IRAQ: ASSESSMENT OF PROGRESS IN ECONOMIC RECONSTRUCTION AND GOVERNMENTAL CAPACITY

[Senate Prints 109-40]
[From the U.S. Government Publishing Office]

109th Congress S. Prt.
COMMITTEE PRINT
1st Session 109-40
_______________________________________________________________________

IRAQ: ASSESSMENT OF PROGRESS
IN ECONOMIC RECONSTRUCTION AND
GOVERNMENTAL CAPACITY

__________

STAFF TRIP REPORT

TO THE

COMMITTEE ON FOREIGN RELATIONS

UNITED STATES SENATE

One Hundred Ninth Congress

First Session

December 2005

U.S. GOVERNMENT PRINTING OFFICE
24-804 WASHINGTON : 2005
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COMMITTEE ON FOREIGN RELATIONS

RICHARD G. LUGAR, Indiana, Chairman

CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut
NORM COLEMAN, Minnesota JOHN F. KERRY, Massachusetts
GEORGE V. VOINOVICH, Ohio RUSSELL D. FEINGOLD, Wisconsin
LAMAR ALEXANDER, Tennessee BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire BILL NELSON, Florida
LISA MURKOWSKI, Alaska BARACK OBAMA, Illinois
MEL MARTINEZ, Florida
Kenneth A. Myers, Jr., Staff Director
Antony J. Blinken, Democratic Staff Director

(ii)
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C O N T E N T S

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Page
Letter of Transmittal............................................ v

Summary/Overview................................................. 1

The Economy...................................................... 3

Capacity of Iraqi Institutions and the ``New'' Strategic Plan.... 9

The New Embassy Compound......................................... 16

Appendixes

Appendix I. Embassy Staffing Summary............................. 23

Appendix II. Meetings and Interviews............................. 26

(iii)
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LETTER OF TRANSMITTAL

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Dear Colleague:

The committee recently sent Mr. Patrick Garvey of the
professional staff to Baghdad to assess progress in the U.S.
mission to stabilize Iraq.
We are pleased to share with you his trip report, which we
believe provides significant insight into several areas--
particularly economic reconstruction and the capacity of Iraqi
governing institutions--that will be key to a stable and
democratic Iraq. The report pays significant attention to the
U.S. strategy to improve Iraqi institutional capacity and
engender policy reform that often receive less attention in the
press, providing insight into the successes we have achieved
and the challenges that lay ahead.
The report also provides a number of recommendations that
may be helpful as the Committee on Foreign Relations continues
its oversight of Iraq and the Department of State whose ability
to manage complex stabilization and reconstruction missions is
so critical.
We look forward to continuing to work with you on these
issues and welcome any comments you may have on this report.
Sincerely,

Richard G. Lugar,
Chairman

(v)

IRAQ: ASSESSMENT OF PROGRESS
IN ECONOMIC RECONSTRUCTION AND
GOVERNMENTAL CAPACITY

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From November 4-12, 2005, a member of the professional
staff from the United States Senate Committee on Foreign
Relations (SFRC) traveled to Baghdad, Iraq. At the request of
the Chairman, the purpose of the trip was to examine two
issues:

1. Reconstruction progress in the area of economic
development.

2. Capacity of Iraqi ministries and Iraqi governing
institutions, including those at the provincial level,
to function independently of U.S. assistance.

These two pillars in the reconstruction effort were chosen
because of their importance to the long-term stability of the
country, the relative lack of media attention they receive, and
their relevance to the oversight responsibilities of the
committee. This report also explores other areas of concern to
the SFRC, specifically:

The ``New'' Joint Strategic Plan, which includes
Provincial Reconstruction Teams.

Construction of the new embassy complex, as well as
staffing and security issues.

The Rule of Law program.

Staff visited with lead Embassy officials, Iraq
Reconstruction Management Office (IRMO) leadership, the
Director of the Gulf Regional Division of the Army Corps of
Engineers, Project and Contracting Office members, the USAID
Mission Director, two members of the Iraqi National Assembly,
and numerous embassy personnel (see Appendix II for complete
list).
Staff's movement was restricted to the International Zone
for security reasons and Ambassador Khalilzad and many senior
Iraqi government officials were traveling outside the country.

Summary/Overview

Staff found that U.S. and coalition reconstruction
projects, investments and other program and policy reforms
implemented since 2003 appear to be having a stabilizing effect
on the economy. U.S. officials agreed with recent IMF Executive
Board comments citing Iraq authorities for ``having established
and maintained a degree of macroeconomic stability under
extremely difficult circumstances, and for having initiated
structural reforms.'' \1\ While reliable statistical
measurements are hard to come by, embassy economic advisors
cite soaring demand for every type of good and service;
improvements in salaries--especially for government workers
that are up ten or twenty times pre-war levels; stabilized oil
exports; increasingly reliable electricity generation; and
Iraqi government initiatives to reduce subsidies and re-join
the IMF. The country's economy, while still vulnerable to major
disruptions, has progressed despite the ongoing insurgency and
high demand-driven inflation (measured at 42% from August 2004-
August 2005).
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\1\ IMF Survey, Vol. 24, No. 16, August 29, 2005, p. 251.
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Iraq's legacy as a controlled economy that further suffered
the impact of internationally-imposed sanctions and isolation
from the world financial community looms large in some
respects, from a lack of natural market mechanisms to a
business community that is unaccustomed to having the freedom
to develop their own business solutions. Like the Russians of
fifteen years ago when the Communist political economic system
collapsed, Iraqis enjoy their new civic and religious freedoms,
but some are finding it hard to give up the financial benefits
of a state-controlled system.
U.S. policy and governance assistance to date was
characterized by one official as ``doing and directing.'' For
example, Iraqi participation in determining spending priorities
for the Iraq Relief and Reconstruction Fund (IRRF) and even the
Development Fund for Iraq (DFI) spending has been minimal. This
practice--by which we make the decisions and then get the
Iraqis to accept them (described as getting ``Iraqi buy-in'')
has muted the Iraqi voice and stifled capacity-building.
Officials interviewed suggest that simply giving grants and
funding projects outright (hand-outs) should not continue as
the practice can perpetuate governmental mismanagement and
laziness. More than one official suggested we could help Iraq
more by requiring matching funds or funding small business
loans rather than making grants. Continuing to state the
obvious: that U.S. funding is finite and designed to jump-start
the economy is also a useful reminder. As one senior advisor
stated, ``scarcity sharpens the mind.''
Among State and DoD officials leading the Iraq mission,
past frictions seem to have been overcome and State and DoD
operate and coordinate more closely as a team. Ambassador
Khalilzad and General Casey are in the final stages of a joint
strategic plan with numerous metrics and a red-yellow-green
indicator system to mark progress toward milestones. Officials
suggest the plan will be finalized by mid-December, but many
details have already been worked out and discussed.
Nevertheless, resources to implement the plan in 2006 and
beyond remain untallied and sources have yet to be identified.
Although the military and civilian cultures do not always
understand each other, U.S. government civilians, contractors
and military officials have formed a team in Iraq and respect
one another's expertise. On the one hand you have action-
oriented, results-driven individuals with a penchant for Power
Point; on the other hand you have thoughtful, analytical
consensus-builders who are used to writing diplomatic cables
and offering policy options. Style and personality count
significantly in such an environment, both at the operational
level and in management. Ambassador Khalilzad and his Charge
d'Affairs Ambassador Satterfield, paired with General Casey and
General Vines are a strong and capable leadership team, but
agreement at the top does not always translate at the
operational level, where Army veterans and young, inexperienced
Foreign Service Officers must execute policies.
Mistakes of the past two years are being dealt with
directly by Ambassador Khalilzad and his team. There is open
recognition that disbanding the Iraqi Army and deep level de-
Ba'athification were mistakes. This has gained the Ambassador
greater credibility and respect among Iraqis and U.S. personnel
alike. He not only speaks about a long-term U.S. vision for
Iraq, but he has also demonstrated a personal long-term
commitment to Iraq, which has further engendered trust among
Iraqis. When the Iraqi people elect and install a ``permanent''
government in the coming months, embassy leadership is
optimistic that government will be able to provide the type of
consistent leadership necessary to build lasting, capable
institutions and a stable, prosperous and democratic Iraq.
The joint strategic plan mentioned above, contains a one,
two and four year development strategy. It ties into the clear-
hold-build strategy that Secretary of State Rice set forth in
testimony to the SFRC on October 19, 2005 and will require
close collaboration of all the various civilian and military
elements of the coalition, including: the Multi-National Force
Iraq (MNFI), USAID, NGO's and contractors.
The ability to execute the plan is not assured. To be
successful, it will require (1) firm commitment on the part of
the Iraqis; (2) top-notch US civilian personnel; (3) properly-
managed and focused resources; and (4) the dedicated
constructive involvement of the international community and all
regional actors.

