at the top.

I see a direct correlation between perceptions of stability within

the Iraqi Government and the level of insurgency, because then

February and March were the two most peaceful months we have

had since the war began.

But the government, you remember, was not able to form. They

couldn’t build the parliamentary numbers necessary to appoint a

president. We were into April without a government, and we were

starting to get close to a deadline that we would have lost and had

to go through another election. What happened was, the insurgency

boomed.

Then, as we moved toward the August deadline for the vote to

send the constitution for referendum, we didn’t meet it. We had to

delay 7 days, and then we had to delay 3 more days, and the insurgency went up.

So the last point is, we have to wait and see how the October

15th election is going to affect it. If it was a success like the January 30th one. The pattern may prove true this will be a stabilizing

effect on the country.

Mr. SHAYS. I will just make a quick point though. They missed

their deadline, the constitution, by a week, and the press called it

a failure. I was struck by the fact that we had our Articles of Confederation, which were an abysmal failure, and a Constitution of

the United States that said if you were Black you were three-fifths

of a person and a slave, and in order to get Virginia to agree to

be part of the Union, fortunately, we adopted 10 amendments.

I am hearing people now being critical that there is negotiation

between Sunni, Shi’a and Kurd, as if somehow they failed in their

constitution. I am learning from my experience that the Iraqis are

taking to politics better in some cases than we ever imagined. They

love the bartering and the dialog. Maybe they like the dialog too

much.

You gave me the chance to ask my question, so I love you for

that, and we will close with this: The bidding. It relates to bureaucracy.

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How long does the bidding process take? Can we do a bidding

process that takes 2 weeks or a month; or by its very nature you

have to announce what you are bidding for, you have to leave so

much time, and are we then talking 6 months, and then does that,

in a sense, make bidding not practical in some instances?

Mr. BOWEN. Well, there are expedited measures that you can use

in bidding contracts.

Mr. SHAYS. All right. Expedited, how long would it take from

start to finish?

Mr. BOWEN. I don’t know the details of this. Perhaps Mr. Gimble,

who knows these very well, can address it.

But I would say in Iraq, we did that, we did 7-day competitions

on many contracts, put them up on Federal Business Opportunities; and they were posted and a week later they were competitively awarded.

Mr. SHAYS. Do you all agree we can allow for notice? Can anyone

speak to this, or do I need another panel?

Mr. KRONGARD. Sir, are you talking about domestic or foreign?

Mr. SHAYS. Just tell me either way.

Mr. KRONGARD. Because the representative was talking about

Katrina, and of course, we are all talking about Iraq.

Mr. SHAYS. I am talking foreign, but I mean—I thought—meant

domestic-military here. No, I am talking foreign. I am just trying

to understand.

And I don’t want to give an excuse to the administration. The excuse to the administration is decisions had to be made, people had

to be put in place, we needed cooks, we needed security guards,

and we weren’t going to take 6 months in order to find them. So

we just did it and it was cost-plus.

Now, is there a point where cost-plus gets replaced by bidding?

That is all I am trying to understand. If you can’t speak to it, that

is fine, but I would think Inspectors General could speak to this.

No one can?

Mr. GIMBLE. I think there are some reasonable accommodations

that can be made to the contracting procedures. One of the things

that came up a little earlier was the IDIQ contracts, indefinite delivery, indefinite quantity. Essentially those are competed, and

then you just do task orders on them as you come up, complete the

task orders. That would cut down, a lot, the time.

I think you see a lot of these contracts when they are pulling

back and competing them, they are becoming a basic contract competed. And then you have your task orders, I think.

Is it cumbersome? Yes, it probably is. Can it be worked? It is

probably not a good practice, what we would take the position on

sole-sourcing without competition ever. There would be certain

times in emergency situations that might be the only vehicle available.

I think you will see some of that in Katrina, that there are going

to be some sole-source contracts that will stand.

Mr. SHAYS. Well, my colleague and I need to wrestle with this

one.

Mr. BOWEN. Mr. Chairman, one other point.

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Mr. SHAYS. Then we are going to go to our next panel. If there

is any point anyone wants to make before we close, this is your

chance.

Mr. BOWEN. On that subject, two issues. One, when I met with

General Casey during my last visit, we talked about this issue, how

can we provide for a more effective, competitive contracting process

in an overseas wartime situation? And I suggested that perhaps

the FAR, Federal Acquisition Regulation, should be amended to

provide a supplement of sorts, a wartime contracting supplement

that promotes competition but does so with more reasonable guidelines, so that when you are trying to build a school in Fallujah and

being shot at, you don’t want to post on Fed Bus. Opps and wait

a month, because that is not possible. So you are forcing the contracting officer to find the quickest way to get it done, and sometimes that leaves him open to criticism.

So I think it is an appropriate subject for the Congress to look

at and amend the FAR and provide a supplement that takes accounts in contracting in hazardous wartime environments.

Second, we will be looking at this in our December Lessons

Learned Panel on contracting in Iraq. We bring in all the experts

who did the contracting, learn the lessons and the problems we encountered in executing it, and in providing solutions like this going

forward.

Mr. SHAYS. OK, thank you. Any comments, Mr. Christoff?

Mr. CHRISTOFF. A different topic to put a plug in, I think, for an

important report that we want you to read and all members of the

subcommittee should read. It’s our classified report that will be

forthcoming shortly looking at the security conditions in Iraq. It is

going to discuss the conditions that are in the campaign plan, and

also looking at that strength of the insurgency and the capabilities

of the Iraqi security forces.

Mr. SHAYS. Thank you. He loses his job if I don’t read the report.

Mr. CHRISTOFF. OK.

Mr. SHAYS. Mr. Gimble.

Mr. GIMBLE. I have nothing else.

Mr. FARINELLA. One point, Mr. Chairman, on the discussion earlier on coordination among the various IGs, because I think it is

a very important point, and I think the coordination, from my personal experience sitting on the committee chaired by Mr. Bowen,

it’s excellent. Not only is the coordination excellent among the various IGs, but during these quarterly meetings, we get down to a

level of detail where each individual IG is discussing exactly what

they are doing, what they are planing. And there is a conscious effort to avoid any type of duplication in what the various IGs are

doing.

I think we have been very successful to date in avoiding duplication. Not only are we discussing what we are doing and what we

are planning on a quarterly basis, but we are also exchanging information among each other on a continuing basis. I think it goes

a long way to providing the broadest level of coverage that we all

can possibly provide without duplicating each other’s efforts.

Mr. SHAYS. Anything else?

Ms. MORROW. I would just say that the Army Audit Agency does

have 18 auditors currently in Iraq and Kuwait. Our primary focus

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with those folks is with the LOGCAP contract. There are a number

of challenges with that we are looking at. We are finding that, you

know, soldiers are receiving quality goods and service.

But we are concerned about, you know, some of the contract administration issues, so we are working those and we will continue

to work those. We have been able to respond to all of the requests

that we received from Army leadership to support them from an

audit perspective in Iraq. We also have three audits that are currently ongoing related to Katrina. So, again, our focus is to try to

help the Army in those efforts to give good stewardship to the dollars it’s entrusted to.

Mr. SHAYS. Thank you. Mr. Christoff, you made mention of the

report on security. I have read a report a few months ago. That is

not the report.

