LAT: Costs Whittle Funds to Iraqis

[RamboLiberal]

http://www.latimes.com/news/nationworld/iraq/la-fg-rebuild26sep26,1,1952690,print.story?coll=la-home-headlines

Less than half of the aid in the Bush administration's reconstruction package for Iraq is being spent in ways that will benefit Iraqis, U.S. government officials and independent experts said.

Nearly a year after Congress set aside $18.4 billion for the rebuilding, costs related to the insurgency in Iraq -- such as security services, insurance and property losses -- are consuming an increasing share of the money, analysts said. Another large chunk of the aid -- contractors' profits and American and other foreign workers' salaries -- winds up outside Iraq and doesn't help the Iraqi economy, they said.

U.S. officials, pointing to "unusually difficult" conditions in Iraq, acknowledged last week that security and other overhead in Iraq were a large expense. Some government analysts said those costs might eat up half or more of the rebuilding aid. But private analysts estimated that the "Iraq premium" meant that as much as 75 percent of U.S. spending in the country provided no direct benefit for Iraqis.

"The central point is this money is not reaching the Iraqis," said Frederick Barton, co-director of the reconstruction studies program at the Center for Strategic and International Studies, a Washington, D.C., think tank, and a former Clinton administration official in the U.S. Agency for International Development. "We're spending a lot of money we believe is helping people and converting Iraq to a new kind of economy. That's where I think we're kidding ourselves."