Stabilizing and Rebuilding Iraq: Serious Challenges Confront U.S. Efforts to Build the Capacity of Iraqi Ministries
Published: 2007-10-04T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The development of competent and loyal government ministries is critical to stabilizing and rebuilding Iraq. The ministries are Iraq's largest employer, with an estimated 2.2 million government workers. U.S. efforts to build the capacity of Iraqi ministries include programs to advise and help Iraqi government employees develop the skills to plan programs, execute budgets, and effectively deliver services. The administration received $140 million in fiscal year 2007 to fund U.S. capacity-building efforts and requested an additional $255 million for fiscal year 2008. This testimony discusses (1) U.S. efforts to develop ministry capacity, (2) the key challenges to these efforts, and (3) the extent to which the U.S. government has an overall integrated strategy. This statement is based on GAO-08-117 . To accomplish our report objectives, we reviewed reports from and interviewed officials of U.S. agencies, the Iraqi government, the United Nations, and the World Bank. We conducted fieldwork in Washington, D.C.; New York City; Baghdad, Iraq; and Amman, Jordan.
section_title: What GAO Found
paragraphs: Over the past 4 years, U.S. efforts to help build the capacity of the Iraqi national government have been characterized by (1) multiple U.S. agencies leading efforts without overarching direction from a lead agency or a strategic plan that integrates their efforts; and (2) shifting timeframes and priorities in response to deteriorating conditions in Iraq. As of May 2007, six U.S. agencies were implementing about 53 projects at individual ministries and other national Iraqi agencies. Although the Departments of State and Defense and the U.S. Agency for International Development (USAID) have improved the coordination of their capacity-building efforts, there is no lead agency or strategic plan to provide overarching guidance. U.S. efforts to develop Iraqi ministerial capacity face four key challenges that pose risks to their success and long-term sustainability. First, Iraqi government institutions have significant shortages of personnel with the skills to perform the vital tasks necessary to provide security and deliver essential services to the Iraqi people. Second, Iraq's government confronts significant challenges in staffing a nonpartisan civil service and addressing militia infiltration of key ministries. Third, widespread corruption undermines efforts to develop the government's capacity by robbing it of needed resources, some of which are used to fund the insurgency. Finally, violence in Iraq hinders U.S. advisors' access to Iraqi minstries, increases absenteeism among minstry employees, and contributes to the growing number of professional Iraqis leaving the country. The U.S. government is beginning to develop an overall strategy for ministerial capacity development, although agencies have been implementing separate programs since 2003. GAO's work in this area shows that an overall strategy for capacity development should include (1) a clear purpose, scope, and methodology; (2) a delineation of U.S. roles and responsibilities and coordination with other donors including the United Nations; (3) goals and objectives linked to Iraqi priorities; (4) performance measures and milestones; and (5) costs, resources needed, and assessment of program risks. U.S. ministry capacity efforts have included some but not all of these components. For example, agencies are working to clarify roles and responsibilities. However, U.S. efforts lack clear ties to Iraqi-identified priorities at all ministries, clear performance measures, and information on how resources will be targeted to achieve the desired end-state. State and USAID noted concerns over our recommendation to condition further appropriations and cited the appointment of an ambassador to supervise civilian capacity development programs. GAO does not recommend stopping U.S. investment in capacity development. The $140 million in fiscal year 2007 funds remains available to continue efforts while developing an integrated strategy. In addition, the U.S. ambassador arrived in Iraq in July 2007 underscoring our point that U.S. efforts lacked overall leadership and highlighting the need for an overall integrated strategy.

section_title: Letter
paragraphs: I am pleased to be here today to discuss our report issued today on U.S.  efforts to build the capacity of Iraqi ministries. The development of  competent and loyal government ministries is critical to stabilizing and  rebuilding Iraq. Iraq’s 34 ministries are responsible for ensuring security  through the armed forces and police and providing essential government  services, such as electricity, water, and health care. The ministries are  Iraq’s largest employer, with an estimated 2.2 million government workers.
U.S. efforts to build the capacity of Iraqi ministries include programs to  advise and help Iraqi government employees develop the skills to plan  programs, execute budgets, and effectively deliver services. In 2005 and  2006, the United States provided $169 million for programs to help build  the capacity of key civilian and security ministries.  The administration  received an additional $140 million in fiscal year 2007 and requested  $255 million for fiscal year 2008.