Mr. CHRISTOFF. You read the draft. We are still waiting on the

final security review on the part of the DOD.

Mr. SHAYS. Yes. What I read was pretty incredible.

Mr. CHRISTOFF. Yes, sir. Absolutely.

Mr. LYNCH. Thank you, Mr. Chairman. I just want to point out

there was a great paper that came out of the Army War College—

I know we have a few graduates here—and it discussed the Iraq

contracting/auditing-related issues, stuff that you are centrally involved in. There was a quote in there where it said—it warned that

contractor loyalty to the almighty dollar, as opposed to support for

the frontline soldier, remains a serious issue in Iraq.

That’s the point of interdiction for all of your offices. So we are

relying heavily on you for that protection for our frontline troops,

as well as for the American taxpayer, but we appreciate the job

that you are doing.

Thank you, Mr. Chairman.

Mr. SHAYS. I would like to add my words. Thank you for your

patience. It’s been a while, a long panel discussion, and thank you.

Thank you for allowing us to put so many of you in one panel. It

helped us out a lot. Thank you.

We go to our second panel and our last panel. I am really looking

forward to the dialog we will very having.

Dr. Mary Habeck, the Paul H. Nitze School of Advanced International Studies, Johns Hopkins University; Ms. Judy Van Rest,

executive viCe President, International Republican Institute; Mr.

Les Campbell, senior associate and regional director, Middle East

and North Africa, National Democratic Institute.

Given this is an investigative committee, we do swear in our witnesses. I would ask you to rise and we will swear you in.

[Witnesses Sworn.]

Mr. SHAYS. I would note for the record our witnesses have responded in the affirmative. It is great to have all three of you here.

We have an opportunity to have any discussion that you would like

on the issue of Iraq and how we are doing and what you have seen

happen. You are all experts on this issue. You all work for three

outstanding institutions. We are very fortunate to have you here.

Do I pronounce it Habeck?

Dr. HABECK. Habeck.

Mr. SHAYS. Dr. Habeck, right. No, it is not on. You have to clip

it down below.

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Dr. HABECK. OK.

Mr. SHAYS. Again, how do I pronounce your name?

Dr. HABECK. Habeck.

Mr. SHAYS. Habeck.

Mr. SHAYS. Habeck. Doctor, Welcome. We will allow you 5 minutes, so you can trip over the next 5 and go right down the road

here.

STATEMENTS OF MARY HABECK, THE PAUL H. NITZE SCHOOL

OF ADVANCED INTERNATIONAL STUDIES; JUDY VAN REST,

EXECUTIVE VICE PRESIDENT, INTERNATIONAL REPUBLICAN INSTITUTE; AND LES CAMPBELL, SENIOR ASSOCIATE

AND REGIONAL DIRECTOR, MIDDLE EAST AND NORTH AFRICA, NATIONAL DEMOCRATIC INSTITUTE

STATEMENT OF MARY HABECK

Dr. HABECK. Thank you very much, Chairman Shays, for this opportunity to talk about this very important matter. I will be very

brief. I was in Iraq for 2 weeks in August and had an opportunity

to observe up close how the Corps is fighting their part of the war.

I did not have an opportunity to really observe the political process

or what is happening economically in the country, so I can’t really

talk about those parts of it.

But as far as the purely military side of this war goes, it is my

expert opinion that the Corps is winning their part of the war. I

would like to talk about how precisely we define winning.

This is one of those instances where talking about issues like territory or numbers of attacks really do not get at the heart of the

problem. Instead, we have to think about what was the main objective of this war, and that is to create a free, independent, stable

Iraq that will not act as a haven for terrorists that could possibly

attack us.

That was the main objective of the war, and put in those terms,

one can say that there has been tremendous progress made toward

winning this part of the war. And, in fact, progress is precisely

what is overwhelmingly obvious, no matter what terms of their success are used to look at them. I would like to talk in three different

areas.

First of all, there has been progress on the political process.

There has been now two successful elections with a tremendous

buy-in on the part of the Iraqi population, and it is progress that

has been assisted entirely by the fact that the U.S. military has

been on the ground assisting that process. Without their presence,

none of this would have happened. The military understands that

political process is, in fact, how this war will be won and how success will be determined. They are not committed to attrition as the

way to win this war, just simply killing off terrorists; they are really committed to the political process.

Second, there has been progress in the creation of the Iraqi

armed forces. Many people have commented on the fact that there

is only 1 unit, that is put at Level I, and 37, I believe, that are

put at Level II, and all the rest at Level III. What this does not

take into consideration is the fact that a year ago none of these

units even existed, and that over the past year we have seen the

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creation of these units and their training successfully bringing one

of those units up to American readiness standards.

After conversations with people within the Corps, I can also say

that bringing them up to American standards is, in fact, not the

standard that they wish to use. And they are perfectly comfortable

with Level II that can be used as the standard for measuring success within these units. They will be able to provide, that is, security within their own borders and prevent invasion from—you

know, take care of border security.

Third, there’s been progress in fighting the insurgencies, although that is not always obvious. I think one thing that should

be very clear is that we are not fighting one insurgency here. We

are fighting, in fact, four separate insurgencies. That is not four

separate insurgency groups, but four separate insurgencies with

different goals, objectives, and people they appeal to.

Mr. SHAYS. The four are?

Dr. HABECK. The four that are generally used by the mill to talk

about this is, first, the Shi’a, which are sort of represented by militia, such as Sadr’s Mokhtiar army. The second one would be the

former Baathists or the Saddamists, as they are now called. The

third one would be Sunnis, who simply reject the idea of Shi’a

being in charge of their country, but were not formerly Baathist.

Finally, there are the foreign fighters or the jihadis, or fighters

coming in from abroad with a very different ideology about what

they are doing in the country.

If you take a look at all four of those and kind of break down

what is happening with each of those, you can say that the political

process has managed to disarm three of the four and only one of

them is at full strength still. This explains why there was such a

huge drop in the number of attacks immediately after the elections

in January.

Mr. SHAYS. Why is that?

Dr. HABECK. The fact that three of the four have bought into the

political process. Not entirely. There are still Baathists around who

believe that they need to take part in an armed insurgency, and

there are still a few of the Sunni rejectionists who still believe that

they need to do this.

But allow me to give an example. In the town of Ramadi, that

was basically a Sunni town, three of the four sheiks there after the

elections realized that they were no longer—by the way, this was

a place that was full of violence and had all sorts of attacks on

Americans and also on Iraqi security forces before the elections.

After the elections, three of the four sheiks who control the territory within the town announced publicly that they wanted to participate in the political process and that they were renouncing violence. This explains why in Ramadi, in particular, there was such

a huge drop in violence after the elections in January, end of January 2005.

What about that fourth? Well, this explains what I just said, that

there are some of the Sunni rejectionists and some of the Baathists

who have not bought into the political process. And it’s about 25

percent that have decided to continue to fight.

If you take a look at this upswing in violence that people were

talking about over the last couple of months, it can be explained

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almost entirely by the jihadis increasing the number of their attacks on areas all over the country. But even here, there have been

measures, there are ways to measure success against these jihadis.

