Hard Lessons: The Iraq Reconstruction Experience (SIGIR, 2009)

Hard Lessons: The Iraq Reconstruction Experience Contents Preface vii Key U.S. Figures in Iraq Reconstruction xi Acronyms xvi Map of Iraq xix Part I: Planning for Postwar Iraq 1 1. Planning Begins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2. The Agencies Engage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3. The Department of Defense Takes Charge. . . . . . . . . . . . . . . . . . 32 4. Staging in Kuwait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 5. ORHA in Baghdad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Part II: The Coalition Provisional Authority Leads Reconstruction 67 6. Charting a New Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 7. CPA’s Shortfalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 8. Treasury’s Triage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 9. Bremer’s Grand Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 10. Contracting Billions for Reconstruction . . . . . . . . . . . . . . . . . 105 11. Restoring Iraq’s Capacity to Govern . . . . . . . . . . . . . . . . . . . . 115 12. Reconstructing Iraqi Security Forces. . . . . . . . . . . . . . . . . . . . 124 13. Restarting Oil Production . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 14. Rebuilding the Electricity Sector . . . . . . . . . . . . . . . . . . . . . . 144 15. Iraq Reconstruction in Transition. . . . . . . . . . . . . . . . . . . . . . 153 Part III: The U.S. Embassy Takes Charge 163 16. Negroponte’s Revisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 17. Contingency Contracting and Program Management . . . . . . . . 172 18. Building in a War Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 19. Iraqi Security Forces and Counterinsurgency . . . . . . . . . . . . . . 193 20. Elections, Rule of Law, and Fighting Corruption . . . . . . . . . . . . 203 21. Investigating Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 • v • Part IV: Overcoming Roadblocks to Reconstruction 227 22. Khalilzad’s Adaptations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 23. Returning to the Provinces . . . . . . . . . . . . . . . . . . . . . . . . . . 247 24. The Primacy of Capacity Development . . . . . . . . . . . . . . . . . . 258 25. Reconstruction Amid Sectarian Violence . . . . . . . . . . . . . . . . . 274 26. The Civilian Surge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 Part V: Lessons Learned 321 27. Hard Lessons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 Afterword: Reforming Contingency Relief and Reconstruction Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338 Annexes 343 I. The Genesis and Methodology of Hard Lessons . . . . . . . . . . . . . . 345 II. Oversight of Reconstruction Programs and Expenditures. . . . . . . 348 Acknowledgements 357 Notes 359 • vi • Preface Hard Lessons: The Iraq Reconstruction Experience appears virtually upon the five-year anniversary of my appointment as Inspector General in Iraq. Shortly after that appointment, I met with Secretary of Defense Donald Rumsfeld, to whom I reported, to discuss the mission. His first words were: “Why did you take this job? It is an impossible task.” I began to understand why he offered so startling a “welcome” during the following week, when I made my first trip to Iraq to begin setting up oversight of the Coalition Provisional Authority (CPA), then in charge of Iraq’s reconstruction. My office in the Republican Palace, which housed the CPA—and would later house the U.S. Embassy—was adjacent to the CPA Comptroller’s. What I saw was troubling: large amounts of cash mov- ing quickly out the door. Later that same day, walking the halls of the palace, I overheard someone say: “We can’t do that anymore. There is a new inspector general here.” These red flags were the first signs of how challenging executing oversight in Iraq would be. But it has not been impossible, chiefly because of the profes- sional, productive, and courageous conduct of the many auditors, inspectors, and investigators who have worked diligently to fulfill the mission of the Office of the Special Inspector General for Iraq Reconstruction (SIGIR). SIGIR’s oversight jurisdiction covers about $50 billion in U.S. funds appro- priated by the Congress for Iraq—the largest relief and reconstruction effort for one country in U.S. history. This sea of taxpayer dollars flowed to a wide spectrum of initiatives, ranging from training Iraq’s army and police to building large electrical, oil, and water projects; from supporting democracy-building ef- forts to strengthening budget execution by provincial councils; and from funding rule-of-law reforms to ensuring that the Iraqi government sustains what the U.S. program provided. Some of these initiatives succeeded, but, as this report docu- ments, many did not. Hard Lessons reviews