The Economy

obstacles to progress

Lack of security and a reliable mercantile infrastructure--
according to embassy analysts and Iraqi business leaders
alike--are preventing the economy from taking off. Mercantile
infrastructure includes: power and communications, reliable
transportation (move goods to/from market); and a free market
structure to include laws, subsidy elimination and
privatization of state-owned enterprises. Subsidy elimination
will also help control aggregate demand, which continues to
rise unchecked.
The U.S. Treasury Attache, who notably has held that
position for two years, suggested that Minister of Finance Ali
Allawi is taking on many of these issues and has demonstrated
the necessary acumen, asking for assistance and taking
initiatives without waiting for direction. The Minister is
expected to continue in the job after the new government is in
place, but even if he does not, many of the policy reforms are
underway and should proceed apace, regardless of who is in that
job.
Poverty, as noted in the testimony of Dr. Keith Crane of
the RAND Corporation appearing before the SFRC on 19 July 2005,
is a continuing challenge. Embassy officials suggest that an
estimated 25% of the population lives beneath the Iraq-defined
poverty level of $1 per day. Saddam dealt with it through a
complex welfare system that provided free food and jobs that
may not have required work.

financial sector and private investment

Officials explained that the financial sector remains
constrained. An estimated 90% of all assets are in the two
state-owned banks, which have ``deeply negative net worth''
according to detailed assessments. They are not inter-
connected. There's no electronic funds transfer capacity.
Salaries are paid in cash (although a direct deposit system for
government workers will soon come online). Private banks are
more like family-owned investment companies. There is no
foreign investment in the Stock Exchange. There is no demand
for 30-year paper, which could fund long-term liabilities such
as pensions or large capital investments. There is no credit,
which could enable short term loans.
The Senior Consultant for Private Sector Development, who
has been in that position for 21 months, reported that a
lending program she has overseen, providing loans of up to
$25,000 through Iraqi-trained loan officers working in a dozen
neighborhood offices to provide seed money for small or start
up local business, has made more than 16,000 loans disbursing
more than $31 million with no write-offs in two years. Women
make up 9% of the borrowing pool. A program audit is
forthcoming.
She explained that it has been her experience that there is
tremendous pent-up demand for credit to rebuild and begin
entrepreneurial endeavors. It is her view that Iraqis respect
the loan regimen and that she could easily expand the program
to enable even larger businesses to get on their feet. She
expressed her frustration with other programs (i.e. USAID) that
provide public sector grants rather than private sector loans.
She said her programs were looking for another $70 million, and
demurred when prompted for further thoughts on the scalability
of the programs to accomplish large-scale reconstruction.

Recommendation 1--SFRC should formally request a
proposal and feasibility commentary on how aid could be
structured to capitalize on the commercial lending
concepts the Private Sector Development office has
implemented. The question is to what extent these
private sector solutions can be expanded effectively in
Iraq.

IMF STANDBY ARRANGEMENTS (SBA)

Iraq has been negotiating with the IMF for standby
arrangements (SBA), which are the second step in Iraq's re-
entry into the IMF and the world economy. The first was the
Emergency Post-conflict Agreement (EPCA) entered into in
November 2004, which laid out policy and performance goals to
develop fiscal and monetary data; financial management and
information systems; a national payments system; a national
budget process; a plan to restructure state banks; and a
subsidies reform plan. The EPCA allowed small IMF borrowings
and led to the first tranche (30%) of Paris Club debt
reductions.
The SBA will govern the Iraq-IMF relationship for the long
term. It requires Iraq to significantly reduce subsidies. On 18
December, fuel prices for premium gas at the pump will increase
from 20-50 ID/liter (about 5 to 13), and according to Embassy
Baghdad Economic advisors, will step up in 2006 to reach market
prices (700 ID) for premium by the end of the year. SBA will
allow larger IMF borrowings (< $1.5 billion) and the 2nd and
3rd tranches of Paris Club debt reduction on the agreed upon
schedule of 20% in January 2006, and the final 20% in January
2007. Of note, black market fuel prices were already at market
level.
Embassy Baghdad's Economic section has prepared several
cables on subsidies and the IMF agreements, which SFRC Staff
has requested be made available to Members.

IRAQ'S OIL SECTOR

Oil is the lifeblood of Iraq's economy. More than 95% of
government revenue is derived from oil exports. Oil will
generate $24 billion in export revenue this year, an estimated
$27 billion in 2006 and $40 billion in 2007.\2\ Iraq is the
world's second largest oil reserve, with large upside potential
from future exploration. The industry, however, remains
crippled after decades of sanctions and Saddam's mismanagement.
Current production hovers around 2.3 mbpd (million barrels per
day), about a half million below existing feasible capacity
because of insurgent attacks in the North and ``field decline''
in the South.\3\ The U.S. government is investing $2.4 billion
to restore production capacity to meet or exceed pre-war
capacity. The goal is 3.0 mbpd, and work should be completed in
2006. Because of steady attacks, money originally allocated for
this sector is now limited to repairing existing
infrastructure, helping to sustain operations and set the stage
for revenue growth. Despite lagging production, the world
market oil price increases have boosted revenues.
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\2\ Numbers provided by IRMO. Oil revenues based on $9 less than
West Texas Intermediate Reference prices.
\3\ Post war production levels were about 0.6 mbpd and pre-war
levels were approx. 2.6 mbpd.
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Fuel crises exist in the country on a daily basis because
refineries produce only 55% of fuel demand, requiring Iraq to
import the rest at market rates. The Economic section has
prepared a cable on this subject and staff will provide that
analysis to Members when it is made available.
The Project & Contracting Office (PCO) stated that their
number one priority is to complete the repair on the pipeline
at Al-Fathah crossing. This bridge crossing in the pipeline
leading to Turkey has been previously repaired, but has been
sabotaged. The Corps of Engineers is now proceeding to bury the
pipeline under the river at that point. This repair will enable
exports to Turkey once again and improve progress toward a 3.0
mbpd production capacity.
U.S. efforts have also improved efficiencies in the Oil-
Natural Gas sector. Iraq continues to flare more than 1,000
million cubic feet per day (mcfd) of natural gas, which could
be used to fuel gas turbine electric generators that currently
burn less efficient liquid fuels. Experts suggest that perhaps
as much as 100% of Iraq's domestic power could be generated if
the natural gas that is now being flared was captured and
distributed.
Smuggling, corruption and diverted deliveries persist, as
noted in recent SFRC hearings. See below for more on the
corruption issue.

Assessment: In order not to look as if we had designs
on Iraqi oil, the United States has foregone meaningful
investment in the one area that would have made the
biggest difference, namely Iraq's oil-exporting
infrastructure. Coupled with economic and subsidy
reforms, the Iraqis need to repair the pipeline,
install storage tanks at the ports and borders so that
a pipeline interruption doesn't mean export
interruption, build refineries, and secure the whole
system. Capacity in the Oil Ministry is assessed as
``good.'' The ministry managed their budget well this
year, unfortunately to the point that the nearly $3
billion allocated for capital improvements was not
programmed. This is symbolic of the challenges many
ministries face in overcoming the command-directed
style of Saddam. Deputies still insist that every
action be authorized in writing, and there is little
delegation of authority.