They are not growing in strength nor are they growing in effectiveness. If you take a look at numbers of the attacks and then ask

the questions about numbers of effectiveness, you can say that effectiveness has not, in fact, increased over time. That is, none of

these insurgents are getting better at what they are doing. They

are not able to draw in more people into the insurgency.

So, you know, the number of attacks goes up but the effectiveness is still about 10 to 15 percent. Effectiveness means they actually cause injury to someone or actually cause death or some sort

of destruction to the property. That has not changed at all and still

remains 10 to 15 percent. They are not becoming more effective.

They are not drawing more people into this violence over time. So

you can say that even by that sort of measure, there has been success on the part of our military. Thank you.

Mr. SHAYS. Thank you very much.

[The prepared statement of Dr. Habeck follows:]

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Mr. SHAYS. Ms. Van Rest.

STATEMENT OF JUDY VAN REST

Ms. VAN REST. Thank you, Mr. Chairman, and members of the

subcommittee. I am pleased to have this opportunity to appear before you today to discuss recent developments in Iraq and progress

in Iraq’s struggle for sustainable democracy. Immediately following

the fall of Saddam Hussein’s regime, I spent more than a year in

Iraq working for the Coalition Provisional Authority, and, for the

past year, have been involved in the work of the International Republican Institute in Iraq.

Over this period of time, I learned to never be surprised by the

resiliency of Iraq’s people or by the depth and strength of their desire to live in peace without fear, and by a rule of law that is just

and fair. I come before the subcommittee today with a continued

optimism and a strong belief that the people of Iraq, with the help

and support of the United States and its allies, will succeed in accomplishing the democratic transformation of their country.

Saturday’s constitutional referendum is proof of Iraqis’ desire

and dedication to democracy, as was the January 30th election this

year, which brought millions of Iraqis to the polls, despite incredible danger to their lives. Whatever the final outcome of the constitutional referendum, I believe we will continue to see the majority of Iraqi citizens participating in the political process of their

country.

Unfortunately, events over the past several months have provided no shortage of material to sustain pessimistic views that

many have expressed regarding Iraq’s future: terrorist attacks that

claim a tragic human toll and have hindered Iraq’s efforts to rebuild its infrastructure, energize its economy, and improve living

standards. These are the matters of the gravest concern. But these

issues do not represent the whole story and should not be allowed

to overshadow or diminish the magnitude of what the Iraqi people

have accomplished in this historic year.

The story of the past year has been one of extraordinary, frequently heroic public and private perseverance in the face of a

ruthless enemy. Much has been accomplished. Prior to January

30th, hundreds of Iraqis participated in the political process, either

running as candidates for the Iraqi National Assembly or conducting a wide range of voter education activities.

On January 30th, nearly 60 percent of Iraq’s eligible voters came

to the polls despite the violence leading up to election day. The

Iraqi independent election commission conducted an election that

produced a National Assembly that Iraqis feel legitimately represent their interests. And while it took several frustrating months

of negotiations, by April 2005 Iraqi leaders established a sovereign

government that turned its attention to the drafting of a constitution.

Iraqi civil society organizations across the country provide an

input into the constitutional process by conducting hundreds of

workshops on the constitution and communicating the results of

these workshops to the constitutional drafting committee and members of the National Assembly. The constitutional committee and

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leaders of the National Assembly grappled with politically difficult

problems and realities.

And while they continued to negotiate, almost to the day of the

referendum itself, to resolve differences on issues, the fact that

they arrived at a final document that gained support of some major

Sunni leaders should be seen as an accomplishment.

Iraq’s second electoral event was successfully held on October

15th with an estimated 60 percent turnout. And the process remains flexible. While the compromises contained in the draft constitution were hardly satisfactory to everyone, and many Iraqi citizens were not fully informed of the last-minute changes, there will

be opportunity for issues to be addressed in the near future. If

adopted, the new constitution will allow amendments to be presented to the Iraqi voters in a referendum within 6 months after

a new National Assembly is seated.

One of the most notable developments in these past months has

been the beginning of political maturation of Iraqis by their participation and political dialog, negotiation, compromise and voting.

The emergence of an organized and vocal Iraqi civil society has

been one of the truly great but largely unheralded stories.

The International Republican Institute has supported the development of four major Iraq civil society organizations. Between

them, they have reached every corner of Iraq and thousands of

Iraqi homes with educational materials, print, TV and radio, that

have given Iraqis the chance to be part of the national political debate surrounding the January 30th elections and October 15th referendum. IRI partners, with the financial support of American taxpayers, have aired more than 300 hours of political process-related

television programming. These partners have printed and distributed more than 2 million booklets, fliers, and posters to inform the

public about voting procedures and constitutionalism.

Prior to the referendum, they conducted 1,400 constitutional

workshops throughout the country, reaching more than 57,000

Iraqis. They have risked their lives in public rallies to advocate for

human rights and gender equality. To illustrate, in the province of

Salahaddin, one community leader held a series of public workshops in schools and mosques to explain the basic principles of

Iraq’s new constitutional structure. His efforts did not come without tremendous personal cost. He was threatened repeatedly, but

he was not deterred. Because of his courage and efforts, more

Iraqis have a better understanding of the distribution of powers

and responsibilities in the proposed political system.

A few weeks ago, a group of women advocating gender equality

decided to hold a rally in a downtown Baghdad square. They were

confronted by another more conservative women’s group that

strongly disagreed with their agenda. After spending the day rallying against each other, the two groups sat down and discussed the

issue. While they didn’t reach consensus, they did gain greater understanding and appreciation of differing perspectives.

In a television ad, a Sunni cleric urged viewers to participate in

the constitutional referendum. The spot taped in the cleric’s

mosque aired both nationwide and on satellite channels. Given the

cleric’s religious affiliation, his willingness to support the referenVerDate 11-MAY-2000 12:32 Jan 25, 2006 Jkt 000000 PO 00000 Frm 00170 Fmt 6633 Sfmt 6633 D:\DOCS\25441.TXT HGOVREF1 PsN: HGOVREF1
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dum process in a high-profile manner constituted an act of remarkable courage.

These extraordinary individuals and organizations, which have

benefited from partnerships with international nongovernmental

organizations such as IRI and the National Democratic Institute,

will continue to grow in strength and influence and become powerful in sustaining voices for democracy and rule of law in Iraq. They

will, however, need continued support.

IRI intends to be fully engaged in helping Iraqis prepare for the

next milestone, the December National Assembly elections. In the

weeks leading up to that date, IRI will engage in a broad range of

activities designed to encourage political party outreach, as well as

to continue to support the election-related activities of Iraqi’s

emerging civil society groups. The group will place special emphasis on programs intended to draw greater numbers of women and

youth into Iraqi politics.

Likewise, it will be imperative that we remain engaged with the

new National Assembly and the ministries of the next government.

Though some institutional development has taken place, it will

take years, and not months, for Iraqis to repair the damage to their

governing institutions that resulted from 30 years of Baathist dictatorship and corruption.

American taxpayer-supported programs are making and will continue to make a critical difference. IRI, for example, is working

with Iraqi partners to create an arm of the Iraqi National Assembly, similar in concept to our own Congressional Research Service.

This and many other initiatives aimed at strengthening Iraqi governing institutions in the capacity of its new bureaucracy are critical investments in Iraq’s democratic future, but it will take time.