the Iraq reconstruction experience from mid-2002 through the fall of 2008. Like SIGIR’s previous lessons learned reports, this study is not an audit. Rather, it arises from our congressional mandate to provide “advice and recommendations on policies to promote economy, efficiency, and effectiveness” in programs created for Iraq’s relief and reconstruction. The report presents a chronological history of the reconstruction program, threading together a number of themes including: •  the enormous challenges that security problems posed for rebuilding efforts • vii • • Preface • •  the dramatic and frequently reactive course-changes in reconstruction strategy •  the turbulence engendered by continual personnel turn- over at every level •  the waste caused by inadequate contracting and program management practices •  the poor integration of interagency efforts caused by weak unity of command and inconsistent unity of effort. The text of this report—through vignette, interview, and factual detail—ex- plicates these themes by, in turn, laying out the blinkered and disjointed prewar planning for postwar Iraq; the CPA’s large and ultimately too ambitious expan- sion of the reconstruction program; the security-driven reprogrammings required by the exploding insurgency; the strongly resourced response of the surge; and the rise of Iraq’s role in its own reconstruction. Hard Lessons answers some important questions about the U.S. relief and reconstruction program in Iraq: •  Did the program meet the goals it set for itself? Generally no on the infrastructure front, but generally yes regarding the development of Iraq’s security forces. Electricity and oil out- puts remain below goals set by the CPA more than five years ago, and the number of successful project completions in the key water and health sectors fell far short of hopes. But after several false starts and greatly increased U.S. investment, Iraq’s security forces have achieved substantial operational capabilities, despite remaining doubts about overall unit readiness and potential performance levels. •  Was the program grossly burdened by waste and fraud? Regarding waste, yes; regarding fraud, no. The overuse of cost-plus contracts, high contractor overhead expenses, ex- cessive contractor award fees, and unacceptable program and project delays all contributed to a significant waste of taxpayer dollars. Although SIGIR and other law enforcement agencies have uncovered egregious examples of fraud, the size of the total criminal wrongdoing known to date amounts to a relatively small percentage of the overall reconstruction investment, and the number of individuals involved was • viii • • Hard Lessons: The Iraq Reconstruction Experience • relatively low. The vast majority of those who served the U.S. reconstruction program—soldier, civilian, and contractor— did so honorably. •  Why did reconstruction efforts so often fail to meet their mark? Security. That single explanation has been offered up thou- sands of times since the 2003 invasion as the prevailing reason for shortfalls, large and small, in the U.S. program. But this explanation leads to a further question. Why was an extensive rebuilding plan carried out in a gravely unstable security environment? This question underscores an over- arching hard lesson from Iraq: beware of pursuing large-scale reconstruction programs while significant conflict continues. But beyond the security issue stands another compelling and unavoidable truth: the U.S. government had neither the es- tablished structure nor the necessary resources to carry out the reconstruction mission it took on in mid-2003. As Under Secretary of Defense for Policy Douglas Feith said, “Every time the United States has had a substantial stabilization and reconstruction project, pretty much from World War II forward, we’ve [had to] improvise.” The research for Hard Lessons comprised interviews with hundreds of in- dividuals and the review of thousands of documents. SIGIR reached out to virtually every major player in the Iraq reconstruction experience and almost all agreed to be interviewed or provide useful responses. Among others, Secretaries Powell, Rumsfeld, Gates, and Rice; USAID Administrator Natsios and Deputy Administrator Kunder; Deputy Secretaries Wolfowitz, England, Armitage and Negroponte; Under Secretary Feith; Ambassadors Bremer, Khalilzad, Crocker, Jeffrey, Satterfield, Speckhard, Taylor, and Saloom; and Generals Garner, Abizaid, McKiernan, Strock, Eaton, Sanchez, Casey, Petraeus, Odierno, Chiarelli, Dempsey, and McCoy were all interviewed by SIGIR or gave helpful information or advice. We also interviewed Iraqi leaders, including former Prime Ministers Allawi and Ja’afari, Deputy Prime Ministers Chalabi and Salih, Ambassador Sumaida’ie, Judge Radhi, and Minister Baban. Equally important to the study, SIGIR