{ 4.IN 8/16:IR 1/25 IRAQ: UPDATE ON U.S. POLICY HEARING BEFORE THE COMMITTEE ON INTERNATIONAL RELATIONS HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECOND SESSION APRIL 26, 2006 Serial No. 109-223 Printed for the use of the Committee on International Relations Pennsylvania State University Libraries FEB - 9 2007 Documents Collection U.S. Depository Copy Available via the World Wide Web: http://www.house.gov/international"^relatlons U.S. GOVERNMENT PRINTING OFFICE 27-232PDF WASHINGTON : 2006 For sale by the Superintendent of Documents. U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866i 512-1800; DC area i202i 512-1800 Fax: (202i 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 2 In the security sector, approximately 250,000 Iraqi security forces have undergone training and are gradually taking on respon- sibility for areas under their control. The United States should ex- plore all possible means of ensuring that these forces are both rep- resentative of the Iraqi population and fully integrated in order that they might become a symbol of Iraq's sovereignty and con- tribute to Iraq's long-term stability. However, there are significant challenges in our effort to help stabilize Iraq in the post-Saddam era. A recent GAO study that discussed the challenges facing the United States and Iraqi Gov- ernments in rebuilding Iraq found that the deteriorating security environment and the continuing strength of the insurgency have derailed stabilization and reconstruction efforts. This reality poses a serious concern for the U.S. Congress as multi-billion dollar emergency funding legislation for the war effort is currently under- way. I hope to hear from our distinguished panel not only about the areas in which we are making progress, but also about where we are facing our biggest challenges and how we are working to re- solve them efficiently from lessons learned. We are fortunate to have Ambassador Jeffrey and Assistant Sec- retary Rodman here today to provide a update of the situation in Iraq and discuss where we go from here. I will now yield to my friend and colleague, Ranking Democratic Member Tom Lantos, for any opening remarks he may wish to make, and I might suggest with some reluctance that we will ab- breviate the opening statements to the Chairman and Ranking Member of the Subcommittee having jurisdiction of this subject as well as Mr. Lantos and myself, primarily because of the short time available to our witnesses, and I think our time is more profitably spent hearing from them rather than listening to each other. But with that precaution, I am happy to yield to Mr. Lantos. Mr. Lantos. Thank you very much, Mr. Chairman. It is my understanding that this is not a hearing about how we got into Iraq. It is a hearing about our nation's role in the future of Iraq both militarily and in the daunting task of reconstructing the Iraqi economy. Through this and other hearings, it is impera- tive that we get to the bottom of charges that American funds have not been spent wisely or effectively in Iraq, and that our nation has an inadequate strategy for bringing stability to Iraq so that our troops can return home expeditiously. Mr. Chairman, since our last Full Committee hearing on Iraq nearly 2 years ago, much has changed but then again much has not. In the spring of 2004, sovereignty was about to be transferred to an interim Iraqi Government with the hope of creating a new political culture in Iraq and stopping the transformation of unrest into insurgency. It was our hope that our reconstruction program, which the Coa- lition Provisional Authority had launched, but which had been limping along, would kick into high gear, and it was expected that Iraq's own revenues would rise to fill in any gaps in our own recon- struction efforts. Now, 2 years later, we face many disappointments. Despite two successful national elections and the national referendum on the 6 Committee has had and the Subcommittees have had on the issues dealing with Iraq. The idea that we have not had oversight or in- vestigations or hearings on Iraq, I do not understand how my col- league and friend came to that conclusion, but my own Sub- committee, for example, just recently held hearings, and I have a list here of, I think, about nine different hearings that we have had over the years, over the last couple of years on Iraqi issues, and I would like to submit them for the record. [The information referred to follows:] Summary of Oversight on Iraq War 9 Resolutions of Inquiry pertaining to the war in Iraq, 4 Full Committee Hearings (including today's), 3 Sub-Committee Hearings, A members-only meeting, 5 classified briefings, Numerous non-classified briefings. 