IRAQ: Millions Said Going to Waste

BAGHDAD - Iraqi officials have crippled scores of water, sewage and electrical plants refurbished with U.S. funds by failing to maintain and operate them properly, wasting millions of American taxpayer dollars in the process, according to interviews and documents.

Hardest hit has been the effort to rebuild the country's water and sewage systems, a multibillion-dollar task considered among the most crucial components of the effort to improve daily life for Iraqis. Of more than 40 such plants run by the Iraqis, not one is being operated properly, according to Bechtel Group Inc., the contractor at work on the project. The power grid faces similar problems. U.S. officials said the Iraqis' inability to properly operate overhauled electrical plants contributed to widespread power shortages this winter. None of the 19 electrical facilities that has undergone U.S.-funded repair work is being run correctly, a senior American advisor said.

An internal memo by coalition officials in Iraq obtained by The Times says that throughout the country, renovated plants "deteriorate quickly to an alarming state of disrepair and inoperability."

"There is no reason to believe that these initial experiences will not be repeated for the other water and sanitation projects currently underway throughout Iraq," the memo said. "This is the antithesis of our base strategy and a waste not only of taxpayer funds, but it deprives the most needy of safe drinking water and of streets free from raw sewerage."

Iraqis are paying the price. Schoolchildren have to step over rancid brown puddles on their way to classrooms. Families swim in, fish and get their drinking water from the polluted Tigris and Euphrates rivers, leading to high rates of child mortality and water-borne illnesses. People jury-rig pumps in their homes to increase water flow - poisoning the water further by sucking sewage through cracks in the lines.

U.S. officials blame insufficient training, logistical problems and an indifferent work ethic learned under the regime of Saddam Hussein. Iraqis say the Americans excluded them from the early stages of the projects and have not provided adequate funds for upkeep.

The failures have left U.S. and Iraqi officials contemplating a disheartening scenario: After expending billions of dollars and tremendous effort, some of the reconstruction effort might literally go to waste. One official involved in reconstruction estimated that "hundreds of millions" had been squandered because of improper operation and maintenance of U.S.-funded projects.

It is the result, some U.S. officials said, of a misguided effort that has put more focus on dirt-turning than developing the skills Iraqis need to operate and maintain the expensive equipment that is being installed.

A State Department report to Congress on Thursday acknowledged the problem and proposed shifting $607 million to pay for additional operation and maintenance programs to protect U.S. investment in the projects.

"This has been my biggest problem and concern in Iraq," said Mark Oviatt, who oversees water projects for the U.S. Agency for International Development, America's primary overseas development arm. "Americans are investing hundreds of millions in Iraq. The capacity is not there to maintain it."

The problem is complex, touching on issues of sovereignty and the overall U.S. effort to enable Iraqis to run their own government, armed forces and infrastructure.

The U.S. has required the corporations contracted to carry out the reconstruction to train Iraqis to operate the new power and water plants. Most of those corporations are American.

Once facilities are handed over to the Iraqis, however, U.S. officials say they no longer exert control. If the Iraqis run the projects badly, the U.S. can offer advice, but it does not intervene.

"This is their country. This is their water-treatment plant," said Bill Taylor, head of the reconstruction effort for the U.S. Embassy in Iraq. "They need to take responsibility. We're not going to be responsible for it. If they run it into the ground, we'll be disappointed. But this is their country."

U.S. officials say they have often been frustrated in their attempts to establish operation and maintenance practices that are standard elsewhere.

There has been little emphasis on maintenance. Under Hussein, this was partly because of patronage: Many people held their jobs because of connections to the regime, not because of their expertise, and didn't have to worry about being held accountable. What little upkeep that did take place was under threat of harsh punishment - a worry that vanished with the fall of Hussein's regime.

The problem was exacerbated by more than a decade of United Nations and U.S. sanctions that resulted in severe shortages of parts. It was a daily struggle simply to keep plants operating. And many Iraqi engineers fled the country, creating a "brain drain."

Today, longtime staffers accustomed to getting paid whether they work or not often don't show up. Intimidation by insurgents means high staff turnover. And power struggles between central government and regional officials result in disputes over funding and salary payments.

"People are afraid to make decisions," said Aidan Goldsmith, a USAID consultant who is helping train Iraqis in government affairs. "It's top-down."

Iraqi officials acknowledge the problems. But for them, it's a question of money.

The Ministry of Public Works estimates that it would cost as much as $10 billion to provide clean water to most Iraqis. Facing rising security costs, the U.S. has slashed the budget for water projects from $4.3 billion to less than $2.3 billion - with further cuts planned.

The ministries say they simply do not have enough money to maintain their current dilapidated systems, much less operate new ones.

"The main problem we suffer is our budget. There's simply not enough for our needs," said Mahmoud Ali Ahmed, the head of Iraq's water distribution system. "The money does not exist for the maintenance and rehabilitation of existing projects."

But the Iraqis also attacked the failure of the U.S. to work with them in rebuilding the nation's infrastructure, especially in the early days of the reconstruction effort.

They said the U.S. should have allowed the Iraqis more control over what projects were built and how money was spent.

Baghdad Mayor Alaa Tamimi said the U.S. should have channeled money through the Iraqi government, allowing them control over the selection of the scope, equipment and locations for new projects.

U.S. officials "made a lot of decisions themselves, and the decisions were wrong," said Tamimi, an engineer who returned to Iraq after years of exile to help rebuild the country. "This is our country. It's our city. They didn't accept that."

After nearly two years and hundreds of millions of dollars' worth of repairs to rebuild Iraq's crumbling power plants, electricity production remains below prewar levels, according to the latest State Department figures.

John "Dick" Dumford, a consultant who oversees the electrical sector for USAID, said that production, depressed by fuel shortages, had been worsened by the maintenance problems.