staff interviewed hundreds of mili- tary members, government officials, and civilian contractors who carried out the “brick and mortar” work of Iraq’s relief and reconstruction. The report also draws • ix • • Preface • on the body of SIGIR audits, inspections, and investigations, as well as reports from other investigative bodies. Finally, a somber note. Although this oversight mission has not been “impos- sible,” it has been dangerous. During 2007, five SIGIR staff members were injured by indirect fire in Iraq. And on March 24, 2008, SIGIR auditor Paul Converse died from wounds he received during the Easter Day rocket barrage of the Green Zone. This report is dedicated to him and to all who gave their lives in Iraq in service to our country. Stuart W. Bowen, Jr. Inspector General February 2, 2009 • x • Key U.S. Figures in Iraq Reconstruction General John Abizaid – Commander, United States Central Command (July 2003-March 2007) Elliot Abrams – Special Assistant to the President and National Security Council Senior Director for Near East Affairs (December 2002-February 2005); Deputy National Security Advisor for Global Democracy Strategy (February 2005-January 2009) Hilda “Bambi” Arellano – USAID Iraq Mission Director (August 2006-August 2007) Richard Armitage – Deputy Secretary of State (March 2001-February 2005) Joshua Bolten – Director, Office of Management and Budget (June 2003- April 2006); White House Chief of Staff (April 2006-January 2009) Major General Thomas P. Bostick – Commanding General, U.S. Army Corps of Engineers-Gulf Region Division (June 2004-June 2005) Ambassador L. Paul Bremer III – Administrator, Coalition Provisional Authority (May 2003-June 2004); Presidential Envoy to Iraq (May 2003-June 2004) President George W. Bush – President of the United States General George Casey – Director, Joint Staff (October 2001-January 2003); Commander, Multi-National Force-Iraq (June 2004-February 2007); Chief of Staff, U.S. Army (April 2007-present) Ambassador Wendy Chamberlin – Assistant Administrator for the Bureau for Asia and the Near East, USAID (December 2002-December 2003) Vice President Richard B. Cheney – Vice President of the United States Lieutenant General Peter Chiarelli – Commanding General, 1st Cavalry Division (2003-2005); Commander, Multi-National Corps-Iraq (January 2006-December 2006) Robin Cleveland – Associate Director for National Security Programs, Office of Management and Budget (March 2001-June 2005) • xi • • Key U.S. Figures in Iraq Reconstruction • Ambassador Ryan Crocker – United States Ambassador to Iraq (March 2007-present) Christopher Crowley – USAID Iraq Mission Director (September 2007-present) Lieutenant General Martin E. Dempsey – Commanding General, 1st Armored Division (June 2003-July 2005); Commander, Multi-National Security Transition Command-Iraq (August 2005-June 2007); Deputy Commander, United States Central Command (August 2007-March 2008); Acting Commander, United States Central Command (March 2008-October 2008) Major General Paul Eaton – Commander, Coalition Military Assistance Training Team and the Office of Security Cooperation (June 2003-June 2004) Gordon England – Deputy Secretary of Defense (January 2006-January 2009) Douglas Feith – Under Secretary of Defense for Policy (July 2001-August 2005) Henrietta Fore – Administrator, United States Agency for International Development (November 2007-January 2009) General Tommy Franks – Commander, United States Central Command (July 2000-July 2003) Lieutenant General (Ret.) Jay Garner – Director, Office of Reconstruction and Humanitarian Assistance (January 2003-May 2003) Robert Gates – Secretary of Defense (December 2006-present) Brigadier General Steven Hawkins – Commander, Joint Task Force Four (December 2002-March 2003); Commanding General, Task Force Fajr (April 2003-June 2003); Commanding General, Task Force Restore Iraqi Electricity (September 2003-June 2004) Charles Hess – Director, Project and Contracting Office (August 2004- April 2005) Ambassador James Jeffrey – Deputy Chief of Mission (June 2004-March 2005); Senior Advisor to the Secretary of State on Iraq (August 2005-August 2006); Principal Deputy Assistant Secretary, Near Eastern Affairs (August 2006- July 2007); Deputy National Security Advisor (August 2007-January 2009) • xii • • Hard Lessons: The Iraq Reconstruction Experience • Ambassador Zalmay Khalilzad – United States Ambassador to Iraq (June 2005-March 2007) James Kunder – USAID Deputy Assistant Administrator for Asia and the Near East (July 2002-July 2004); USAID Assistant Administrator for Asia and the Near East (July 2004-January 2009); USAID Acting Deputy Administrator (July 2006-January 2009) Dawn Liberi – USAID Iraq Mission Director (April 2005-July 2006) Lewis Lucke – USAID Iraq Mission Director (March 2003-February 2004) Major General William H. McCoy – Commanding General, U.S. Army Corps of Engineers-Gulf Region Division (June 2005-October 2006) Lieutenant General David McKiernan – Commander, Combined Forces Land Component Command (September 2002-May 2003) Peter McPherson – Chief of Economic Policy, Coalition Provisional Authority (April 2003-September 2003) Frank Miller – Chairman, Executive Steering Group of the National Security Council (August 2002-March 2003); Senior Director for Defense Policy and Arms Control, National Security Council (January 2001-March 2005) Christopher Milligan – Iraq Deputy Director, USAID (March 2003-2005) Rear Admiral (Ret.) David Nash – Director, Program Management Office (July 2003-May 2004); Director, Project and Contracting Office/Iraq Reconstruction Management Office (June 2004-August 2004) Andrew Natsios – Administrator, United States Agency for International Development (May 2001-January 2006) Ambassador John Negroponte – United States Ambassador to Iraq (June 2004-March 2005); Deputy Secretary of State (February 2007-January 2009) General Raymond T. Odierno – Commanding General, 4th Infantry Division (October 2001-June 2004); Commander, Multi-National Corps-Iraq (December 2006-February 2008); Commander, Multi-National Force-Iraq (September 2008-present) • xiii • • Key U.S. Figures in Iraq Reconstruction • Rear Admiral (Ret.) David Oliver – Director, Office of Management and Budget, Coalition Provisional Authority (June 2003-November 2003) General David Petraeus – Commanding General, 101st Airborne Division (March 2003-June 2004); Commander, Multi-National Security Transition Command-Iraq (June 2004-September 2005); Commander, Multi-National Force-Iraq (February 2007-September 2008); Commander, United States Central Command (October 2008-present) General (Ret.) Colin Powell – Secretary of State (January 2001-January 2005) Dr. Condoleezza Rice – National Security Advisor (January 2001-January 2005); Secretary of State (January 2005-January 2009) Donald Rumsfeld – Secretary of Defense (January 2001-December 2006) Ambassador Joseph Saloom – Director, Iraq Reconstruction Management Office (May 2006-May 2007) Lieutenant General Ricardo Sanchez – Commander, Combined Joint Task Force-7 (June 2003-June 2004) Ambassador David Satterfield – Deputy Chief of Mission in Iraq (May 2005-July 2006); Senior Advisor to the Secretary of State on Iraq (August 2006-present) Major General Darryl A. Scott – Commander, Joint Contracting Command- Iraq (January 2006-January 2008) Brigadier General Stephen Seay – Commander, Joint Contracting Command-Iraq/Head of Contracting Authority (October 2004-2005) Ambassador Daniel Speckhard – Director, Iraq Reconstruction Management Office (June 2005-August 2006); Deputy Chief of Mission (August 2006-November 2007) James “Spike” Stephenson – USAID Iraq Mission Director (February 2004- March 2005) Lieutenant General Carl Strock – Deputy Director of Operations, Coalition Provisional Authority (June 2003-September 2003); Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2004-2007) • xiv • • Hard Lessons: The Iraq Reconstruction Experience • Ambassador William B. Taylor – Director, Iraq Reconstruction Management Office (July 2004-May 2005) Brigadier General Michael Walsh – Commanding General, U.S. Army Corps of Engineers-Gulf Region Division (October 2006-October 2007) Thomas Warrick – Director, Future of Iraq Project (April 2002-March 2003) Ross Wherry – USAID Senior Reconstruction Advisor for the Bureau for Asia and the Near East (October 2002-August 2004); and USAID Director, Office of Iraq Affairs (2004-March 2006) Dr. Paul Wolfowitz – Deputy Secretary of Defense (March 2001-May 2005) • xv • Acronyms AIRP Accelerated Iraq Reconstruction Program BSA Board of Supreme Audit CAP Community Action Program CCCI Central Criminal Court of Iraq CENTCOM United States Central Command CERP Commander’s Emergency Response Program CFLCC Coalition Forces Land Component Command CJTF Combined Joint Task Force CMATT Coalition Military Assistance Training Team CPA Coalition Provisional Authority CPA-IG Coalition Provisional Authority Inspector General CPATT Coalition Police Assistance Training Team CPI Commission on Public Integrity CSIS Center for Strategic and International Studies CSP Community Stabilization Program DART Disaster Assistance Relief Team DCAA Defense Contract Audit Agency DCMA Defense Contract Management Agency DFI Development Fund for Iraq DoD Department of Defense DoJ Department of Justice DoS Department of State ePRT Embedded Provincial Reconstruction Teams ESF Economic Support Fund FAR Federal Acquisition Regulation FEST Forward Engineering Support Teams FOB Forward Operating Base FPS Facilities Protection Service GAO Government Accountability Office GRD Gulf Region Division GST Governorate Support Team IAF Iraqi Armed Forces IAMB International Advisory and Monitoring Board ICDC