ELECTRICITY

Since mid-2003, the SFRC has followed closely the
electricity sector as our aid workers, the US military,
contractors and the Iraqis have struggled to improve this
crucial sector that the Saddam regime left in a fragile and
decrepit state. Our three senior advisors on electricity report
marked progress against the unchecked tide of demand for power
from an influx of electrical good--refrigerators, air
conditioners, washers, dryers, TV's and microwaves--and
industrial demands such as oil refining.\4\ Electricity remains
a virtually free commodity, and most Iraqis make little effort
to conserve. There is metering, but no collection, which is
further complicated by the lack of a postal service. Without a
check on demand, Iraq will not be able to meet 100% of its
power needs (or supply more than 16 hours per day of power) for
the foreseeable future. Technology is available to govern
demand through current limiters, whereby a home would only be
able to use a certain kilo-wattage per day. Bearing Point is
conducting a feasibility study of this practice.
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\4\ Of note, USAID's chief electricity advisor has been in Iraq for
more than 30 months, and the two advisors from the U.S. Department of
Energy have been in country for more than 21 months each.
---------------------------------------------------------------------------
Demand this winter is expected to reach a daily peak of
9000MW, while current peak generation is 4750MW. IRMO advisors
stated that even now, further generation would not improve the
situation as transmission and distribution capacity is weak.
Transmission projects underway will improve Iraq's ability to
import power from Iran, Syria and Turkey, and make the grid
more resilient to sabotage by creating redundant line routes
and additional substations.\5\
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\5\ Figures provided by IRMO.
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By the end of 2006, investments managed by the U.S. of
$7.74 billion in the power sector will have brought Iraq's
power generation capacity to 6000MW while improving operations
and maintenance procedures, increasing transmission capacity
and continuing distribution improvements. Approximately $2.9
billion worth of projects are underway, with another $955
million funded and awaiting award.\6\
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\6\ $7.74B total includes DFI ($1.8B), Donor ($0.6B), IRRF I
($0.94B), IRRF II ($4.3B) and CERP ($0.1B); source IRMO. UN and World
Bank assessments from October 2003 suggest a total of $20 billion is
needed to reach national targets of 20% over demand.
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The capacity of the Ministry of Electricity is improving.
Policies have improved load-sharing and reduced brownouts, but
the ministry awaits cabinet or assembly-level decisions on
subsidy and rate reform. The ministry understands the need to
invest in operational sustainment, and build redundancy into
the system, but have fought US advice to run their grid at
normal frequency. Iraqis run their grid under frequency--at
49Hz--which the ministry believes saves power, but U.S.
engineers say is very damaging. The Ministry of Oil has begun
to cooperate with the MoE to invest in generation requirements,
which will allow the MoO to pump and refine more oil and take
some of the pressure off of the budget in the long term.

2006 IRAQI BUDGET

Iraq Budget Outlook in Summary\1\
($ billions)
----------------------------------------------------------------------------------------------------------------
FY 06(-) FY 2005
2005 Plan 2006 Draft 05 Actual\2\
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Revenue 19.3 28.2 8.9 23.4
Oil 17.1 27.2 10.1 22.2
Other 2.2 1.1 -1.2 2.2
Expenditures 24.0 33.2 9.2 23.0
Surplus/Deficit -4.7 -5.0 -0.3 1.4

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\1\From briefing documents provided by Treasury Attache/IRMO-FFA.
\2\Assumes Oct.-Nov. oil revenues at the 9 month mean, oil product arrears, underpending elsewhere.

The 2006 Budget draft forecasts a $5 billion deficit.
Embassy briefers suggested this gap could easily be overcome by
updated revenue figures or expenditures that will be determined
once the new government is in place and oil and revenue figures
are firmed up. The Budget is summarized in the table. The
nearby pie chart depicts expenditures by category for 2006.
Note that 21% of the budget is subsidies, and Iraq continues to
pay 5% of oil revenues into the UN compensation fund. The UN
Compensation Commission is a subsidiary organ of the UN
Security Council. It was established by the Council in 1991 to
process claims and pay compensation for losses resulting from
Iraq's invasion and occupation of Kuwait. Compensation is
payable to successful claimants from a special fund that
receives a percentage of the proceeds from sales of Iraqi oil.
The Security Council established Iraq's legal responsibility
for such losses in resolution 687 of 3 April 1991.\7\
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\7\ Several UN Security Council Resolutions have amended the
original terms of UNSCR 687, but the commission continues its work.

2006 Expenditures

CORRUPTION

While U.S. efforts have helped put in place several
institutions to fight corruption and have worked to train and
empower Inspectors General, corruption has not abated and we
should not expect that it will for quite some time. As one
official pointed out, ``it is not only endemic, it is
systemic.'' The Treasury Attache offered that one cannot just
fight corruption by itself. He said that the largest source of
corruption is ``simply the lack of proper modern administration
and controls.'' Iraq continues to be a cash economy, and there
are no checks and cross-checks in the system. They are very
good at record-keeping and receipts, but, ``you can't have the
guy that wrote the contract paying it too.'' \8\
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\8\ Interview with Treasury Attache, 9 Nov. 2005.
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Reformed systems are coming online. USAID has developed a
government-wide strategy to support the automation of planning,
budgeting and reporting processes across ministries, including
the creation of a Financial Management Information System
(FMIS), an accounting and reporting system for all Iraqi
ministries. Montran, a payment solutions company, is working
with Treasury and OTA to install a direct deposit system for
government workers. These and other systems, however, must
ultimately be paid for by Iraqi banks and the government of
Iraq; a fact the Ministry of Finance understands.
Embassy Economic Officers promised to provide the SFRC with
cables analyzing the effects of corruption.
In a Fall 2005 survey by Zogby International and the US
Center for Private Enterprise, 62% of Iraq business leaders
surveyed said corruption is a serious problem and more needs to
be done to combat it. Unfortunately, some 32% hold out little
hope for change. Thirty-eight percent of respondents estimate
that corruption adds more than 40% to their business costs and
blame corruption on a combination of weak property rights and
civil servants who extract bribes.\9\
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\9\ ``Business Leader Attitudes Toward Commercial Activity,
Employee Relations, and Government in Iraq.'' a Fall 2005 survey by
CIPE and Zogby International, p. 11.
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FOOD, AGRICULTURE & AGRIBUSINESS

In many sectors of Iraq's economy, the forces of supply and
demand do not act normally. Food is a good example. Most of the
country continues to rely on the free food provided by the
government through the Public Distribution System (PDS), a
legacy of the UN Oil-for-Food program now managed by the
Ministry of Trade, which no longer employs advisors from the
World Food Program (WFP) to help manage this complex system. At
an annual cost of approximately $4.5 billion, the government
buys these staples off-shore, undercutting and virtually
eliminating the domestic market for wheat, vegetable paste and
cooking oil. Despite these expenses, because of poor management
and dissipated stockpiles, most Iraqis did not receive rations
for the months of August, September and October.
USAID and IRMO advisors state that there is significant
room for development in agriculture, and the wider aspects of
agribusiness. USAID's $100 million contract for agricultural
revitalization has restored veterinary clinics, introduced
improved cereal grain varieties, repaired equipment, and
trained farmers and ministry staff. USAID has also invested
significantly in rehabilitating the Mesopotamia Marshlands. The
Marshlands and its people were the object of many an atrocity
under the Saddam regime. Food subsidy reform and further
private sector agribusiness development would have significant
sector-wide and economic impact and help cut poverty, reduce
the significant budget burden and revitalize the country's
third largest value sector and the country's largest employer.
Embassy Baghdad Economists and the WFP assess that Iraq
could easily face a food crisis in the coming months. Staff has
requested cables prepared by the Econ Section and will provide
further information and analysis when they are received.

Recommendation 2: Our policies should continue to
encourage Iraqi government officials to make the bold
moves necessary to remove the subsidies, reduce the PDS
to a means-tested entitlement for the poorest Iraqis,
and provide the commercial legal framework to stimulate
not only agriculture, but canning and other
agribusiness.