My testimony today discusses (1) the nature and extent of U.S. efforts to  develop the capacity of Iraqi ministries, (2) the key challenges to these  efforts, and (3) the extent to which the U.S. government has an overall  integrated strategy.
This statement is based on the report we issued today. To accomplish our  report objectives, we reviewed and analyzed U.S., Iraqi, donor  government, United Nations (UN), and World Bank reports and data. We  conducted fieldwork in Washington, D.C.; New York City; Baghdad, Iraq;  and Amman, Jordan. At these locations, we met with officials and  contractors working for the Departments of State (State), Defense (DOD),  Treasury, Justice, the U.S. Agency for International Development (USAID),  the United Nations (UN), the World Bank, European Union, and the Iraqi  government. We conducted our review in accordance with generally  accepted government auditing standards.
subsections: section_title: Background
paragraphs: As of September 2007, the Iraqi government included 34 ministries  responsible for providing security and essential government services. U.S.  capacity development programs target 12 key ministries: State and USAID  focus on 10 civilian ministries while DOD is responsible for the Ministries  of Defense and Interior. These 12 ministries employ 67 percent of the Iraqi  government workforce and are responsible for 74 percent of the 2007  budget (see table 1).
section_title: U.S. Efforts to Build Iraqi Government Capacity Lack Unified Direction
paragraphs: U.S. efforts to help build the capacity of the Iraqi national government are  characterized by (1) multiple U.S. agencies leading individual efforts  without overarching direction from a lead entity or a strategic approach  that integrates their efforts with Iraqi government priorities and  (2) shifting time frames and priorities in response to deteriorating  conditions in Iraq.
As of May 2007, six U.S. agencies were implementing about 53 projects at  individual ministries and other national Iraqi agencies. State, USAID, and  DOD lead the largest number of programs and provide about 384 U.S.  military, government, and contractor personnel to work with the  ministries. DOD provides over half (215) of the personnel to the Ministries  of Defense and Interior to advise Iraqi staff in developing plans and  policies, building ministry budgets, and managing personnel and logistics.   State and USAID together provide an additional 169 advisors to the 10 key  civilian ministries.
Although State, USAID, and DOD have improved the coordination of their  capacity-building efforts since early 2007, there is no lead agency or  strategic plan to provide overarching guidance. Two factors explain the  lack of a lead agency. First, from their inception in 2003, U.S. ministry  capacity-building efforts evolved without an overall plan or the  designation of a lead entity. U.S. agencies provided distinct assistance to  four successive governments in response to Iraq’s immediate needs,  according to U.S. officials. This approach first began under the Coalition  Provisional Authority whereby U.S. advisors ran the ministries using U.S.  and Iraqi funds and made personnel and budget decisions. Attempts to  create an overall capacity development plan were dropped in late 2003  after the United States decided to transfer control of the ministries to an  interim government.
A second factor has been the delay in implementing recommendations  from a 2005 State assessment that characterized U.S. capacity  development programs as uncoordinated, fragmented, duplicative and  disorganized. State recommended a unified effort among State, DOD, and  USAID, with the latter providing overall coordination and leadership. The  recommendations were not implemented. However, in July 2007, State  named an ambassador to direct civilian capacity-building programs,  including USAID efforts.
Shifting priorities also have affected U.S. capacity development efforts,  particularly in response to continued security problems. In early 2007, the  U.S. mission refocused its capacity development program as part of the  surge strategy associated with the administration’s New Way Forward.
Rather than focusing on 12 civilian and security ministries, State and DOD  targeted 6 key ministries (Interior, Defense, Planning, Finance, Oil, and  Electricity) and focused on short-term improvements to address  immediate problems with budget execution, procurement, and  contracting. Accordingly, U.S. capacity development efforts shifted from  long-term institution building to immediate efforts to help Iraqi ministries  spend their capital budgets and deliver better services to the Iraqi people.  Improvements were expected by September 2007.
section_title: Low Capacity of the Iraqi Ministries and Other Challenges Pose Risks to U.S. Efforts
paragraphs: U.S. efforts to develop Iraqi ministerial capacity face four key challenges  that pose a risk to their success and long-term sustainability.