The story behind the past year’s headlines in Iraq has been a

story of building an accomplishment and determination in the face

of a deadly enemy. This past Saturday’s national referendum and

likely adoption of a new constitution by the people of Iraq represents another chapter in that story.

I am optimistic that others will follow, and that with continued

help and support of the United States and the broader international community, Iraq will successfully transition into a democracy that will serve as an inspiration for the rest of the Middle

East.

Thank you.

Mr. SHAYS. Thank you very much.

[The prepared statement of Ms. Van Rest follows:]

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Mr. SHAYS. Mr. Campbell.

STATEMENT OF LES CAMPBELL

Mr. CAMPBELL. Thank you, Chairman Shays, Representative

Lynch, it’s a pleasure to be here again.

I will dispense with a description of NDI’s activities in Iraq. I

know you know them well, and they are contained in my written

statement. I am afraid I will come across, I think, as slightly less

optimistic than my fellow panelists, both about the referendum and

also about the general situation.

The trends that NDI observed in mid-2004 and I include in the

written part of this statement—part of an excerpt from an assessment that I personally and others from NDI did of the political situation in March 2004—the trends we saw then, the fragmentation

of political space, the growth of sectarianism and tribalism, the

search for safety and security and safety within one’s own ethnic

group, the increasing pull of the religious extremists, continues to

pace through 2004 and much of 2005.

In the October 15th referendum that took place in this atmosphere, fragmented atmosphere—and the question on the referendum quickly, several months ago, became not whether the draft

constitution would help heal ethnic and sectarian divisions, and not

even whether the constitution would lead to the—pardon me. The

question became whether or not the constitution would help heal

sectarian and ethnic divisions, not whether the constitution would

lead to the establishment of the important institutions of democracy and to good governance.

Some commentators took to describing a draft constitution as a

compact among competing ethnic and sectarian groups, rather than

a blueprint for a new political system. That was, I think, an important change through the summer. Indeed, the way that the constitution was drafted, at least 50 laws will have to be passed to define major sections of the constitution, including major questions on

revenue sharing, the functioning of the supreme court, which has

a big impact on the status of women in Iraq, and the jurisdiction

of the various regions.

For Iraqis themselves, according to focus groups conducted recently by NDI, the majority of Iraqis cared less about what was in

the constitutional document than they cared about getting this

milestone behind them to get a chance to ‘‘move on.’’ In the words

of one Sunni focus group, a participant from Ramadi, ‘‘The constitution is the most important thing because it can pave the way

for the achievement of other things.’’

So I would argue that the draft constitution and the referendum

should be viewed neither as a detailed road map for governance,

because it is not nor should it be viewed as a compact between potentially warring parties because it didn’t even quite work that way

because, in fact, some of the big decisions were put off; but it

should be viewed as a benchmark or a milestone on the long road

to democracy, as something that needed to happen, was important

to happen, to get behind us, and the Iraqis to move on.

In that context, the referendum and the process leading to the

referendum was a success. Voter turnout, as Ms. Van Rest said,

was about 60 percent, maybe slightly higher than the January elecVerDate 11-MAY-2000 12:32 Jan 25, 2006 Jkt 000000 PO 00000 Frm 00178 Fmt 6633 Sfmt 6633 D:\DOCS\25441.TXT HGOVREF1 PsN: HGOVREF1
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tion. But voter turnout in the majority Sunni areas was dramatically higher, going in many cases from 5 percent to as much as 80

percent turnout in Sunni areas. In Al Anbar and Salahaddin, the

early returns show 80 percent turnout.

Well, one could take the cynical view that the Sunni population

mobilized only to defeat the draft constitution. NDI staff in Baghdad have heard from a number of Sunni political party leaders that

a fundamental decision has been made to use the political system

to pursue policy goals. While the decision to participate in electoral

events may have little immediate impact on the insurgency, Sunni

participation in future elections and future governments could have

an enormous influence on the development of a truly representative

political system.

While the argument can be made that the negotiation process for

the constitution was hurried and flawed, the fact is that the majority of Iraqi citizens are happy with the contents of the constitution,

or at least they acquiesce to the contents. Certainly the Kurds and

many of the Shi’a population of Iraq think it’s fine.

And the overall passage—or, I should say, the overall majority in

the country for the constitution was never in doubt. What was,

though, and still is in doubt, is whether or not the population opposed to the draft, mostly residing in majority Sunni areas of Iraq,

could muster the two-thirds majority required in three provinces to

veto passage of the document. As of this speaking and writing, the

two-thirds threshold has been reached in two provinces, Al Anbar

and Salah Eddin, and there is a simple majority against the draft

in at least one more province, Ninevah.

The latest information this morning that we have been gathering, and I have had the advantage of receiving a few e-mails during

this meeting, says that the ‘‘no’’ vote in Ninevah Province is as

high as 54 percent now. That could actually increase.

Part of the bad news of this, I think, is that if the area of Mosul,

which I think you know, which has been hotly disputed, full of conflict and so on—if the vote starts adding up near the 60 percent

range, and there are a number of irregularities—which there have

been, according to the observers in Iraq, and there certainly were

in the January election—the outcome of the referendum may, in

fact, be disputed. I think it will be disputed. And if that vote in the

Ninevah Province does creep up in the mid-60 to high–50 range, I

think that dispute will be a legitimate dispute.

In other words, it’s possible that the threshold for veto—if not

met, could easily be—the threshold could come within 10,000 to

20,000 votes. So the story is not over and I think we will see in

the next few days it will continue.

Having said that, the referendum was characterized by the

Kurds, shown by the average Iraqi again defying violence to vote—

Iraqis have proven that democracy is essential to their view of the

future. There is no doubt about that. The referendum was remarkably well run under the circumstances. It is interesting that the

election commission itself is the one that is auditing the results.

They have taken action right away to audit the results to make

sure that people perceive the counting is fair.

So I think the lessons learned are fairly clear. Democracy is a

goal shared and embraced by Iraqis. Political processes work best

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in Iraq when the citizens feel ownership of those processes and

when Iraqis are empowered to organize and implement. U.S. assistance is best when delivered discretely and in a manner designed

to bolster and support Iraqi processes and actors. And the political

and democratic process in Iraq is not a panacea or a silver bullet,

but it is a necessary step on the road to security, economic prosperity, and stability. As such, U.S. support for a democratic Iraq must

be clear, steady, and backed by sufficient funding and diplomatic

support.

The next steps, to conclude, for democracy in Iraq, despite what

happens in the referendum—because it is not a disaster if it is vetoed—we go into an election in December in any case. And Sunni

participation will have been cemented, which is good in my opinion

for the next step, including the development of the national and

local governing institutions, national and local government coordination and communication, the better engagement of youth and

women in political processes, and, of course, the operationalizing of

the constitution through over 50 pieces of implementing legislation.

Thank you very much.

[The prepared statement of Mr. Campbell follows:]

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Mr. SHAYS. Thank you very much as well.

We will go with you, Mr. Lynch. We have 10 minutes. Since

there are two of us, we can go back and forth.