Capacity of Iraqi Institutions and
the ``New'' Strategic Plan

NATIONAL LEVEL

Whether or not Iraqi ministries and Iraqi governing
institutions, including those at the provincial level, are
capable of functioning independently of U.S. assistance depends
upon a combination of stability, planning, leadership,
resources and dedicated personnel at all levels of the
particular organization.
Stability has not been helped by the various iterations of
Iraqi governments in the past two years, and by changes in U.S.
leadership and emphasis. Charge d'Affairs Satterfield expressed
the expectation that the election and installation of a new
``permanent'' government will provide leadership committed to
the serious tasks at hand. (More than one U.S. official
expressed their frustration with the interim governments'
inability to focus on basic governing necessities.) Ambassador
Satterfield emphasized the importance of the next year becoming
a collective effort led by the Iraqis with strong participation
by the Coalition, regional nations and the international
community. He further highlighted the outreach the Iraqis are
leading to generate regional and international support, such as
the Arab League organized conference held 19-21 November in
Cairo.
Although it is unfair to compare a coalition government
operating in a parliamentary system to U.S. politics, as yet,
no one Iraqi leader has emerged with a vision for Iraq that has
captured the imagination or provided a rallying point for the
people. This will be a challenge for whoever is elected in
December to lead the country for the next four years.

MINISTERIAL LEVEL CAPACITY

The right formula appears to be in place, with excellent
relations established between experienced U.S. advisors and
their respective Ministers at the Ministry of Electricity, the
Ministry of Oil, the Ministry of Finance, the Ministry of
Planning and International Cooperation and the Minister of
Municipalities and Public Works. A great deal of controversy
surrounds management and advisement at the Ministry of
Interior, which is perhaps the most critical to establishing
law and order. Recent news stories about abused prisoners in
MOI jails and the comments of Minister Bayan Jabr presage
challenges that lie ahead. The Ministry of Transportation--run
by a Sadrist who has literally thrown the American advisors out
of his office--is also struggling.
Under Saddam Hussein, the Ministry of Interior leadership
was 100% Ba'ath and the enforcer of Saddam's rule. Purged of
its senior Ba'ath party elements, the MoI faces great
challenges in building capacity to handle not only the
insurgency and law and order challenges but also the routine
business of training and discipline, providing pay and
benefits, writing regulations and managing personnel. Staff
visited the Ministry and met Assistant Deputy Minister Ayden
Qadir to discuss Elections Security, Deputy Minister Ali Ghalib
to discuss police training and policy matters, and General
Ghazi who led a tour of his National Joint Operations Center.
Staff also visited the Karida-Marium District Police Station in
the International Zone.
Deputy Minister Ayden Qadir had a solid grasp of the
mission of elections security. He described with pride, and
with nodding heads of the U.S. advisors, the progress the Iraqi
Security Forces demonstrated from January to October and looks
forward to December elections for which they have a solid plan
to maintain control with greater autonomy from U.S. forces.
Other Ministry leaders fail to grasp the basics of problem-
solving, management, programming and budgeting. The deputy
minister in charge of the Iraqi Police spent the better part of
an hour listing the problems in his forces, but when asked what
he was doing to remedy the problems, he had no answer. He did
not seem to grasp that problem-solving and policy direction was
his responsibility, not this staff member's or the U.S.
advisors.
Finally, because ministers were not appointed by the Prime
Minister, but rather by the Presidential Council, most do not
owe their allegiance and are not accountable to him, but rather
to their party. This creates management challenges that are
likely to continue in the new government.

RULE OF LAW PROGRAM.

The Rule of Law program should be operated in partnership
with the Ministries of Interior, Justice and Defense. Because
of the recent shift that placed MNF-I in the lead advisor roles
at MOI and MOD, the Rule of Law Program is now the lead
civilian program designed to build understanding and capacity
in the wider concepts of rule of law.
The embassy provided a briefing slide that summarizes the
challenges:

Where we started: A police state that ignored the
rule of law, and used police and other security forces
as instruments of oppression.

Where we are now: Relatively advanced legal
framework. Human rights--improved, but abuses persist
at unacceptable rate. Judiciary--most capable
institution in the justice system, but lacks adequate
security and productive working relations with police
and prisons.

Rule of Law program officials remain concerned about the
level of effort and commitment to these challenges. They have
$380 million in unfunded requirements for the next two years,
and hope that the international community will step up in these
areas where they have been traditionally very strong. The Rule
of Law Coordinator also expressed concern that the military and
even U.S. Department of Justice officials ``think that Rule of
Law is simply Rule of Law and Order,'' or, in other words,
arresting people and putting them away. Many other elements of
an appropriate Rule of Law program are not being resourced or
emphasized at all, she said. In a complex civil society, and
one emerging from conflict and tyranny perhaps more so, a Rule
of Law program must cut across the entire spectrum of capacity-
building, access to legal aid and information about human
rights, commercial and civil law-making, legal professional
training, etc.
SFRC staff inquired of embassy officials about the decision
to put the military in charge of advising the MoI. Training and
developing civilian police is a traditional State Department
rather than a Defense Department mission. Nevertheless, embassy
leadership defended the decision as making sense at this time
because of logistical challenges that DoD was better equipped
to handle. Staff expressed concern that DoD had neither the
interest nor the expertise to pursue overarching rule of law
issues. Embassy leadership assured staff that the Chief of
Mission maintains overall policy oversight. Nevertheless,
several embassy and State Department personnel shared their
concern over this move with staff. They worry about the long-
term stability of perhaps the most crucial ministry in the law-
and-order equation, especially once the military withdraws. One
advisor to the Ministry of Interior told staff that the ``The
MOI situation with DOS/DOD is screwed up . . .'' He said,
``There are a lot of good DOD people working on it but they
have their own faults, and now they don't have any interference
from people who can provide oversight, policy and long term
direction . . . '' He shared further his view that `` . .
. the military is developing solutions that cost a lot of
money, which dramatically change the way that the Iraqis do
things and in my opinion won't last when we leave.''
Staff also raised questions about the findings made in OIG
Report No. ISP-IQO-06-01 of October 2005 regarding the Rule of
Law program.\10\ Everyone indicated that a strategy had been
put together to address the first major finding that ``a fully
integrated approach to justice sector reform in Iraq does not
exist at the present.'' Time limitations prevented a more
extensive inquiry, so progress in addressing the serious
shortcomings found in the IG report was difficult to assess. It
is important to note, however that neither the new senior Rule
of Law coordinator nor the INL program chief have any prior
experience in Rule of Law or INL programs.
---------------------------------------------------------------------------
\10\ United States Department of State and the Broadcasting Board
of Governors Office of Inspector General, Report of Inspection, Rule-
of-Law Programs, Embassy Baghdad, Report Number ISP-IQO-06-01, October
2005.

Recommendation 3: (a) To ensure success in this area,
the Department of State must put in place experienced
INL experts whom the Iraqis will respect and seek out.
They must engage actively with the military and Iraqis
to provide long-term policy guidance. (b) International
donors must be pressed harder for contributions in this
area, not only financially, but also with experienced
trainers and programs. (c) The SFRC should follow-up
with Embassy Baghdad officials for details on the
corrective measures undertaken to address the OIG's
findings about the Rule of Law program.

PROVINCIAL LEVEL CAPACITY

According to embassy officials, the capacity of Iraqi
provincial governments, with the exception of the Kurdish
territories, has not been developed. Their legal mandate is not
clear, they lack experience and resources, and many have been
officially in position only since January 2005. Nevertheless,
their capacity is essential to the long-term success of the
Iraqi mission and the stability of the country. This is where
the Provincial Reconstruction Team plan announced 11 November
by Secretary Rice in Mosul is intended to play a strengthening
role.