11 In interviews, two of the top Army Corps commanders who have had involvement at Al Fatah were reluctant to criticize the work done by KBR in Iraq. That was also the case in February when the Army Corps agreed to pay Halliburton most of its fees on a large fuel supply contract in Iraq, even though Pentagon auditors had found more than $200 million of the charges were questionable. Congressional Democrats have accused Halliburton of enjoying special privileges because Vice President Dick Cheney was its chief executive before he became vice presidcut. Although independent experts have noted that it is one of a handful of companies with the experience and size to handle enormous jobs like the reconstruction effort, KBR is often sheltered by a military that is heavily dependent on it. Through a spokeswoman, Melissa Norcross, KBR rejected the criticisms leveled at it in the Fatah pipeline case by the inspector general and other officials, saving that the company had responded properly to an urgent request by the United States government to build the crossing quickly in a dangerous area. Ms. Norcross asserted in a written response to questions that the geotechnical report was too general to suggest any measures but extensive ground testing, which would have required sophisticated equipment. "Such equipment was not available in the region, and certainly not in Iraq." she said. She said statements that the company did not report regularly about the project are "completely without merit" and that daily and monthly reports were duly filed. Ms. Norcross said that when serious problems arose, "the Corps directed KBR to continue" with the drilling. With the failed effort at Al Fatah, the inspector general estimated lost money from crude oil exports at as much as S5 million a day. The United States was forced to issue a new $66 million job order that includes another attempt to ran pipelines across the Tigris — this time using a different technique. Stunned by a Change in Plans On April 3, 2003, invading American troops had reached the outskirts of Baghdad and were eyeing its smoking skyline. A naval aircraft dropped a single bomb on the Fatah crossing. Gen. T. Michael Moseley, the Air Force chief of staff who was the allied air commander, said thai bridges were not generally targets in the war, but that he approved the Fatah strike to stop the enemy from crossing the bridge on which the original pipelines had run through openings beneath the road. The pipelines had carried crude oil from the fields around Kirkuk, 60 miles to the northeast, crossed the Tigris at Al Fatah and transported the crude to refineries or to export terminals in Turkey. 19 In the water and sanitation sector, the World Bank estimated that $6.8 billion was needed through 2007. Congress initially allocated $4.6 billion for the sector, and that was cut to S2.6 billion by the State Department; the savings were shifted to other priorities, particularly security, according to a September GAO report. Along the way, the original target of delivering potable water to 90 percent of Iraqis was lowered to 50 percent to 60 percent, the report said. In testimony before Congress in February, Stuart W. Bovven Jr., the special inspector general for Iraq reconstruction, said that only 49 of the planned 136 large water projects would be completed because of what he called a reconstruction funding gap. "Most of the projects planned in sewerage, irrigation and drainage, major irrigation and dams have been canceled." But officials here say they are not getting credit for what they have accomplished. Dawn Liberi, director in Iraq of the U.S. Agency for International Development, said her agency has restored water-treatment serv ice to 3.5 million Iraqis and sewer serv ice to 3.2 million. By the end of the year, she said, those numbers will more than double. "The United States was never meant to do this whole job by itself. There's about a $40 billion difference in what was needed for the entire job to be done." she said, based on what the United States is spending and what the World Bank calculated was needed. The United States is making major investments in Sadr City, a teeming Shiite slum with about 2 million residents in northeast Baghdad that is a stronghold of militia leader and cleric Moqtada al-Sadr. A $15 million repair of a water-distribution system was finished in January. Work continues on a $47.5 million project to build a water-treatment plant and lay new pipes in the area. A $106.5 million rehabilitation of the neighborhood's power grid is also underway. Talib Hussein Hailoon. a member of the Sadr City Council, said the projects were the most important infrastructure improvements in the neighborhood in decades. Council President Jawad Kadhum said the water improvements would mean that leaking water would no longer swamp the streets and clean water, not raw sewage, would come from taps. U.S. officials