Mr. LYNCH. Thank you, Mr. Chairman. First of all, I want to

thank you each for offering your testimony. It was very helpful. I

think it gets to the underlying substantive issue. While the first

panel focused on our military objectives and focused more on security, I think your views and your analysis is more targeted toward

the ongoing situation, hopefully after withdrawal of U.S. troops

from Iraq, and whether or not Iraqis are embracing change as opposed to embracing democracy, as Mr. Campbell has pointed out.

I just want to take a couple of points, because my own observations are just a little bit at odds, not significantly. But, Dr. Habeck,

the assessment that the insurgency is becoming less effective—my

own observations—just in terms of what we are trying to do to provide better protection for our troops, they have gone, the insurgency, all four—if you accept that view, all four insurgencies have

adopted a more effective way, through technology, of killing our soldiers.

About 47 percent, almost half of our casualties now in Iraq, are

from IEDs, improvised explosive device, most of them roadside

cases in which our soldiers are killed. And yet there is no—because

it is done through remote control, we don’t necessarily get the insurgent in those cases. In those cases where there’s a frontal attack, and it’s actually an assault on our folks, generally those insurgents do not attack again. They are basically eliminated. But

this dimension of it, this dimension of it where previously we had

jammers on all of our vehicles that were able to reduce the effectiveness of these IEDs, again which are responsible for half of our

deaths of American men and women in uniform, they have gone to

a new technology that is more powerful in terms of its effectiveness. These roadside bombs now can precisely target U.S. convoys

as opposed to having something laying in the road and, whoever

rides over it, detonates it.

Now they are specifically targeting our folks. And the level of the

charges as well as the technology that delivers that blast has been

greatly improved. And I understand we are scrambling right now

to develop a new generation of jammers that will stop these IEDs,

as the previous technology had. But right now we have a gap between development and deployment of these new jammers on our

vehicles.

So I would say over the next 3 or 4 months they have an advantage right now that they did not have before. So I would say, based

on my visits to Iraq and to Walter Reed Medical Center, that they

are indeed at least as effective, if not more effective, than they had

been in the past.

I do get a sense of your analysis as well, Ms. Van Rest and Mr.

Campbell, that this embracing by the Iraqi population of democracy

itself will be the ultimate question here. I always think of—Samuel

Adams had a great quote about the American Revolution. He said

the revolution was in the hearts and minds of the people. I think

it can be said for Iraq as well, whether or not in the hearts and

minds of the Iraqi people, democracy is for them. We seem to be

going about a process of building democratic institutions in Iraq,

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trying to establish a constitution, a legislature, a judiciary that

flows from that, law enforcement, all of those systems that are necessary for an operating democracy. But I question whether or not

there’s viability behind it.

It needs to be the hearts and minds of the Iraqi people that support those institutions, and it can’t just be a Hollywood set of a

court system or a police system, a parliament. It needs to have behind it people willing to die for it, just as our fathers and mothers

and grandparents and other generations of Americans died for our

democracy. There is a great sacrifice here. It remains to be seen,

at least in my mind, whether or not the Iraqi people have bought

in whole hog.

The chairman in his initial remarks talked about some of the

Iraqis, a significant amount of the Iraqis sort of sitting on the sidelines waiting to see who wins this so they can decide who they will

be with. I think the jury is still out on that.

But I would like you to talk about that a little bit and whether

or not there is evidence there, apart from the elections, because the

elections are as much a reflection of a desire for change, the desire

for change. They have seen what Saddam Hussein and dictatorship

brings them. They have seen what terrorists, Islamic extremism,

and al Qaeda brings them. I think they are voting for something

else. But I am not so sure that if in a matter of months or years

that democracy is established there. But failures of democracy will

also leave a bad taste in their mouth, and they will wonder whether or not, given this whole struggle that they are going through as

well, whether it was worth it.

I know there is no definitive answer, but I do respect the fact

that you have been on the ground there, and your institutions have

focused on this problem specifically. Do you just—would you each

just take a turn and address that underlying issue? Thank you.

Dr. HABECK. I just would like to address the effectiveness issue

first. I am not saying there’s been a lessening of effectiveness, just

that it hasn’t changed over time in a way that is worse for us.

Mr. SHAYS. Talk about—effectiveness of whom?

Dr. HABECK. Effectiveness of the insurgency. I am really not saying there has been a lessening of their effectiveness. It has basically stayed steady for the last year. By effectiveness, military

measures, by attacks that do actually kill somebody, injure somebody, or damage infrastructure in some way. And that effectiveness

level has been 10 to 15 percent for the last year basically, and

hasn’t changed.

What this means over time, basically, is that the insurgency is

really not getting better at carrying out attacks. I think this can

be made almost entirely on the fact they have been pretty effective—the military, that is—of killing off the middle management of

the insurgency. That is, they haven’t gotten off the very top people.

They have gotten a lot of the lower people as well, but that middle

management that would convey lessons from above to below has

been killed off, so they are not learning anything over time.

It also speaks to the issue of whether they are growing in

strength over time, are they attracting more people in? Are they—

you know, is the insurgency a growing threat over time? And it is

not.

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So by effectiveness, another measure is how many people are

killed per attack, which is what you are addressing. You are right,

they have become more sophisticated with their IEDs. But the

issue of the fact has to do with there are a very small number, less

than 100 explosives makers, who are very difficult to find. They

have become more adept over time at making explosives. But that

is a very small number of people who are causing an awful lot of

trouble throughout the country.

Actually, this is another issue which I am sure many people have

brought up and talked about. But the basis of this, of the remaining jihadi insurgency, and also parts of the Saddamist insurgency

and of the Sunni rejectionist insurgency, are the Sunnis. They only

represent 15 to 20 percent of the population. That means 80 to 85

percent of the population has bought into something other than violence as a way of changing things.

Thanks.

Mr. LYNCH. But, if I may, 15 percent of the population trying to

kill you is a serious threat. That is all I am saying.

In terms of the quality of the attacks, Balad Air Force Base, the

busiest Air Force base in the world for the U.S. Air Force, probably

gets attacked every 2 days, every 3 days, as I was there several

months ago. The quality of the attacks, it’s basically very amateur.

I don’t think they have actually caused a casualty in probably 8

months, even though they attack every other day. It is just lobbing

something over the perimeter fencing, and it’s not very effective.

On the other hand, we have situations in Mosul and the areas

around Tikrit where those 100 or so are very active—and the

bombmakers—and it appears that technology has advanced somewhat, and their effectiveness, so that small group to cause so much

loss among other own troops is very, very troubling.

Dr. HABECK. Absolutely. The one other way of sort of measuring

effectiveness is you can take a look at how much territory can they

actually control. The fact is, they are not able to take over and run

more than one medium-sized city at a time. So they are not spreading. They are not like able to control both Fallujah and Mosul or

both Fallujah and Samara or Tal Afar and Samara and Fallujah.

And they can only do one or the other.

What happens is, this has been the typical sort of way things

have gone, at least up to now, is that the military will go into

Fallujah and clean it out. And then they go to Mosul. They clean

out Mosul and they go Tal Afar. So there’s been this sort of a chasing around of the insurgency.

Mr. LYNCH. They call it ‘‘clear and hold,’’ I believe. Clear and

hold is the military——

Dr. HABECK. They have switched to that in the last year, and

that has proven—actually about 8 months—and that has proven to

be far more effective. But in my written statement I argued, and

I have argued with other people, it would basically be possible for

the U.S. military at the size they are now in Iraq to clear and hold

the entire country.