THE ``NEW'' STRATEGY

USAID officials provided information regarding their
portion of the plan (see graphic). In the first year (or the
third year of the U.S. reconstruction mission) the emphasis
will continue to be on restoring essential services through
fulfilling the IRRF commitments, completing construction
projects, re-establishing social services, building governance
and stabilizing the economy. From now through 2008, efforts
will be on ``building and sustaining systems.'' The idea is to
accelerate Iraqi ownership and develop capacity at the national
level. USAID and PCO will lead the capacity-building effort at
key ministries, with a two-year focus beginning once the
permanent government is in place. The provincial and local
level plan involves Provincial and Regional Reconstruction
Teams. The third phase for 2008 and beyond suggests a more
traditional relationship among U.S. government, Iraqi
government and the international community and will seek to
``consolidate national sovereign capacity.''

PROVINCIAL/REGIONAL RECONSTRUCTION TEAMS (PRT/RRT)

One of the significant elements in the strategy is the
implementation of PRTs. The plan calls for 15 PRTs and one RRT,
which will cover the Kurdish region. The emphasis will be on
partnering with local government officials to build security,
improve governance and bring about economic development. By
recasting the Regional Embassy Offices (REO's) that have been
in place for 18 months, the first three are already formulated
in Ninewa (Mosul), Babil (Hillah) and Tamim (Kirkuk). The next
three will rollout following the December elections, and the
remaining ten will be in place by the end of Spring 2006.
Program lead for the PRTs will lie with the Chief of
Mission and Department of State, who will provide central
management via a National Coordination Team, as well as through
the PRT Leader, who will be Officer Counselor level Foreign
Service Officers from either the Department of State or USAID.
PRTs will be made up of from 97-140 personnel, broken down as
follows: 28-30 U.S. civilians, 49-85 U.S. military and 20-30
locally employed staff.

Analysis: On paper, the concept appears to be a
substantive and logical follow-through on the
reconstruction mission. Many of the lessons identified
from Afghanistan have been incorporated in this plan;
for example, the PRTs are comprised of a significant
civilian component and there is a central command
element. It is worth noting, however, that the first
three PRTs are re-cast Regional Embassy Offices that
have been in place for 18 months, and it appears that
subsequent PRTs will envelop the State Embedded Teams
or SETs that work with the Major Subordinate Commands.
It appears to be more an evolution than a change in
strategy, but without a visit to the regional offices,
further assessment was difficult. Nevertheless, other
than among those involved directly with the planning,
the Iraq PRT concept is discussed with a healthy degree
of skepticism.

Robert M. Perito of USIP has looked at the use of PRTs and
post-conflict reconstruction missions. In a recent publication
that the Staff Delegation shared with IRMO leaders who briefed
the plan, Mr. Perito draws a comparison to the Vietnam-era
CORDS program:

Much could be achieved if the military component of
the PRT was matched with a robust staff of civilian
personnel. The Civil Operations and Rural Development
Support (CORDS) program in Vietnam might provide a
model for such a program. CORDS was an integrated
civilian-military organization, but USAID was the lead
agency and its personnel were overwhelmingly civilian.
Even in the hotly contested I Corps area of Vietnam,
only 750 of 2,000 CORDS personnel were military. The
State Department assigned several hundred FSOs to serve
on CORDS Provincial and District Advisory Teams,
according to a veteran FSO who served in CORDS and in a
PRT in Afghanistan. These officers received four to six
months of Vietnamese language and area training prior
to eighteen-month to two-year assignments. CORDS
received funding for development assistance and was
provided its own transport and logistical support.
CORDS was developed when it became apparent that U.S.
military operations were alienating the rural
population they were trying to protect. \11\
---------------------------------------------------------------------------
\11\ Perito, Robert M., ``The U.S. Experience with Provincial
Reconstruction Teams in Afghanistan, Lessons Identified.'' United
States Institute of Peace Special Report 152, October 2005, p. 14.

CORDS may provide a better model for Iraq than the
Afghanistan PRT program, which has worked well in some areas,
but has struggled in others because of lack of qualified
civilian personnel, lack of central coordination and inadequate
resources.

CONCERNS WITH THE PRT PLAN

Collaboration: The PRT concept appears again to be a
large-scale U.S.-imposed solution. It was not developed
in concert with the Iraqi Interim Government,
provincial governments or coalition partners. Although
no resistance has been met, further calibration may be
needed when the New Iraqi Government takes office in
January.

Personnel: The list of more than ten ``task focused
activities'' is extensive and far-reaching. This will
require a robust complement of qualified civilian
experts. The Iraq reconstruction mission has, from the
General Garner days, been challenged to recruit and
retain qualified civilians to serve lengthy tours of
duty. There is no evidence that this challenge has
abated. Stability operations, capacity building and
reconstruction are not military missions and should not
be left to the MNF-I. There is no surge capacity in the
civilian agencies. USAID, whose expertise is essential,
has had trouble filling the seats it has in Baghdad
(see Appendix I). The Army's ready supply of Civil
Affairs Teams, which have been hard hit by serial
recalls to Kosovo, Afghanistan and Iraq, is another
potential problem.

Security/Force Protection: The Mission Regional
Security Officer demonstrated a clear understanding of
the risks involved in this plan. On one hand, the
challenge is to protect people outside the Forward
Operating Bases, where they will be living and having
offices. On the other hand, if people are protected
such that they travel around like a squad of storm
troopers, how can they interact directly, humanely and
in a culturally-sensitive manner? Extending the reach
extends the risk.

Mission Integration: The PRT design includes a Rule
of Law Coordinator. Is this piece integrated with the
P3 - Police Training Program?

Recommendation 4: The SFRC should continue to press
the Department of State and USAID for the substance of
this joint strategic and PRT plan, including how it
will be funded and how personnel will be identified to
fill positions. The SFRC should also inquire of State/
USAID and DoD about training they are providing PRTs
before they deploy.

FUNDING FOR THE JOINT STRATEGIC PLAN

Mission leadership is concerned about the lack of funding
for 2006. During the visit to Baghdad, word arrived that the
Conference on Foreign Operations Appropriations had allocated
$60 million in Economic Support Funds (ESF) for Iraq in 2006.
The President's had requested $360 million. IRMO and USAID
leaders were unanimous in their disappointment at this news.
Ambassador Khalilzad recently directed a review team to see
what money had not yet been obligated that could be fenced off
to fund some projects and seed money for the New Iraqi
Government come January 2006. Between $750 million and $1
billion has been identified for these purposes. But this figure
does not include money for the PRT strategy, USAID's programs,
IRMO initiatives (which extend until June 2007 when IRMO will
officially sunset), or embassy operations.
An IRMO deputy stated ``it would be a real shame if we were
to risk failure in this mission for a lack of a billion dollars
or two.'' It was difficult to pin down a figure backed up by
hard data, but $2 billion was mentioned by more than one
official, or as they indicated, the amount that was re-
programmed from the IRRF to pay for army and security force
training. Others compared the figure to the MNF-I expenditure
rate of about $1 billion per week or annual foreign aid figures
in the billions for Egypt and Israel, suggesting that $1 or $2
billion per year in assistance for Iraq would not seem a
unreasonable investment, recognizing the investment that has
been made thus far.

Recommendation 5: Ensuring a steady funding stream
for civilian reconstruction missions, many of which
require contract negotiations and long lead time
planning, as well as military operations is essential.
The SFRC should continue active oversight of
reconstruction funding, engage foreign officials to
make good on their pledged contributions, and encourage
the Department of State and DoD to share plans for
funding Iraq operations for 2006 and beyond.