He said Iraq's gas and thermal generators, if properly maintained and operated, could produce about 8,000 megawatts a day - enough to cover demand. Instead, they are only producing about 3,000 megawatts a day. As a result, Iraqis still endure daily blackouts.

"Operations and maintenance is a big concern for everybody here," Dumford said. "We do not want [the electrical plants] to go south on us as soon as we walk away. How we do that is a concern we all have."

The Kerkh sewage treatment plant is a case study in waste.

Located in southern Baghdad, the sprawling plant is hemmed in by dusty neighborhoods only half a mile from the Tigris River. One of three defunct sewage facilities in the city, it had long been shuttered. The waste of the city's 5 million residents was being shunted directly into the Tigris. Cleaning up Kerkh would be a first step to cleaning up the polluted river.

After dedicating nearly $20 million to refurbish the plant, the U.S. government turned over the keys to the Iraqis last year. Within months, the operators had run the plant into the ground amid allegations of waste, extortion and incompetence, said U.S. and Iraqi officials and Bechtel, the lead contractor on the project.

Bechtel, USAID's primary contractor, arrived on the scene at Kerkh in September 2003, about five months after Hussein's fall. The company's first instinct was to raze the plant and start from scratch. The facility was four decades old and near the end of its life. Its settling tanks were filled with sewage. The plant's operators were showing up only four hours a day.

But with funds limited, USAID directed the San Francisco-based engineering giant to rebuild one of three sewage treatment systems at the plant with $7.5 million in U.S. funds. The two remaining systems were to be renovated later under the auspices of another U.S. agency, the Iraq Project and Contracting Office, with $12.4 million in Iraqi funds. The office manages a portion of the funds appropriated by the U.S. Congress to support the reconstruction of Iraqi infrastructure.

Bechtel spent six months cleaning out the sludge. Then it rebuilt the system and began training the plant's engineers and day laborers on how to work the upgraded facility.

On June 19, 2004, USAID formally turned over control of the first treatment stream, capable of processing more than 18 million gallons of waste a day. It was the first time in years that at least some of Baghdad's sewage wouldn't pollute the Tigris, Iraq's primary waterway.

Jack Hume, who oversees Bechtel's water projects, returned a week later. The plant operators that Bechtel had trained reverted to their prewar routines. Sewage and sludge were building up throughout the facility.

By November, the plant "went septic" - it stopped functioning.

"When I went back out to that plant in November, what I saw was the identical plant that I saw in September 2003," Hume said. "It had reverted back to the same conditions. It was very disappointing."

Despite the problems, work continued on the other two sewage streams. But violence, extortion attempts and threats worsened during the U.S. attack on the insurgent stronghold of Fallouja in November. The threats prompted Bechtel to withdraw its workforce for nearly six weeks. The U.S. military and Iraqi security forces were called in to hunt down the alleged extortionists.

Work didn't resume until February. Even if it is completed, Hume says he has "very little confidence" the Iraqis will be able to operate the plant.

Bechtel has so far turned over 20 water treatment plants and 24 sewage treatment plants to the Iraqis for operation. None of them is running properly. Oviatt said that the water plants were "working after a fashion" but that most of the sewage plants were not treating waste.

The facilities are said to be not especially difficult to operate. Bechtel produced placards with pictures to explain proper procedures at every stage of the process.

"We literally walked them from one end of the plant to the other showing them how to operate this valve, this gate, this pump or screw, all the way through the work process," said Hume, the Bechtel water manager.

"Without exception, they have not been able to staff sufficiently to properly operate the plants," he said.

USAID officials hope they can learn from past mistakes. Oviatt has proposed a new program to encourage extended training even after plants are turned over. Congress must approve a USAID request for an additional $25 million, which is intended to train a cadre of expert Iraqi operators to run the refurbished facilities. The pilot program will guarantee follow-through training only in some plants, however, and only for one year.

In the electricity sector, Iraqi engineers are being trained outside the country to create a "Tiger Team" of experts who can return and teach techniques and leadership to other Iraqis. But the program received only a third of the funds requested, leading to fears that it would not cover all training needs.

The reconstruction process has "not been a waste of money so much as an expensive lesson learned for all parties involved," Oviatt said.

Still, the troubles ahead were clear as Oviatt made a final inspection recently before turning over a water plant in the northern city of Kirkuk. The sprawling plant is surrounded by dirt fields. Goats and donkeys press against the cyclone fence surrounding it.

USAID spent $4.1 million to overhaul the dilapidated plant, which was producing below capacity after years of neglect. But even on the final walk-through on a chilly day in February, Oviatt and the Bechtel engineers found problems.

The Iraqi operators weren't adding chlorine to one part of the treatment process to improve efficiency. Although it had snowed, they hadn't put antifreeze in two backup generators. A basement room was covered with a layer of dirt after Iraqis had failed to clean up a spill of muddy water. A mess of burned cables lay in another part of the plant, the result of a small fire. No workers were wearing safety goggles or boots, even though Bechtel had delivered several cases of them.

The overhaul had restored the plant's capability to 95 million gallons of water per day. But the local water director, Abdulkader Muhammad Ameen, wasn't sure how long it would be able to produce that amount of water.

"Our big problem is to learn and to do maintenance," Ameen said. "We don't want to do it once or twice. We want to do it continuously."

"I don't have a lot of money left," Oviatt said.

At the end of the walk-through, Oviatt officially turned over the plant to the Iraqis in a brief ceremony. He shook hands with Ameen, who thanked America for its contribution.

Then Oviatt and an entourage of security contractors piled into a bulletproof sport utility vehicle.

"They have accepted and acknowledged that they are completely responsible," Oviatt said as his security detail raced away from the plant for the last time. "It's their baby now."

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