This is why the second part of this is so incredibly important.

That is, training up the security Iraqi forces so they can do the

holding. We help to clear out, and then you bring in the Iraqi security forces and ask them to hold it for you. In places like Tal Afar,

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they have actually now gotten the Iraqis to the point where they

don’t just hold; they can actually go in there and help with the

clearing out process. Once you get to there, then you can turn the

war over to them.

Mr. LYNCH. Ms. Van Rest.

Ms. VAN REST. With regard to your questions about whether

Iraqis have in their hearts and souls a dedication to democracy,

from our experience, we certainly believe that they do. We work

with hundreds of Iraqis, multiple civil society groups, political parties. And every day we see them risking their lives to either conduct workshops or to come to trainings. And some folks who have

been leaders of the civil society groups have indeed lost their lives.

So we see a dedication to the idea of democracy. As both institutes know, democracy building takes a very long period of time.

And so it’s one thing to want democracy. It is another thing to put

it into place. And that is where our programs are assisting many

of these folks to understand the technical sides of building transparent institutions and setting up transparent processes and those

types of things.

But there’s no question in my mind that the Iraqis we work

with—and again, there are hundreds of them—very much want democracy. It’s not just change away from Saddam Hussein, it’s definitely a democracy of their own making.

Mr. LYNCH. Thank you.

Mr. CAMPBELL. Excuse me. One of the advantages that I have

had in looking at Iraq, for more than a decade I have been the director for Middle East programs at NDI for programs across the

Arab world, from Morocco through to Iran. I have traveled to Iraq

13 times since the end of the war and have been involved a lot in

Iraq.

What I have seen, in my judgment, in Iraq is more profound and

more important than anything I have seen in any other Arab country in the sense that, after the war, almost 300 political parties

spontaneously formed. We saw them form on any number of different bases, basically affinity groups of various sorts. Countless

civil society organizations, citizens organizations. Iraq has now

seen twice the mobilization of more than 10,000 Iraqi domestic

election monitors. These two mobilizations of domestic election

monitors have dwarfed anything that has ever happened in any

Arab country. NDI and IRI, in our programs in other countries,

have drawn Iraqis in. And Iraqis as individuals are consistently

outstanding people who demonstrate incredible leadership.

For example, NDI just organized a campaign school, 4 or 5 days

in Kuwait, for potential women political candidates from across the

Arab world. The Iraqi women that came were stars. Of course,

these are people who are elite people, who are very good at what

they do. But all the other people from the Arab world were from

the same sort of elite class. And the Iraqi women were very dominant in their performance and their skills.

So I actually believe very, very deeply, there is something important going on in Iraq, and there is something important to build

from. My belief doesn’t come from—even remotely come from agreeing with the aims of the war itself or the decision to invade, which

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ganization we have struggled with being so involved in Iraq in a

project that I would say most of our members of our board of directors, to put it mildly, questioned. So I feel there is something very

strongly there we can build on.

I think your point about a desire for change is an important one,

though. As I was mentioning—and I probably didn’t articulate it

that well—about focus groups that NDI conducted throughout the

summer. The ‘‘yes’’ vote on the constitution, according to our research, was much more about just getting something behind us. It

was more a vote—wanting to move on, to have change, something

different, thinking that this would, again, lead to some sort of path

where things would get better. So it really wasn’t about—you

know, I think people who argue I think this was a vote for some

more lofty goal are probably wrong.

I read an e-mail this morning from one of the Kurdish party activists who said of course he voted yes, and it was a historic moment. But then he went on in paragraphs to describe his disappointment in many, many things. Again I think it was important

that people thought it was important to get out and vote. But I still

think that is something we can build on.

My last comment, though, not my area of security—just to enter

into this debate for a second—what NDI is finding in protecting

many dozens of expatriate staff and many, many hundreds of NDI,

local Iraq employees, we have found that we can protect ourselves

against the insurgents basically. I won’t get too much into that.

But we have ways, we have the funding, the security posture, to

do that.

What we find to be increasingly difficult in Iraq is the chaos, is

the general insecurity; not the sort of organized attacks which we

even can protect ourselves against. When we have lost people—and

we have lost people—it has been to, for example, militias in Basra,

the people masquerading as policemen who have killed people associated with our organization; people in and around Kirkuk who

have been killed in local disputes. The country is fragmenting into

warring factions, tribal warlords and so on, and it is that genuine

security that I think is, frankly, a far bigger problem in the long

run than the insurgency.

Mr. LYNCH. Thank you. I yield back.

Mr. SHAYS. You yield back the 20 minutes of your time.

I find, Dr. Habeck, that you are more optimistic than I am, and

it is kind of fun to meet someone more optimistic than me. But I

just kind of want to assure myself it is not based on naive thinking.

I don’t mean to imply that you are naive. You have a tremendous

background. Your background is knowing the military and knowing

Iraq. But what you did is spend most of your time with the military, correct?

Dr. HABECK. Absolutely.

Mr. SHAYS. So you weren’t with Iraqis, you weren’t with Sunnis,

you weren’t with Shi’as, you weren’t with Kurds as a general rule.

Dr. HABECK. I did actually meet with a minister in Irbil, and I

went up to Ramadi as well.

Mr. SHAYS. But you weren’t in family homes listening to the conversation, so—and the reason I ask is that, you talk about the four,

you know, basic groups: the Shi’as, al Sadr, the Baathists, which

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I would assume you would put into that, the Saddamists. Do the

Saddamists go with the Baathist or the Sunnis?

Dr. HABECK. With the Baathists.

Mr. SHAYS. Then you have the Sunnis, and you have the foreigners. Now, you said basically they were dealing with one group now.

Dr. HABECK. One and parts of these other two, but they are not

at the full strength they were a year ago.

Mr. SHAYS. But let me understand what you mean. We still have

the foreigners in full force, right?

Dr. HABECK. Absolutely. In fact, they are stronger than they

were a year ago.

Mr. SHAYS. So the Sunnis, I think, are split now. They are not

a unified force.

Dr. HABECK. That’s right.

Mr. SHAYS. The Baathists are split.

Dr. HABECK. Right. In fact, I have heard some military people

speculate that there is one, possibly two, kind of master-minds that

are taking care—that are overseeing that entire part of the insurgency left, and the rest have bought in.

Mr. SHAYS. But even among the Shi’as, the Shi’as that are fooling around with the Iranians, it’s not—they are not insignificant,

particularly in the Basra area and down below; correct?

Dr. HABECK. As he mentioned, I actually agreed with what he

had to say—in fact at the end——

Mr. SHAYS. He being? Mr. Campbell?

Dr. HABECK. I am sorry, Mr. Campbell. I do agree with him, that

is a serious challenge, this kind of interim splintering of the country.

Mr. SHAYS. What I come up with is a strong foreign opposition,

a split among Sunnis, a split among Baathists, and a split among

the Shi’as, maybe a smaller split. But if I add up the split, three

splits and one full, I get to, you know, potentially 2, 21⁄2. So are

you uncomfortable, based upon what you are telling me now, or

even then—so it is really not one group, right?