The New Embassy Compound

The 104-acre construction site of the New Embassy Compound
is on the edge of the International Zone, on the banks of the
Tigris, west of the 14th of July bridge and approximately \1/2\
mile south of the Festival and Parade Grounds and the Unknown
Soldier Monument. The ambitious project with 21 structures is
slated to be completed in 24 months.\12\ Underway for four
months, it is on schedule and approximately 16% complete. The
Senior Project Director stated, ``We have every confidence that
we will be completed by June 2007.''
---------------------------------------------------------------------------
\12\ The 21 Structures are: the NOB (New Office Building),
containing the classified portions of the embassy and the unclassified
areas that support those functions; the NOX (New Office Annex) an
unclassified office building containing such sections as Public
Diplomacy, Consular Affairs, USAID; the IOB (Interim Office Building)
designed for future use as a school (the core and shell will be
completed now and used as office space for many of the functions now in
the Palace); the GSO Annex--offices for facilities management, break
areas and locker-room facilities for warehousemen, maint. staff, local
guard force, etc.; Staff Housing--6 apartment buildings containing 619
one-bedroom (700SF) apartments; CMR (Chief of Mission Residence); the
DCMR (Deputy Chief of Mission Residence); the MSGQ (Marine Security
Guard Quarters); CAC's (Compound Access Control buildings) two service
CAC's, a Consular CAC, two main CAC's, an emergency exit/entrance CAC;
a Recreation Building--gym, exercise room, swimming pool, locker-rooms,
the American Club, commissary, food court, barber/beauty shop; a
Warehouse; a Motorpool/Maintenance building for vehicle maintenance,
facilities management shops; the Utility Building--power generation; a
Water treatment plant--water storage, fire pump, water treatment; and a
Waste water treatment.

---------------------------------------------------------------------------
Embassy Baghdad Construction 11/06/2005

Four Tower Cranes

All excavation has been completed and more than 10,000 m\3\
of concrete have already been poured from concrete batch plants
erected on the premises. A great deal of effort has been made
to secure the site and to pre-load materials to alleviate work
stoppages due to waylaid deliveries, as materials make the
journey from outside Iraq. The third-country national workforce
of more than 900 men is housed on the premises.
The Overseas Building Office staff collaborates closely
with Diplomatic Security personnel. They have incorporated into
the design additional set-backs, additional perimeter clearance
areas, structures are reinforced to 2.5 times the standard and
they will build systems to allow 100% independence from city
utilities, including wells, electric generation and sewerage.
First Kuwaiti is the lead contractor for the project that
is budgeted at the Congressionally-appropriated level of $592
million. $483, 202,966 has been awarded to date.
The progress that has been made in only four months is
impressive, reflecting a high level of planning to allocate and
distribute risk in this unprecedented effort to build an
embassy in a war zone on time and on budget. Most major
construction projects undertaken in Iraq since 2003 have not
met these standards. The Senior Project Director stated that
the Iraqi government has reacted very positively to the
building efforts, as they demonstrate that the U.S. is
committed to staying and seeing the Iraq mission through. It
also shows that that we are committed to returning properties
to the Iraqis, such as the Republican Palace, that we have been
occupying.

Recommendation 6: The SFRC should maintain its close
scrutiny of this program. No large scale, US-funded
construction program in Iraq has yet met its schedule
or budget. First Kuwaiti, the lead contractor, should
be encouraged by the Department of State's Overseas
Building Office to consider hiring more local nationals
as personnel screening and security conditions allow.

CIVILIAN PERSONNEL SECURITY ISSUES

This SFRC staff member was not permitted to travel outside
the International Zone (IZ), which may say more about the
security situation in Iraq than anything. Interactions between
US officials and their Iraq counterparts do not occur
frequently, and when they do, Americans travel in five-vehicle
convoys with a very heavy complement of security. Many Foreign
Service Nationals, Iraqi Assembly members and other government
officials live in the IZ, either in homes or apartments or in
the al-Rasheed Hotel, because they have been threatened
directly or fear that their association with the government or
the Americans endangers them or their families. The brother of
one of the deputy ministers staff met during this trip was
assassinated, and one of the Iraqi National Assembly members
interviewed said that members of his family have been
threatened.
The Regional Security Officer (RSO) has 44 permanent
officers and 2237 contractors providing security for the
Embassy and its personnel. The RSO is very engaged in working
to manage the risks embassy personnel face every day. He told
staff that he challenges the necessity of meetings outside the
International Zone that appear overly risky, noting that almost
all Iraqi officials have U.S.-issued cell phones to facilitate
communications. Most embassy and USAID staff said they go
outside the IZ rarely if at all. Staff and the RSO discussed
the net worth of having an Embassy when it is so isolated,
because of the risk avoidance posture he enforces, the ability
of its personnel and the USAID team to carry out their
responsibilities, and the challenges of working with the
military who operate under different regulations. It causes
friction and challenges the mission's effectiveness when the
civilian advisor cannot go to a meeting, but military advisors
can.
The RSO stated candidly that there are no rules for this
mission--ensuring the safety of civilian personnel and securing
an embassy in a war zone. Normally, there is an Emergency
Action Plan that outlines the tripwires that would lead to a
closure and evacuation of an embassy. And, he said, ``We cross
those tripwires every day. EVERY day.''
The Assistant Secretary of State for Diplomatic Security
confirmed that there is not a clearly defined arrangement for
operating an embassy in a war zone. Safety of the Mission and
its personnel is delegated to the Ambassador and his principle
security advisor, the RSO.
U.S. Embassies have been the target of large scale attacks
as recently as the 1998 al-Qaeda bombings in Kenya and
Tanzania. The Department of State makes considerable efforts to
manage the risks undertaken by diplomats living in dangerous
places around the world. Unlike the U.S. military, it does not
``accept'' casualties. Iraq embassy personnel, all of whom are
volunteers and who receive limited crisis reaction training to
deploy to Iraq, are not expected to sacrifice their lives for
the mission. State will need to become an even more effective
risk manager to be truly effective in an environment like Iraq.
Officials in Baghdad and Washington recognize that these issues
will be compounded by the ``PRT'' plan.

Recommendation 7: The SFRC should continue active
dialogue with Diplomatic Security personnel on these
challenging issues, which are not unique to Iraq.
Funding improved telecommunications, such as video-
teleconferencing systems in countries where risks are
high, can save lives and improve interaction.

PERSONNEL AND EMBASSY STAFFING

Embassy management, staffing and personnel issues were
raised with the Embassy's Management Counselor, Ambassador Greg
Engle, with respective section heads and with the Charge
d'Affairs. In short, State Department personnel are out-gunned
by the military. Ambassador Engle joked that when he has
meetings with the military, a half-dozen colonels will file
into the room and wonder why there is only one official on his
side of the table. There is no redundancy in embassy staffing.
An empty position or vacationing official means that work is
left undone. It also means that Foreign Service Officers find
themselves at their desks for long hours, often spending as
much time keeping up with Washington as with Iraq.
One year ago, following a trip to the region, SFRC staff
reported:

There are too few civilian and military civil-affairs
personnel available for the scope of Iraq
reconstruction efforts. Those available reportedly do
not have the right expertise and language skills and
the duration of their assignments are too short (90-120
days) with few incentives available to encourage the
civilians to continue to serve in Iraq. Several people
who had or were serving in Iraq expressed astonishment
at the responsibilities they were given for which they
felt unprepared. For example, personnel with no budget
or program management experience were overseeing
enormous budgets and developing technical assistance
programs. Learning on the job took time. Civilian and
military linguists, budget and contracting specialists
are also in too short supply to adequately support the
mission.\13\
---------------------------------------------------------------------------
\13\ SFRC Staff Inquiry Report, December 2004.
---------------------------------------------------------------------------
Some of the problems found a year ago have been addressed.
In their place, however, new challenges constantly present
themselves. Reconstruction and stabilization missions such as
Iraq and Afghanistan are a new paradigm that require a
combination of innovative incentives to bring in the right
people. So-called ``directed assignments'' is one solution that
may be considered but has been thus far resisted by the
civilian agencies. In a directed assignment a civilian employee
whose contract stipulates worldwide availability, such as a
Foreign Service Officer, is directed to serve in a particular
post and risk promotion or their career in refusing the
assignment.
As mentioned above, to staff the Provincial Reconstruction
Teams, State will be challenged not only to find the senior
FSOs that are indicated in the briefed plans, but also to find
those with the necessary skills. Reconstruction and
stabilization missions demand program management skills and
hands-on field experience, rather than the policy management
and analytical skills needed in traditional embassy positions,
a point with which Ambassador Engle agreed. Several Foreign
Service Officers shared that many who enter the Foreign Service
today are eager for the chance to engage in such missions when
they join the service, but they quickly find themselves working
the visa window and staffing embassy desk jobs. By the time
many FSOs have developed the seniority to lead such a mission,
they have not engaged in running programs or spent much time
operating outside embassy confines.
These challenges are not unique to Iraq. The Department of
State has over 600 positions in `unaccompanied' posts (where
spouses and family are not allowed because of the risk).\14\
While Iraq and Afghanistan are the highest priority, getting
staff to the priority areas is increasingly difficult due to
security issues and the absolute quantity of these needs
relative to the size of the entire Foreign Service corps.\15\
---------------------------------------------------------------------------
\14\ Unaccompanied posts include Kabul, Afghanistan; Algiers,
Algeria; Banja Luka, Bosnia-Herzegovina; Bujumbura, Burundi; Bangui,
central African Republic; Brazzaville, Republic of Congo; Abidjan, Cote
d'Ivoire; Baghdad, Iraq; Pristina, Kosovo; Beirut, Lebanon; Monrovia,
Liberia; Islamabad, Karachi, Lahore, and Peshawar, Pakistan; Riyadh,
Jeddah, Dhahran, Saudi Arabia; Khartoum, Sudan; and Sanaa, Yemen.
\15\ There are 12,666 members of the U.S. Foreign Service. Of
those, 11,066 are at the State Department, 1131 are at USAID, 255 serve
in the Foreign Commercial Service, 170 serve in the Foreign
Agricultural Service, and 44 serve with the International Broadcasting
Bureau.
---------------------------------------------------------------------------
Charge D'Affairs Ambassador Satterfield stated that the
Department made some mistakes in staffing the Embassy on the
first rotation. In too many cases, positions were filled with
junior personnel, instead of FS-02s, and FS-03s. In some cases
there were Ambassador and Minister Counselors heading sections
with no one in between them and the first tour officers. Like
any organization, mid-grade officers carry the load, mentor,
and convey essential on-the-job training. They are also needed
to interact competently and authoritatively with seasoned Iraqi
and US military personnel. USAID has done better, but is facing
a challenge filling positions for its next rotation.

U.S. Mission Staffing Summary*
----------------------------------------------------------------------------------------------------------------
Authorized U.S.
Agency positions U.S. onboard Percentage
----------------------------------------------------------------------------------------------------------------
State Department 157 145 92.5
IRMO/Other State 348 286 82.2
Defense 245 210 85.7
Agriculture/FAS 2 2 100
Commerce/FCS 2 2 100
HHS 2 2 100
DHS 21 1 4.8**
Justice 62 26 41.9**
Labor 1 0 0
Treasury 4 2 50
Transportation 3 3 100
USAID 99 62 62.6
Other -- -- --
Baghdad Total 946 739 78.1
----------------------------------------------------------------------------------------------------------------
* See Appendix I for full staffing summary, as of 4 November 2005.
** This summary table does not reflect TDY personnel. DHS and DoJ fill many positions TDY.

Staffing challenges will intensify with the new initiative
to build Iraqi governing capacity in the regions. The first
three PRTs have been manned, but 11 of the remaining 12 and the
one Regional Reconstruction Team destined for the Kurdish
region, will be headed by as yet unnamed Officer Counselor
(flag equivalent) Foreign Service Officers.
Satterfield reported that the entire Department--all the
way up to the Secretary--had committed to making personal
appeals to individual candidates to fill the positions with the
right people. The Iraq desk at State indicated that bids were
not coming in for the PRT positions that had been posted. Staff
asked if ``directed assignments'' were being considered.
Feelings were mixed on this issue. The Management Counselor
suggested that would have far-reaching effects in the Foreign
Service and that the union (American Foreign Service
Association) would react loudly. Ambassador Satterfield told
Staff that directed assignments made sense if it were up to
him. Others agreed, saying that the only way State can show it
means business and is committed is to ``call up its best FSOs
and put them in charge of the PRTs.''
Traditional State Department positions in Iraq are filled
to 92% (145 of 157). But, it is worth noting that six of those
unfilled permanent positions are allotted to the Office of
Inspector General who currently has no staff in Baghdad. Asked
about this shortfall, State OIG Howard Kroengard stated that
although he has been able to inspect the Rule-of-Law Program as
mentioned above, he has received no funding to do Baghdad work.
Most of the work the OIG does is mandated by Congress, and to
do program audits or inspections of reconstruction efforts, he
would have to surge and probably hire additional people.

Recommendation 8 (Staffing):

(a) The SFRC should initiate an inquiry into State
Department staffing patterns at post-conflict
reconstruction and stabilization missions, including a
review of the training received prior to deployments
specific to the mission.

(b) The SFRC should inquire as to whether the State
Department, USAID and other cabinet agencies are
willing to go to ``directed assignments'' to fill
positions with persons of appropriate rank.

(c) The SFRC should ask the State Department
management experts to suggest what other options are
available--long and short-run--to remedy these
challenges. This complex environment demands not only
people who can live on adrenaline and cope with some
level of chaos, but also that have experience.

(d) The State Department should consider recruiting
more mid-level personnel with skill sets appropriate to
leading PRT-like missions.

(e) The SFRC should continue to push the State
Department to establish a Ready Response Corps within
the Department of State (the so-called ``Lugar Corps'')
made up of 250 experienced civilians trained to work in
hostile environments as detailed in Title VII of S.
600.

A P P E N D I X E S

----------

Appendix I.--Embassy Staffing Summary

U.S. Mission Iraq Staffing Summary
(As of 11/04/2005)
----------------------------------------------------------------------------------------------------------------
Locally Locally Estimated
U.S. U.S. on TDY Eng. Staff Eng. Contractors
Agency Notes Authorized board (13) Staff on (supporting
(12) Authorized board COM) (9)
----------------------------------------------------------------------------------------------------------------
1. Embassy Baghdad NSDD-38 positions
under COM

State................................ (1)
Consular........................... 7 6
Econ............................... 10 8
Executive Office................... 12 10 50
Executive Secretariat.............. 4 4
Management......................... (14) 37 36 13
Political Section.................. 18 17
Pol-Mil............................ 6 6
INL................................ (2) 3 3 500
Public Affairs..................... 7 7
Security........................... (3) 44 44 2237
OBO................................ 9 4
------------------------------------------------------------------
State Subtotal................... 157 145 16 155 75 2800
------------------------------------------------------------------
Temporary/Other State Units.......... (4)
Iraq Reconstruction Mgt Office 219 163
(IRMO)............................
Legal Office....................... 3 3 3 1
ORA................................ 120 120
State OIG.......................... 6 0
------------------------------------------------------------------
Temp/Other State Unit Subtotal... 348 286 3 1 0
----------------------------------------------------------------------------------------------------------------
Agriculture/FAS...................... 2 2 4 1
----------------------------------------------------------------------------------------------------------------
Commerce/FCS......................... 2 2 8 2
----------------------------------------------------------------------------------------------------------------
Defense..............................
PCO/JCC-I (requested).............. 134 123 419
Def. Contract Audit Agency (DCAA).. 20 19 0
SIGIR (requested).................. 45 45 0 2
MSG Det............................ 14 14
DCMA............................... 32 28
DIA................................ 4
------------------------------------------------------------------
DoD Subtotal..................... 245 210 23 0 2 419
----------------------------------------------------------------------------------------------------------------
DHS..................................
DHS Headquarters................... 2 1 1
TSA................................ 1 0 2 1
CBP................................ 18 0 17 6
------------------------------------------------------------------
DHS Subtotal..................... 21 1 19 8 0
----------------------------------------------------------------------------------------------------------------
HHS.................................. 2 2 1 0
----------------------------------------------------------------------------------------------------------------
Justice.............................. (2)
Justice............................ 2 1 0
Alcohol, Tobacco, & Firearms (ATF). 4 0 3 0
CRIM/OPDAT......................... 2 3 0
FBI................................ 9 6 67 0
Int. Criminal Invest. Training Asst 2 1 0 259
Pgm. (ICITAP).....................
Regime Crimes Liaison Office 41 15 33 0 3
(requested).......................
U.S. Marshals (requested).......... 2 0 4 0 1
------------------------------------------------------------------
Justice Subtotal................. 62 26 107 0 4 259
----------------------------------------------------------------------------------------------------------------
Labor................................ (5) 1 0 0
----------------------------------------------------------------------------------------------------------------
Transportation....................... 3 3 2 1
----------------------------------------------------------------------------------------------------------------
Treasury.............................
Treasury........................... 2 1 1
Treasury/IRS-CID................... 2 1 0
----------------------------------------------------------------------------------------------------------------
USAID................................
USAID.............................. (6) 68 37 14 134 100 76
Army Corps of Engineers............ 23 18 14 7
RIG................................ 8 7 2 1
------------------------------------------------------------------
USAID Subtotal................... 99 62 14 150 108 76
----------------------------------------------------------------------------------------------------------------
Baghdad TOTAL:....................... 946 739 182 330 193 3554
================================================================================================================
2. REO/SET NSDD-38 positions under
COM (11)