hope that this and similar projects will ease anti-U.S. sentiment and perhaps reduce support for Iraq's insurgent groups and violent militias. "If I can sit in a La-Z-Boy and if the TV and AC w ork, why am I going to go out and lay an IED?" said Col. Peter J. Rowan, a commander in the Gulf Region Division of the Army Corps of Engineers who lives in Fairfax County. Despite the massive U.S. investment, there is a huge funding shortfall, and how Iraq will make it up is anybody's guess. The country has no real tax base, and the government projects that about 90 percent of its annual operating revenue will come from oil. The oil sector is not producing or exporting as expected. Last year 186 attacks on oil facilities kept production and exports about 800,000 barrels below prewar levels and cost the country $6.25 billion, the Oil Ministry reported in February. The needs are glaring. At the Wehda water-treatment plant on the Tigris River, eight water pumps built in 1945 and 1958 sit alongside massive new electric generators from US AID, which were purchased to ensure reliable electricity to pump water even during the capital's long power failures. But the generators 25 Waxman notes that despite the U.S. expenditure of some $2 billion, Iraqi oil production remains below pre-war levels, with similar shortcomings in electricity generation. Committee chairman and Republican Congressman Christopher Shays says Congress must continue to examine contracting, management and other failures that have set back reconstruction, but adds the U.S. has no choice but to remain in Iraq: "Premature withdrawal of our military will guarantee failure," said Christopher Shays. "I believe we must replace our withdrawal mindset with a mindset that appreciates what our military, State Department and others have accomplished in Iraq and the sacrifices made by the people of Iraq to grasp hold of democracy and live a better life." GAO comptroller Walker says the U.S. has made more progress building Iraq's military than it has Iraqi police forces, adding that giving Iraqis the logistical capabilities to support and sustain themselves is a critical need. Maryland Congressman Dutch Ruppersberger believes U.S. troops should withdraw from Iraq's urban areas to allow Iraqis to take over more of the security burden: "By doing this we would be able to start sending a lot more of our troops home, but we [would] have our key operations on the perimeter, we're backing up the Iraqis, we're not leaving because they are not ready yet, but they have to learn themselves to provide their security," said Dutch Ruppersberger. President Bush reiterated this week that the U.S. will remain in Iraq to defeat terrorists and provide hope to the Iraqi people. GAO comptroller Walker told lawmakers it is likely Iraq will need much more than the $56 billion originally estimated for reconstruction and stabilization, adding it remains unclear how the Iraqi government will finance these objectives. m 26 /Assessments of rebuilding in Iraq draw Defense ire r By Rowan Scarborough THE WASHINGTON TIMES April 24, 2006 Pentagon reconstruction officials are privately complaining that the special inspector general for Iraq is drafting error-prone reports and hampering their work in Iraq, according to defense officials. But the office of Stuart W. Bowen Jr., the White House-appointed special inspector general for Iraq reconstruction, rejects the complaints, saying Mr. Bowen issues accurate reports and solid advice. Mr. Bowen is generally hailed in the press and in Congress as the man who has brought oversight to a $24 billion program of U.S. taxpayer funds that at times lacked proper supervision and accountability. Mr. Bowen. a lawyer and former aide to President Bush, separately investigated the spending of Iraq oil money and found significant mismanagement and fraud. But within the Pentagon and among some defense officials in Iraq, Mr. Bowen's staff is viewed as inaccurate and meddlesome at times, according to interviews with defense officials and e-mails between Army Project and Contracting Office officials in Washington and Baghdad. Defense officials complain that SIGIR. the acronym for Mr. Bowen's office, has 55 inspectors in Iraq, nearly one for every program manager, forcing the managers to spend increasing amounts of time answering their questions. Their most serious complaint is that SIGIR's draft reports contain too many errors. "The quality of the SIGIR reports has been so poor that the government agencies who are the subject of the reports have become the quality assurance for the documents," said a defense official who asked not to be named because he was not authorized to speak for the department. "Countless man-hours are expended correcting the SIGIR's mistakes and inaccuracies." James P. Mitchell, chief