Dr. HABECK. No. These are all groups that also have competing—

let’s take the Shi’a, for instance. As part of the Shi’a insurgency,

I think you would have to, of course, count Sadr and his Mokhtiar

Army and a couple of other key groups. But how large are they as

part of the overall Shi’a. Well, he actually bought into the political

process in January and ran and got somewhere between 2 and 5

percent.

Mr. SHAYS. Where he had 19 seats out of 240; is that right, Mr.

Campbell?

Mr. CAMPBELL. Something along that line. I think somewhere in

terms of the 2 to 5 percent of votes gathered.

Dr. HABECK. Yes. So that suggests there’s a very, very small percent of the Shi’a, and that is why I almost don’t count them.

Mr. SHAYS. Hold on a second. I would love to believe your optimism. I would. I want to be optimistic. I am. I am hopeful. Optimistic is not where I am at. I am hopeful to optimistic. Let’s put

it that way. It’s 5 percent of the total vote, so 2 to 5 percent of the

total vote, so he is maybe 10 percent of the Shi’as.

Dr. HABECK. Maybe. But you know, that is 65 percent.

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Mr. SHAYS. OK. I basically viewed the election as a pretty strong

success, and I am being a little facetious, but there’s a lot of truth

to my point that I knew it was a success when the press stopped

talking about it. I mean, really, because it’s—of all the—of anything you can say about the Iraqis, the one thing you can say is

the election in January was a success. I was there. I know it was

a success. It was a huge success. The transfer of power last June

was a huge success. People said it wouldn’t—I had a press conference with the Iraqi Foreign Minister. It was my press conference. I had no questions.

The Iraqis, who were the press, asked their new leader, as I was

now a part of a relationship through the State Department, not

part of the ruling party. The election in January was successful,

and I think that we will find the election here was a success.

What I am interested in knowing, Mr. Campbell, because you

spoke most of this, and Ms. Van Rest and Dr. Habeck, you can respond as well—I want to interpret the challenges of votes. Is it in

a few places or within the whole province? I mean, is it within

some towns within a province, or is it within the whole province?

And is it based upon the fact that there were more—in other

words, more voters than registration?

Maybe you could start, Mr. Campbell.

Mr. CAMPBELL. Sure. Well, I think the early information characterized the potential problems in three ways. In predominantly

Shi’a areas, the Iraqi—the independent election commission has

noted that there are unnaturally high numbers of ‘‘yes’’ votes, as

many as 90–95 percent yes. So their assumption——

Mr. SHAYS. In areas where you wouldn’t have that?

Mr. CAMPBELL. Well, even in areas where the population is Shi’a,

but where 90 or 95 percent just sort of tests reality; where we have

said this is basically a threshold that would invite them to audit.

So they are actually going to take selected ballot boxes and take

X numbers of ballots out of the boxes and see if it tallies up. So

the same thing is happening——

Mr. SHAYS. I don’t understand it. Do they have a paper trail that

enables them to do this? In other words, if you stuff a ballot, how

do you know that it’s——

Mr. LYNCH. We are not talking about butterfly ballots here, are

we?

Mr. CAMPBELL. Well, something along that line. There have been

a few—some people are alleging that sort of vote fraud, although

our experience from January is that the elections are quite well

run. The notion of someone substituting a ballot box with all yeses

or——

Mr. SHAYS. What is the potential of abuse?

Mr. CAMPBELL. Not likely, highly unlikely. So what they are trying to determine, they are looking at, actually, international experience. They are saying that because the U.N. and IFES and other

American organizations are helping, they are saying that in an

international experience, the 90 or 95 percent vote for any option

is abnormal. Even if you accept that Iraq is polarized, it’s abnormal.

So they will audit. What they will try to do is they will try to

determine what a normal result might be. You know, you assume

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that not everyone will vote one way. There are also instances in the

North among the Kurdish vote where the voting was abnormally

polarized.

And it’s interesting that the irregularities on the January 30th

election, were really in the Kurdish area, primarily where the

Kurds, even the Kurdish leaders themselves acknowledged overzealous behavior on the part of the PeshMarga and the Kurdish police and so on to sort of enforce or police a standard vote.

So I think we may see that there was sort of zealotry in the predominantly Shi’a areas and predominantly Kurdish areas. That is

important, and I think they will discover if there is some of that

going on. However, when we get sort of hard-nosed about it, that

probably had no impact on the outcome. This was a straight yes,

no, up, down vote. Everyone understood going in that the majority

of the Kurds would vote ‘‘yes,’’ the majority of the Shi’a population

would vote ‘‘yes.’’ The fact that they have a bigger Shi’a majority

voting ‘‘yes’’ doesn’t matter very much.

Where this will come down to really is in places like Mosul,

where you have a mixed population, where you clearly had a strong

‘‘no’’ vote, and where actual sort of chicanery and fraud and intimidation—for example, there have been some reports of ballot boxes

being stolen at gun point. Where are those ballot boxes, what was

in those ballot boxes, were they replaced with other boxes? This is

going to probably take weeks to figure out.

I don’t think this is a huge, huge issue. I mean, I think I share

your feeling, Mr. Chairman, that overall the referendum process

was successful in this incident. It went off in a way that Iraqis got

a chance to express what they wanted. However, if I am in the

shoes of the Sunni opposition to this vote, and I start to get wind

that credible objective of local observers and the U.N. and IFES

and the Iraqi election officials, who have been very good, are starting to investigate fraud, for example, in Mosul, and I think I am

within 20,000 votes, I think, you know, as a political matter, I

would probably make the most of this. I would stretch it out for

months on end. So I think we are in for a protracted kind of period

of them complaining.

Having said that, as I said in my earlier statement, I think what

is really interesting and extremely important is that the Sunni

population, I think in my opinion, has bought heavily into the political process as a way of making change and policy change. I hope

I am right because that would herald, in my opinion, the most important change in the last year or two.

Mr. SHAYS. If you are right on that, Mr. Campbell, and even if

it is rejected, if you get Sunni buy-in into a political process——

Mr. CAMPBELL. Or even if as long as these allegations, if they

come up, are investigated in a credible, thorough way and people

don’t rush to judgment, I think that is key.

Mr. SHAYS. Ms. Van Rest, you can jump in.

Ms. VAN REST. I think Les covered it pretty much. But I think

the one thing I would like to add is that it’s important that the

election commission has stepped up to the plate immediately and

started auditing rather than just kind of waited for things other

than kind of become a larger problem. I have observed elections all

over the world, and there have been instances where an election

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commission just won’t either look at something, denies that there’s

a problem, and then there’s this assumption there’s a lot of fraud

that occurred, though it might not have.

So that is another reason why I share your optimism about this

election is I think that they conducted—the election commission

certainly conducted the best election that it could under the circumstances, and they are turning their attention immediately to

figuring out if there is fraud in any of these areas.

Mr. SHAYS. Did you want to say something, Dr. Habeck?

Dr. HABECK. Yes, just briefly. I want to emphasize that I am

talking right now about the progress that is made. I am not saying

they have won the war. I am not saying that anywhere. But they

are making good progress toward that goal.

Mr. SHAYS. That part comes across. I was having a hard time

sorting out four numbers to one. We straightened it, out and I

think we are clear.