Iraqi Civil Defense Corps ICITAP International Criminal Investigative Training Assistance Program IDIQ Indefinite Delivery, Indefinite Quantity [contract] • xvi • • Hard Lessons: The Iraq Reconstruction Experience • IED Improvised Explosive Device IG Inspector General IGC Iraqi Governing Council IIF Iraqi Intervention Force IIG Iraqi Interim Government IJ Investigative Judges IMF International Monetary Fund ING Iraqi National Guard IPS Iraqi Police Service IRDC Iraqi Reconstruction Development Council IRMO Iraq Reconstruction Management Office IRRF Iraq Relief and Reconstruction Fund ISF Iraqi Security Forces ISFF Iraq Security Forces Fund ITAO Iraq Transition Assistance Office JCC-I Joint Contracting Command – Iraq JMD Joint Manning Document JSAT Joint Strategic Assessment Team JSPA Joint Strategic Planning and Assessment JTF Joint Task Force LGP Local Governance Program LOGCAP Logistics Civil Augmentation Program MAAWS Money as a Weapons System MBPD Million Barrels Per Day MNC-I Multi-National Corps – Iraq MNF-I Multi-National Force – Iraq MNSTC-I Multi-National Security Transition Command – Iraq MoD Ministry of Defense MoI Ministry of Interior MW Megawatt NGO Nongovernmental Organization NRRRF Natural Resources Risk Remediation Fund NSC National Security Council NSPD National Security Presidential Directive OIF Operation Iraqi Freedom OMB Office of Management and Budget OPLAN Operations Plan • xvii • • Acronyms • ORHA Office of Reconstruction and Humanitarian Affairs OTI Office of Transition Initiatives PCO Project and Contracting Office PHC Primary Healthcare Center P.L. Public Law PMO Program Management Office PRB Program Review Board PRDC Provincial Reconstruction Development Council PRT Provincial Reconstruction Team QRF Quick Response Fund REO Regional Embassy Office RFP Request for Proposal RIE Restore Iraqi Electricity RIO Restore Iraqi Oil RSCMA Reconstruction and Stabilization Civilian Management Act of 2008 S/CRS Department of State-Office of the Coordinator for Reconstruction and Stabilization SAMP Single Acquisition Management Plan SIGIR Special Inspector General for Iraq Reconstruction SOE State-owned Enterprise SOMO State Oil Marketing Organization SOW Statement of Work SPMO Sector Program Management Office TAL Transitional Administrative Law TNA Transitional National Assembly TRA Transition Readiness Assessment UN United Nations UNSCR United Nations Security Council Resolution USAAA United States Army Audit Agency USACE United States Army Corps of Engineers USAID United States Agency for International Development USIP United States Institute of Peace WMD Weapons of Mass Destruction • xviii • • Hard Lessons: The Iraq Reconstruction Experience • • xix • Part I Planning for Postwar Iraq September 2001 to May 2003 Chapter 1 Planning Begins I have no idea what CENTCOM was planning, and I have absolutely no idea what the Joint Chiefs of Staff were planning. I do know that the political guidance they were getting from Rumsfeld, the NSC, and the White House was, ‘You got about three months to get [the postwar Iraqi government] up and running.’* General Colin Powell Secretary of State (2001-2005) The origins of U.S. reconstruction policy in Iraq are rooted in a series of de- bates that occurred during the fall of 2001, when President Bush ordered the Pentagon to revise its plans for deposing Iraqi dictator Saddam Hussein.1 From the outset, Secretary of Defense Donald Rumsfeld believed that, after Saddam’s fall, power should rapidly transfer to an interim Iraqi authority. Reflecting this belief, Pentagon officials conceived of U.S. forces as liberators who would leave Iraq within months of toppling the regime. In this scenario, the United States would not need to administer the functions of Iraq’s government after major combat operations ceased. 2 A different view of regime change developed at the State Department. Some senior officials in Foggy Bottom believed that Iraq, with its history of sectarian violence, could not be easily reshaped. They concluded that invading Iraq and replacing its totalitarian regime would require a U.S. commitment of enormous scope, carried out over a period of years, engaging everything from Iraq’s judiciary to its electrical grid. Secretary of State Colin Powell pointedly told the President that “when you hit [Iraq], it’s like a crystal glass. It’s going to shatter. There will be no government. There will be civil disorder. You’ll have 25 million Iraqis standing around looking at each other.”3 The tense interplay between these competing visions fundamentally shaped the process of prewar planning for postwar Iraq in the fifteen months that pre- ceded the March 2003 invasion. As planning moved forward, experts inside and outside government—including some at the Department of Defense—warned that failing to prepare for a more extensive engagement