spokesman for Mr. Bowen, rebutted the complaints by saying most draft report findings are returned from the contracting office with the notation "concur." The complaints, Mr. Mitchell said, "come with oversight." "But oversight has its value. And we feel we have made a lot of difference in how Iraq reconstruction has been managed in making it more efficient and effective, and we believe we are deterring fraud," he said. Five persons have been arrested on fraud and bribery charges based on Mr. Bowen's investigations. There are still 70 open cases. James Jeffrey, the State Department's chief policy adviser on Iraq, had notliing but praise for SIGIR in testimony in February before the Senate Foreign Relations Committee "1 want to particularly highlight ihc signature work of SIGIR in evaluating management operations and big-picture issues related to our [reconstruction] strategy," Mr. Jeffrey said. "We listen closely to SIGIR's suggestions, and many of our actions from direct contracting, including with Iraqis, to our focus on cost-to-complete, and plans for operations and maintenance of our projects reflect SIGIR's input." On consuming too much time of contract officers, Mr. Mitchell said it is SIGIR policy to immediately report findings to managers and not wait until filing a report. A senior Pentagon contracting official declined to comment when asked about Mr. Bowen's work. The unnamed defense official showed a reporter e-mails between reconstruction officials in Washington and those in Baghdad complaining about SIGIR's methods. This official contended that SIGIR misstated an important statistic to measure progress in Iraq: how many citizens have access to drinking water. The official said SIGIR reported that fewer Iraqis were getting water compared with prewar levels. The State Department hotly disputed the numbers. Mr. Bowen tried to settle the dispute in a letter to Secretary of State Condoleezza Rice. "SIGIR is reviewing newly received data indicating that approximately 20.5 million Iraqis now have access to drinking water," he said in the March 7 letter, a copy of which was obtained by The Washington Times. "As SIGIR noted in its January quarterly, best prewar estimate indicated that 12-13 27 million Iraqis had access to drinking water in 2003. Thus, it appears that access to drinking water has increased since 2003." Defense officials say the letter was Mr. Bowen's way of admitting a mistake without expressly saying so. But Mr. Mitchell said there are various numbers from different government groups on potable water and the issue "took a lot of hashing out." He said SIGIR stood by its numbers. Administration officials provided a November 2005 draft of the SIGIR management report to The Times, with numerous paragraphs circled by Pentagon officials to indicate they believed the assertions were inaccurate. For example, one section quoted "some reports" that said the now-disbanded Coalition Provisional Authority filled jobs with "a disproportionate number of ideologically motivated but inexperienced young people." The final report in January omitted that section and reduced the assertion to a small footnote. L. Paul Bremer, who ran the authority that ruled Iraq for the first year after the ouster of Saddam Hussein, was willing to openly criticize Mr. Bowen. He sent a terse letter to the inspector general after one of his first reports in 2004 skewered the former ambassador's management of billions in Iraqi oil money. "In my view, this draft report does not meet the standards Americans have come to expect of the inspector general." Mr. Bremer wrote. Mr. Mitchell said Mr. Bremer did not point out any instance in which a SIGIR report was factually wrong. Copyright O 1999 - 2006 News World Communications, Inc. http://msider.washingtontimes.cotn/sec tions/national/normal.php?20060424-122054-241 Or 39 assume a greater role in their own security, the face of the international partner- ship should reflect that shift with increased economic and political support. On behalf of all those serving in Iraq or working on this crucial issue, I want to assure you of our commitment to success, and our dedication to make the lives of Iraq's 26 million citizens better, and the entire region more secure and more free. Chairman Hyde. Thank you, Ambassador. Mr. Rodman. STATEMENT OF THE HONORABLE PETER W. RODMAN, ASSIST- ANT SECRETARY, INTERNATIONAL SECURITY AFFAIRS, U.S. DEPARTMENT OF DEFENSE Mr. Rodman. Thank you, Mr. Chairman, Congressman Lantos. I do not have a prepared statement, but I would like to make an observation briefly if I may. It is prompted by the statement that we all read from Mr. Zarqawi yesterday. Mr. Zarqawi yesterday denounced this new gov- ernment in Iraq as "a poison dagger in the heart of the Islamic Na- tion." He complained about