WASHINGTON - The United States has still only spent a small portion of the $18.4 billion (9.8 billion pounds) it set aside for rebuilding Iraq and is being forced to reallocate funding from some projects because of the poor security situation, a new government report shows.
According to a copy of the Bush administration's latest quarterly update to Congress on Iraq obtained by Reuters on Thursday, as of December 29 only $2.2 billion of the funds had actually been spent.
"Insurgency and terrorism remain the most significant challenges to the reconstruction of Iraq," the report said.
"Intimidation of local workers has delayed projects, while the unsecure environment has driven away critically needed foreign technicians in essential services."
As a result, costs for private security has soared, adding to overall rebuilding costs.
The report comes as the Bush Administration prepares to ask Congress for an emergency spending package to pay for military operations in Iraq and Afghanistan seen totalling $80 billion to $100 billion. Extra money for police training, which falls under reconstruction, is expected to be part of that request.
Administration officials say that request is likely to be submitted in February or March, somewhat later than some had expected.
The amount of money spent is only a small increase from the $1.2 billion in the previous quarterly report, dated September 22. However, the portion of the money promised to companies for projects has risen to $10.5 billion from $7.1 billion in the prior report.
The latest report said the U.S. Embassy in Baghdad planned to divert $457 million from its reconstruction funding for high-impact projects in the electricity sector to essential programs key post battle cities.
Hampered by security problems in many areas and mindful of the need to show impatient Iraqis that progress is being made to rebuild their country, the United States has been shifting around funding for projects and changing its strategies.
"The objective of this reprogramming is to gain support of the local population by complementing the efforts of the Coalition Forces and Iraqi Security Forces as they seek to stabilize the operating environment," the report said.
The document said it would shift $211 million from longer-range transmission projects to cover more immediate needs such as spare parts, repair, maintenance programs and turbine upgrades.
In addition it would use $246 million for "immediate and visible essential services" such as potable water in four cities -- Falluja, Najaf, Samara and Sadr City. The report said $170 million of this amount was subject to 15-day congressional notification which was sent to Congress on December 27.