First, Iraqi government institutions have significant shortages of personnel  with the skills to perform the vital tasks necessary to provide security and  deliver essential services to the Iraqi people.  When the Coalition  Provisional Authority (CPA) removed Ba’athist party leaders and members  from upper-level management in government, universities, and hospitals in  2003, most of Iraq’s technocratic class was forced out of government. A  September 2006 U.S. embassy assessment noted that the government had  significant human resource shortfalls in most key civilian ministries. The  majority of staff at all but 1 of the 12 ministries surveyed was inadequately  trained for their positions, and a quarter of them relied heavily on foreign  support to compensate for their human and capital resource shortfalls.  The lack of trained staff has particularly hindered the ability of ministries  to develop and execute budgets. For example, in 2006, the Iraqi  government spent only 22 percent of its capital budget. For January  through July 2007, spending levels have improved with about 24 percent of  capital budgets spent. However, as we reported in early September 2007, it  is unlikely that Iraq will spend the $10 billion it allocated for 2007 for  capital budgets by the end of this year.
Second, Iraq’s government confronts significant challenges in staffing a  nonpartisan civil service and addressing militia infiltration of key  ministries. In June 2007, DOD reported that militias influenced every  component of the Ministry of Interior. In particular, the Ministry has been  infiltrated by members of the Supreme Islamic Council of Iraq and its  Badr Organization, as well as Muqtada al-Sadr’s Mahdi Army.  Furthermore, the Iraqi civil service remained hampered by staff whose  political and sectarian loyalties jeopardized the civilian ministries’ abilities  to provide basic services and build credibility among Iraqi citizens,  according to U.S. government reports and international assessments.   DOD further found that government ministries and budgets were sources  of power for political parties, and staff ministry positions were rewarded  to party cronies. The use of patronage hindered capacity development  because it led to instability in the civil service as many staff were replaced  whenever the government changed or a new minister was named,  according to U.S. officials.
Third, according to State, widespread corruption undermines efforts to  develop the government’s capacity by robbing it of needed resources,  some of which are used to fund the insurgency; by eroding popular faith in  democratic institutions seen to be run by corrupt political elites; and by  spurring capital flight and reducing economic growth. According to a State  assessment, one-third of the 12 civilian ministries surveyed had problems  with “ghost employees” (that is, nonexistent staff listed on the payroll). In  addition, the procedures to counter corruption adopted at all but one of  the civilian ministries surveyed were partly effective or ineffective. Similar  problems existed in the security ministries, according to DOD.
Finally, the security situation remains a major obstacle to developing  capacity in areas vital to the government’s success. The high level of  violence hinders U.S. advisors’ access to their counterparts in the  ministries, increases absenteeism among ministry employees, and  contributes to “brain drain” as ministry employees join the growing  number of Iraqis leaving the country. According to a UN report, between  March 2003 and June 2007, about 2.2 million Iraqis left the country and  2 million were internally displaced. According to U.S. and international  officials, the flow of refugees exacerbates Iraqi ministry capacity shortfalls  because those fleeing tend to be disproportionately from the educated and  professional classes. A November 2006 UN report stated that an estimated  40 percent of Iraq’s professional class had left since 2003.
section_title: The United States Is Beginning to Develop a Strategy for Capacity Development Efforts
paragraphs: In February 2007, State officials provided GAO with a three-page, high- level outline proposing a U.S. strategy for strengthening Iraqi ministerial  capacity. This document was a summary with few details and no timeline.  A senior USAID official indicated that it is uncertain whether the high-level  summary will be developed into a strategy, although the administration  received $140 million in funding for its capacity development efforts in  fiscal year 2007 and requested $255 million for fiscal year 2008.
GAO has previously identified the desirable elements of a strategy: a clear  purpose, scope, and methodology; a delineation of U.S. roles,  responsibilities, and coordination; desired goals, objectives, and activities  tied to Iraqi priorities; performance measures; and a description of costs,  resources needed, and risks. Table 2 summarizes the key elements of a  strategy and provides examples of the status of the U.S. approach as of  September 2007.
As table 2 shows, U.S. agencies have developed some of these elements in  their programs for capacity building at individual ministries, but not as  part of an overall U.S. strategy. For example:    We found little evidence that the U.S. government has clearly defined  the purpose, scope, and methodology for developing an overall  strategy. Agencies have provided some limited information on why an  overall strategy is needed, what it will cover, and how it will be  developed.
A Joint Task Force on Capacity Development, established in October  2006, has helped U.S. agencies better delineate roles and  responsibilities and coordinate their efforts. However, we found no  plans on how the capacity development programs of State, USAID, and  DOD will be unified and integrated.
While U.S. agencies have clearly identified the overall goals of capacity  development at the Iraqi ministries, most U.S. efforts lack clear ties to  Iraqi priorities for all ministries.
