Iraqi agencies can't perform basic functions, report says

WASHINGTON -- The effort to resurrect vital government services in Iraq has been hampered by ethnic and sectarian purges among the ranks of civil servants, a high turnover rate for senior administrative officials, and a lack of comprehensive planning on the part of both Iraqis and the United States, according to an audit by the special inspector general for Iraq reconstruction released yesterday.

As a result, Iraq's ministries -- the backbone of the fledgling government, responsible for hospitals, utilities, and the provision of food rations and gasoline -- are struggling to perform basic functions, such as drafting budgets and hiring contractors, and too often depend on their American advisers. That in turn has led to the Iraqi government's failure to spend $13 billion -- more than a third of its annual budget -- in 2006, a situation that could further destabilize the country, the audit said.

"US mission officials view the Iraqi government's inability to spend its own budget resources . . . as a significant problem that, if not corrected, may lead to the failure of the government," the audit warned.

Nevertheless, the Bush administration plans to more than double the amount it has been spending to train Iraq's ministries to function without embedded advisers. The United States plans to allocate $260 million this year for training Iraq's civil servants, up from $125 million in 2006, the audit said.

The audit, which focused on Iraq's ministries, was one of a series of reports released this week detailing ongoing problems in the $18.6 billion-plus effort to rebuild Iraq. Other audits examined waste and abuse, including a $43 million purchase of trailer homes that went unused.

The ministries examined in the report have struggled amidst the spiraling violence in Iraq, including near-daily bombings, kidnappings, and militia battles. But another key problem, according to the audit, is that Iraq has essentially had four governments in as many years.

The Iraqi government's transitions -- from the US-led occupation in 2003 that dismissed much of Iraq's civil service, to the interim government in 2004, to the transitional government in 2005, to the elected government that came to power last year -- have led to the continuous removal of experienced civil servants and officials who have been trained with US funds, the audit said. With each temporary government, "senior officials not only purged the remaining skilled ministerial staff but replaced them with persons hired more for their ethnic loyalty and/or familial relationship than their qualifications," it stated.

Qubad Talabani , a Washington-based representative of Iraq's Kurdish regional government, agreed with the assessment. "Ministers that have only been in their job for six months, and that will only be in their job for eight months, are not likely to come up with a strategic plan" to effectively rebuild the nation, he said.

Meanwhile, the audit said the country's bureaucracy is inconsistent and uncoordinated; for example, the Ministry of Finance's anticorruption procedures were so strict it created a financial "bottleneck" that kept other ministries from spending the funds they needed to function.

Yahia Said , who recently led a UN team to Iraq to draft an aid agreement between Iraq and the international community, said Iraq's failure to spend its budget last year is an ominous sign. "This is the strongest indicator of the dwindling capacity of the Iraqi government," he said.

Said cited the late formation of the government in the spring of 2006, the security situation, and "a lack of a capacity to organize tenders, purchase [and] execute work " as the reason the funds have gone unspent.

But Michael O'Hanlon , an Iraq specialist at the Brookings Institution, a Washington think tank, said the money could be interpreted as a positive sign: it wasn't squandered or stolen.

The audit said that US officials in Baghdad evaluated 11 key ministries in August to see whether they could carry out basic functions, but the findings were kept secret.

Specialists said the capabilities of the ministries vary widely. Some are seen as highly competent, such as the Ministry of Foreign Affairs and the Ministry of Water, which have been led by the same ministers for years. But other crucial agencies, such as the Ministry of Oil and the Ministry of Finance, have been ravaged and weakened by a series of sectarian purges and political infighting.

After national elections in 2005, control of the ministries were divided among the various political parties that won seats in Iraq's parliament. But the arrangement has suffered amid the same heated sectarian and political divisions that plague much of Iraq's political landscape, the audit said.

"Several key Iraqi ministries are under the control of political parties that appear more concerned with furthering sectarian interests than the governance and capacity-building objectives of the representative government," according to the audit.

In recent months, some ministries have devolved into de facto sectarian battlegrounds, where Shi'ite or Sunni politicians are accused of delivering services only to their own constituents. Extremist militias have also targeted the leaders of ministries led by their rivals for kidnapping and assassinations.

"A Sunni is worried about giving birth in a hospital that is run by Shi'ites. That's tragic," said a spokesman for an Iraqi political party who asked not to be named to avoid offending his colleagues.

The Ministry of Health, leadership of which has passed back and forth between the moderate Shi'ite Dawa party and a party loyal to radical Shi'ite cleric Moqtada al-Sadr , is seen by many as a political fiefdom for Shi'ites. Because Sadr is deeply opposed to the US presence in Iraq, the Health Ministry under his leadership had a tense relationship with US advisers sent in to assist it.

Said, who now works for Iraq Revenue Watch, a nonprofit organization that keeps an eye on Iraq's budget, praised the competent work of several ministries, including Trade and Planning, but said that others are still too reliant on American advisers.

Several months ago, he said, the Ministry of Agriculture, which is responsible for ordering food rations on which a third of the Iraqi population depends, forgot to arrange for future shipments of the food. "The only way they were alerted to this situation was that the American adviser alerted them to this" and the ministry had to scramble to avoid a food shortage, he said.

Some ministries have refused US advisers in the past. But 38 US advisers are currently stationed in the Ministry of Defense, and as many as 50 serve in the Ministry of the Interior, according to the audit. About a dozen work on finance, banking, and trade, while eight are attached to Iraq's High Judicial Council.

The audit said the US government was taking actions to increase the capability, including awarding a $165 million contract last summer to a private company, Management Systems International, to train up to 58,000 Iraqi civil servants.