Dr. Palarino, who goes with me to Iraq, he wrote down, here is

another example of not understanding Islam. If the mullah says to

his congregation, vote ‘‘yes,’’ just about everyone will vote ‘‘yes.’’

Consequently, you will get an unnaturally high ‘‘yes’’ vote in Shi’a

areas.

I think I happen to agree with that basic point. Maybe I could

be persuaded differently. Doesn’t a cleric have sometimes a pretty,

you know, significant impact on the vote?

Dr. HABECK. I would say in the Shi’a areas in particular; not so

much in the Sunni areas where an Iman can be just kind of somebody who is elected from amongst the congregation itself, but in

the Shi’a areas where it is very hierarchical and they are held in

a lot more esteem and have more education and so on. So I would

say yes.

Mr. SHAYS. One of the most impressive things when I have been

to Iraq was the work of NDI and IRI. What amazes me about what

you do is you bring in—at least it appeared that way, and tell me

if I am wrong—you are not bringing in Americans to sell them democracy. I encountered folks from former Yugoslavia who were

there and so on.

Tell me a little about—you go in and you don’t try to Americanize—what do you try to do. And then tell me who you brought into

Iraq to help Iraqis understand democracy. Why don’t we start with

you, Ms. Van Rest?

Ms. VAN REST. Yes, we have an expat staff that is a mix of

Americans and Eastern Europeans.

Mr. SHAYS. Eastern Europeans are folks that basically kind of

experienced democracy as fledgling——

Ms. VAN REST. That is correct. They have gone through a transition period of their own. They were part of the early youth movements in Serbia, for example. These are staff who are there on the

ground every day.

In addition to that, we bring in trainers. We have had American

trainers who come in and talk about the basics of communications

and constituent outreach, that type of thing. But we have also had

legislators from Eastern Europe to come in and talk to the Iraqis

about what they went through in running for office, and how it

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sitions and their country’s. We find that it really transfers, the information does certainly transfer a little better to Iraqis.

But we have always, when we have done programs around the

world, understood that our American system is sometimes even difficult to explain to people, it is very unique, but there are basic tenets of democracy. So we have had people who are able to come in

and talk about just the basic ways of doing things and then helping, say, in the case of Iraqis, figure out how they are going to

apply these types of programs.

For example, town hall meetings. As I mentioned in my testimony, we have worked with a variety of civil society groups who

held workshops in the runup to this referendum, and they held

about 1,400 meetings, town hall meetings. These are not town hall

meetings in the way we understand them.

Mr. SHAYS. You are bringing community leaders together, but

you didn’t do this in the Green Zone.

Ms. VAN REST. This is out. Yes, this is out.

Mr. SHAYS. It would amaze most of my constituents that there

were meetings like this that happened, that happened without everyone getting killed all the time, because their impression would

be that if you did that, you were a dead man walking.

Ms. VAN REST. Well, one of the important things to note is that,

for obvious reasons, for security reasons, our expat staff cannot be

out and about all the time, so what we have is the trainer——

Mr. SHAYS. You have Iraqis training Iraqis.

Ms. VAN REST. We train Iraqis, and then they go out. It is a multiplier effect.

Mr. SHAYS. As a former Peace Corps volunteer, that is the Peace

Corps way, and I love it. I love it.

Mr. CAMPBELL. I will just jump in and amplify what Judy said.

Just since you mentioned this, I was writing down here the nationalities of our staff. Just off the top of my head, and I am probably

missing people, but we have people from Serbia, Croatia, from

France, Romania, Bulgaria, Canada, Ecuador and Sweden, and I

am sure I am missing a few, permanent over there for a year or

more in Iraq.

As Judy said, I think that the hallmark of what we do in any

country but Iraq are two things: One, as I mentioned in my testimony, we stand behind people, not in front. We are not there to

wave flags and sort of drive some kind of agenda. We are there to

back up what they are trying to do.

As I mentioned in Iraq, there was a spontaneous outgrowth. People want to take part in the system, and we are there to support

that and be behind that.

No. 2, we are not there to impose some kind of system. The criticism often comes that there is a sense that somehow these American organizations are coming in to impose something. We are not.

We bring a variety of experiences, and part of that is through the

staff that we put forward.

I think both of us, both organizations, are highly committed, and

it actually follows on the last panel to how this continues after we

leave, because we will leave 1 day. And both organizations employ

hundreds of Iraqis, but not just employ hundreds of Iraqis; we rely

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on thousands of Iraqis to reach in turn hundreds of thousands of

people.

Judy has mentioned statistics for IRI. NDI reached more than

100,000 individuals through its programs through August and September. That maybe was the work of five expatriates or foreigners,

but that was probably the work of 2,000 or 3,000 Iraqis reaching

those people.

Mr. SHAYS. I remember when I was in Iraq for the vote, and Dr.

Palarino and I were there, in this case it was IRI, but I was triggered to comment, because I was so impressed with the staff at the

NDI, and so I asked this young woman, she had an accent, and I

wanted to know where in the United States she was from. She was

younger than 30, and she was in charge of 28 people. I think she

was younger than 30.

I said, where are you from? She gave me a town in the former

Yugoslavia. And then I said, why are you here? And she said, almost in tears, that our country had shared with her and her country, fellow countrymen, democracy, and it had made all the difference in her life, and she wanted to share it with someone else.

It was a very memorable moment in my life.

When I think of, and I make it with very real respect to you, Mr.

Campbell, this is not a justification of our being there and so on,

but I respect that you recognize that we are there, and your organization does, and it is powerful, the work that you are doing. It is

absolutely powerful. I would like more people to know about it, but

maybe in some ways it is good that you just do your work and let

the results show for themselves.

I am impressed that 160,000 Iraqis, with the training they receive from you and other organizations, were able to pull off two

elections, where the U.N. basically told me that these are as good

elections as you will find anywhere in the world, and they told me

that when I was in Iraq a week and a half ago, better than any

almost anywhere else, and I made an assumption even the United

States. It just is the very good part of a story that has mixed parts

to it.

Is there anything that we need to put on the record before we

adjourn, anything you would like to say before we adjourn?

Mr. CAMPBELL. On behalf of maybe Judy and myself, we really

appreciate the work you have done on this and your visits. Every

time you have visited, I know you met with both the staff of NDI

and IRI, and a lot of this work is below the radar. So we also appreciate the support that you have shown through your efforts and

being able to go and meet with people and get these kinds of onthe-ground briefings, which we highly appreciate.

Ms. VAN REST. I would just like to add to that, thanks for the

support that you are giving to our two organizations. It is obviously

very important.

Mr. SHAYS. You are hitting a sensitive chord now, because I am

a born again here, because in my youth I was wondering what are

we doing funding these institutions, and I was leading the charge

to save money. I found myself listening to debate over time and losing the debate, and over time thinking, you know, they are right,

and I am wrong. It makes me question other things I do, if I could

have been so wrong in that one issue, because you do a great job.

195

Dr. Habeck, I am really happy you were able to go to Iraq. I appreciate your insights as well.

Dr. HABECK. Thank you. Thank you for giving me the opportunity to express my views.

Mr. SHAYS. With that, this hearing is adjourned.

[Whereupon, at 2:15 p.m., the subcommittee was adjourned.]

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