what he called the rotten play of de- mocracy that he said was seducing people, and it was part of the cunning plan of the Americans. Now, this statement by Zarqawi reminded me of another state- ment by Zarqawi 2 years ago in a message that we intercepted and published in which he said, "If democracy comes to Iraq, there is no pretext. We have no pretext." And on March 4th of this year there was a statement posted on the internet by Zawahiri, who is a deputy of bin Laden who he spent a couple of pages of this state- ment warning the Palestinian people and the Iraqi people not to be seduced by the political process, which he said was a deception by the Americans, and it was a distraction from the duty of jihad. My point from all these quotes is that our enemies hate this po- litical process. They fear this political process. And remember last December 15th, 78 percent of the Iraqi people turned out to vote for this political process. So I think our enemies are afraid of this, and they boasted they can inflict the defeat on us in Iraq, but we think we can defeat—we think we can inflict a defeat on them in Iraq, and the political process is the core of the strategy. I mean, our strategy is political as much as it is military, and that is why the formation of the government is so important, and why it is such an important success. It represents the culmination of the po- litical timeline and the strategy that we have pursued over the last 3 years, and that is the opportunity that we and the Iraqis face in Iraq today. Thank you. Chairman Hyde. Thank you, Mr. Rodman. We will now entertain questions, and do you have a list? Mr. Lantos for 5 minutes. Mr. Lantos. Thank you, Mr. Chairman. Ambassador Jeffrey, you are the Secretary of State's principal advisor on Iraq, so I would like to raise a question initially to you. It is self-evident that terrorism will continue in Iraq for a long time to come. In dramatically more stable societies such as Egypt, we have now had a series of terrorist acts. And the question that I think legitimately more and more of our citizens are asking, at what point do we feel that the Iraqis are capable of dealing with the ongoing terrorist threat within their country? 50 I just wanted to find out what happened to that missing $9 bil- lion that was transferred to the CPA, and I can't get an answer, and Mr. Bowen has never appeared before any Subcommittee that I have participated in. But I want to focus on the relationship between Iraq and Iran, Mr. Rodman, and the role or the potential role of Ahmed Chalabi, whom I know you know, because he has had a significant impact on American policy as it relates to Iraq. I found it interesting to note that his representative here in Washington made the observa- tion that this war would not have been fought but for Ahmed Chalabi, and I know there are many of us that do agree with that comment. But in any event, Mr. Chalabi is well known to us. We paid him some $40 million over a period of how many years because of his role as a dissident. We know him too because he was convicted in Jordan of embezzling some hundreds of millions of dollars from a bank that he formed. Correct me if I am wrong, but I think he was sentenced to some 22 years in absentia. Am I correct on that, Mr. Rodman? Mr. Rodman. I don't know exactly. Mr. Delahunt. But he was sentenced. Mr. Rodman. I know he was convicted in Jordan. I don't know the details. Mr. Delahunt. Okay. And he does have a close relationship with the Iranians, is that accurate, Mr. Rodman, Mr. Secretary? Mr. Rodman. I think all of the Shi'ia, especially during the pe- riod of exile, had relations with Tehran. I mean, the group Skiri Mr. Delahunt. Right. Mr. Rodman [continuing]. Was one of our leading allies Mr. Delahunt. But I am asking Mr. Rodman [continuing]. And had headquarters in Tehran. Mr. Delahunt. Right. Mr. Rodman. He had contacts with Iran, certainly. Mr. Delahunt. Right. In fact, he supported Muqtada al-Sadr on occasion, didn't he? Mr. Jeffrey. He is in contact with al-Sadr. I will leave it to Jim to describe the current politics. Mr. Delahunt. Well, I am interested in a little bit of context here. In fact, it is my memory that he participated in a sit down strike, if you will, or a protest with the purpose of discouraging the United States to pursue Muqtada al-Sadr. Is that correct, Ambas- sador? Mr. Rodman. He has had contact with Muqtada al-Sadr. Mr. Delahunt. Did he participate in—if you know? Mr. ROdmAn. During my period there, he did not, to the best of my knowledge, but I wasn't there during the first outbreak of fight- ing between the coalition in April of Mr. Delahunt. But are you aware that he lived in Tehran prior to the invasion? Mr. Rodman. I am aware that he has traveled to Tehran. I am aware that he lives in various places.