While DOD is developing measures to assess progress at the security  ministries, such measures have not been developed for Iraqi civilian  ministries.
U.S. agencies have not identified the costs and resources needed to  complete capacity development programs beyond the budget for fiscal  year 2007 and the 2008 budget request. Agencies have not provided  information on how future resources will be targeted to achieve the  desired end-state or how the risks we identified will be addressed.
In addition, efforts to improve cooperation with the UN and other  international donor nations and organizations have encountered difficulties.  For example, U.S. efforts are to be coordinated with the Iraqi government and  the international donor community through the Capacity Development  Working Group.  However, the group did not meet for about a year after  forming in late 2005 and did not meet from February through May 2007.
section_title: Conclusion
paragraphs: Current U.S. efforts to build the capacity of the Iraqi government involve  multiple U.S. agencies working with Iraqi counterparts on many issues.   GAO, for example, is working with the Iraqi Board of Supreme Audit to  enhance its auditing skills and capacity.  However, U.S. efforts to improve  the capacity of Iraq’s ministries must address significant challenges if they  are to achieve their desired outcomes. U.S. efforts lack an overall strategy,  no lead agency provides overall direction, and U.S. priorities have been  subject to numerous changes. Finally, U.S. efforts confront shortages of  competent personnel at Iraqi ministries, and sectarian ministries contend  with pervasive corruption. The risks are further compounded by the  ongoing violence in Iraq as U.S. civilian advisors have difficulties meeting  with their Iraqi counterparts and skilled Iraqi professionals leave the  country.
Congress appropriated $140 million in May 2007 for capacity building and  the administration requested up to $255 million for fiscal year 2008. We  believe that future U.S. investments must be conditioned on the  development of an overall integrated U.S. strategy that clearly articulates  agency roles and responsibilities, establishes clear goals, delineates the  total costs needed, and assesses the risk to U.S. efforts.  The strategy  would also need to consider any expanded role of multilateral  organizations, including the United Nations and World Bank.
section_title: Recommendation for Executive Action
paragraphs: GAO recommends that State, in consultation with the Iraqi government,  complete an overall integrated strategy for U.S. capacity development  efforts.
Key components of an overall capacity development strategy should  include a clear purpose, scope, and methodology; a clear delineation of  U.S. roles, responsibilities, and coordination, including the designation of  a lead agency; goals and objectives based on Iraqi-identified priorities;  performance measures based on outcome metrics and milestones; and a  description of how resources will be targeted to achieve the desired end- state.
section_title: Matter for Congressional Consideration
paragraphs: Given the absence of an integrated capacity development strategy, it is  unclear how further appropriations of funding for ministry capacity  development programs will contribute to the success of overall U.S. efforts  in Iraq. Congress should consider conditioning future appropriations on  the completion of an overall integrated strategy.
section_title: Agency Comments and Our Evaluation
paragraphs: In commenting on a draft of the report accompanying this testimony, State  and USAID noted (1) their concern over our recommendation to condition  future appropriations for capacity development on the completion of a  strategy; (2) the recent appointment of an ambassador to supervise all  short- and medium-term capacity development programs; and (3) the need  to tailor capacity development needs to each Iraqi ministry. In response to  the agencies’ first comment, we do not recommend stopping U.S.  investment in capacity development; the $140 million in supplemental  funding appropriated in fiscal year 2007 remains available for the agencies  to continue their efforts. Rather, we recommend that Congress condition  future funding on the development of an overall integrated strategy.
We acknowledge that State named an ambassador to coordinate the  embassy’s economic and assistance operations. However, this action  occurred in July 2007, underscoring our point that U.S. capacity  development efforts have lacked overall leadership and highlighting the  need for an overall integrated strategy. Finally, our recommendation does  not preclude U.S. agencies from tailoring capacity development efforts to  meet each ministry’s unique needs. A strategy ensures that a U.S.-funded  program has consistent overall goals, clear leadership and roles, and  assessed risks and vulnerabilities.
Mr. Chairman, this concludes my statement. I would be pleased to answer  any questions that you or other Members have at this time.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For questions regarding this testimony please me on (202) 512-5500, or   Mr. Joseph A. Christoff, Director, International Affairs and Trade, on  (202) 512-8979 or christoffj@gao.gov. Other key contributors to this  statement were Tetsuo Miyabara, Patrick Hickey, Lynn Cothern,  Lisa Helmer, Stephen Lord, and Judith McCloskey.
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