State................................ (10) 38 32 14 14
--------------------------------------------------------------------------
Temporary/Other State Units..........
IRMO............................... 30 11 2 2 2
ORA................................ 28
----------------------------------------------------------------------------------------------------------------
Defense..............................
JCC-I (requested).................. 20 11
DCMA............................... (7) 36 35
DIA................................ (8) 4
----------------------------------------------------------------------------------------------------------------
USAID................................
USAID.............................. (6) 25 8 1 12 10
Army Corps of Engineers............ 0 0 0 3
Support Contractors.................. 738
----------------------------------------------------------------------------------------------------------------
REO/SET Total:....................... 149 97 33 28 29 740
----------------------------------------------------------------------------------------------------------------
Total Baghdad + REO/SET:............. 1095 836 215 358 222 4294
----------------------------------------------------------------------------------------------------------------
Total positions under COM authority:. 1453
Grand Total Positions:............... 5747
----------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------
U.S. LES Contractors
------------------------------------------------------------------------
3. Not under COM located at
Embassy

Defense (in Support of COM)...
MNF-I in Embassy............ 487
MNSTC-I..................... 15 6
MNF-I Legal Office.......... 3
MNF-I Area Support Group.... 130
FAST Marines................ 151
------------------------------------------------------------------------
Special Tribunal (Contract)... 50-70
------------------------------------------------------------------------
NOTES:

(1) Baghdad State phasing FSN: up to 155 in FY06.

(2) INL/DOJ contractors are Police Trainers, Advisors, and Corrections
(IPLO; IPT; PSD, Static, Support, Dog Teams).

(3) Contractors include PSDs in Direct Support of RSO, USAID, PCO; also
includes Fixed Security Guards at Five Sites.

(4) Other State units--all numbers are estimates, except for Ministry
Advisors; phase in and out depending on need, normally 3161 or TDYers.
This category includes all functions previously performed by CPA.

(5) Labor Falls under Econ Section.

(6) USAID authorized includes 69 PSCs. USAID FSN numbers include 7 TCNs.
On Board Count includes Irbil.

(7) DCMA has teams outside Baghdad in 18 locations.

(8) DIA under Commander at this time.

(9) Estimated number of contractors in support of COM as of Aug. 1.

(10) REO/SET Security positions and on-board personnel are Baghdad FTE--
thus they are already counted in the Baghdad Security section.

(11) REO/SET authorized and on-board numbers for IRMO, USAID and DCMA
include some personnel in other regional locations in Iraq.

(13) TDY staff data is estimated except for State numbers. Because many
TDYs are augmenting US authorized positions, they are not included in
the total position count to avoid double-counting.

(14) Information Management contractors include Northrop Gruman, SPAWAR,
USIS, BE, and Global Sat.

Appendix II.--Meetings and Interviews

New Embassy Compound Briefing and Tour
Mary French, New Embassy Senior Project Director

Discussion of Embassy Operations and Structure
Clarke Cooper, Legislative Affairs Advisor

Discussion of Human Resources, Staffing & Mission Management
Ambassador Greg Engle, Management Counselor

Discussion of Inspector General Issues
State Department Inspector General Howard J. Krongard

SIGIR discussion
Mike Boisvenue, Chief of Staff; James Connolly, Special
Agent-in-Charge; Brian Flynn, Assistant IG for Special
Operations

Privatization, Private Sector Development, Stock Exchange and
Securities Commission
Ms. June Reed, Senior Consultant for Private Sector
Development (IRMO)

Iraq Reconstruction Management Office Briefing
David C. Harris, Chief of Staff and Director of
Development; MG Robert Heine, Deputy Director Civil-Military
Regional Operations; Mr. Brad Higgins, Deputy Director and CFO

Essential Services Briefings
Oil: Mr. Robert Todor, Senior Consultant Iraqi Ministry of
Oil
Electricity: Mr. Scott Hutchins, Senior Ministerial Advisor
Water: Dr. Linda Allen, Water Resources Advisor
Water: Mr. Wayne Curry, Senior Consultant

Reconstruction Management Briefing (PCO/GRD)
BG McCoy, Commander of Gulf Regional Division Army Corps of
Engineers (and staff)

International Republican Institute
Richard Hougton, IRI Resident Governance Program Director

Discussion on Human Rights and the Rule of Law
Dr. Ellen Klein, Human Rights Officer

Rule of Law Program Briefing & Discussion
Ambassador James Yellin, Senior Justice and Rule of Law
Coordinator; Ms. Karen Hanrahan, Rule of Law Coordinator; Mr.
Robert Witajewski, Director International Narcotics, Law
Enforcement

Ministry of Interior Visit and Briefings (Adnan Palace)
Assistant Deputy Minister Ayden Qadir (Elections Security);
Deputy Minister Ali Ghalib (Police Capabilities and
Challenges); Mr. Thomas Bishop, National Security Advisor to
the Ministry of Interior; Mr. Jerry Burke, International Police
Liaison Officer; Mr. John Bozicevich, International Police
Liaison Officer

Police Station Visit (Karida-Marium District Station)
Capt Faiz; Mr. Jerry Burke, International Police Liaison
Officer; Mr. John Bozicevich, International Police Liaison
Officer

Saddam Trial Brief & Courthouse Visit
Regime Crimes Liaison Office Staff; Mr. Michael Kulstad,
U.S. Department of Justice
Public Diplomacy Discussions
Public Affairs Counselor Jim Bullock; Cultural Officer Ilya
Levin; Ms. Fatima Fleifel (Political Section FSN); Political
Officer Vince Campos

Daily MNF-I Battle Update Assessment Briefings
MNF-I Corps Staff

Meeting with Treasury Attache
Mr. Kevin Taecker, Department of the Treasury

Meeting with Iraqi National Assembly (INA) members
Dr. Saad Jawad Qindeel; Ms. Wijdan M. Salim

Roundtable with Iraqi-Americans working in Iraq

Regional Security Officer Interview
Mr. Mark Hunter, Regional Security Officer; Mr. John Flynn,
Deputy RSO

Economic Section Meeting
Mr. Thomas Delare, Minister Counselor; Ms. Martha
Patterson, Economic Officer

Meeting with Charge d'Affaires
Ambassador David Satterfield; Ambassador Dan Speckhard,
Director of IRMO; Ambassador James Yellin, Senior Justice and
Rule of Law Coordinator

USAID meeting
Ms. Dawn Liberi, Country Director

Visit to the Joint International Police Training Center in
Amman, Jordan.
Note: this event was cancelled due to Nov. 10 bombings in
Amman hotels.

After-action/follow-up meetings:
Ambassador Richard J.Griffin, Assistant Secretary of State
for Diplomatic Security; Mr. Bob Perito, USIP; Ms. Carina
Perelli, UN Elections Chief; Mr. Jengahir Khan, UN Iraq Desk
Officer

Note: this list is not all-inclusive. Additional
conversations were held in Washington in advance of the trip
and with other members of the Embassy team that contributed to
this report.