after regime change ex- posed the United States to extraordinary risks. Although the NSC agreed that * SIGIR interview with General (Ret.) Colin Powell, former Secretary of State, February 4, 2008. • 3 • • Chapter 1 • Iraq should be liberated from Saddam’s tyranny, the disagreements about the postwar plan remained unresolved right up to the invasion. They arose from differing assessments of prewar conditions in Iraq and what the consequences of deposing Saddam would be. A Brief History of Modern Iraq Shortly after World War I, Winston Churchill, then head of Britain’s War Office, told the commander of British forces in Iraq: “The fate of the province depends entirely upon whether a reasonable scheme for main- taining order can be devised at a cost which is not ruinous.”4 Creating a “reasonable scheme,” however, proved exceedingly difficult. The British shaped and laid claim to modern Iraq through the 1916 Sykes- Picot agreement, negotiated by the United Kingdom, France, and Russia in anticipation of the fall of the Ottoman Empire at the end of World War I. By 1920, Iraqis living under British military occupation had compiled a list of grievances against their foreign rulers. Shi’a clerics in the south demanded an independent Islamic government. The Kurds in the north wanted autonomy. Tribesmen throughout the country opposed the British-imposed tax system and forced labor. Eventually, senior Sunni and Shi’a clerics joined together to issue a fatwa calling for rebellion. An insurgency started in Baghdad and quickly spread across the coun- try, forcing the British to move up their timetable for granting Iraq full sovereignty.5 In their efforts to build an independent state, British officials faced the challenge of melding three distinct social structures (tribal, clerical, urban), three ethno-religious groups (Sunni Kurds, Sunni Arabs, Shi’a Arabs), and three territorial regions (north, central, south).6 The solution they ulti- mately settled on, undertaken with the advice of British Arabists Gertrude Bell and T.E. Lawrence, was to install a king, Emir Faisal, to lead the new country. The 1921 investiture of Faisal—a Sunni—entrenched a pattern of volatile sectarian politics that would burden Iraq for decades.7 The exercise of power by the minority Sunnis over the majority Shi’a produced instability: 58 separate governments ruled Iraq in the 37 years between 1921 and the 1958 revolution that overthrew the monarchy.8 In 1963, the Sunni-controlled Ba’ath party took power in a coup.9 By the mid-1970s, a middle class had emerged in Iraq that was a model for its neighbors. High oil prices briefly pushed the country’s per capita gross • 4 • • Planning Begins • domestic product past that of Spain’s. A secular state with an excellent education system and a thriving economy, Iraq seemed poised to break with its turbulent past. But this relative renaissance was not to last. In 1979, a law school dropout named Saddam Hussein seized power. He would rule Iraq for the next 24 years at ruinous cost. In 1980, Saddam launched his country on a disastrous eight-year war with Iran that left a half million Iraqis dead. The war ended the country’s brief period of prosperity, decimated a generation of young men, and roiled tensions between the regime’s Sunni Arab elite and their Shi’a and Kurdish coun- trymen. In 1990, Saddam invaded Kuwait and the United States quickly responded, leading to the 1991 Gulf War.10 Saddam was badly defeated by a broad coalition of forces, and his regime became an international pariah. By the year 2000, the impact of multiple wars, severe international sanctions, and repressive rule had left Iraq a broken country. Iraq Under Saddam In 2003, Iraq’s population of around 27 million people lived in an area about the size of California. The land between the Tigris and Euphrates Rivers, known as the cradle of civilization, had given birth to remarkable innovations in writing, farm- ing, law, medicine, and governance. But Iraq suffered under a brutal tyrant whose destructive policies had led to the imposition of harsh United Nations (UN) sanctions. The deterioration of the country’s physical infrastructure stemmed, to varying degrees, from these sanctions, Saddam’s neglect, the Iran-Iraq War, and the 1991 Gulf War. During the Gulf War, Iraq inflicted significant damage on Kuwait. Under the supervision of then-Secretary of Defense Richard Cheney, Kuwaiti and U.S. of- ficials planned the reconstruction of Kuwait in advance of its liberation. Kuwait’s quick recovery largely resulted from work carried out by the U.S. Army Corps of Engineers (USACE) and private contractors, including Bechtel, and Brown and Root, both of which would later play major roles in Iraq’s reconstruction.11 Although Saddam restored some essential services after the Gulf War, the larger recovery of Iraq proved more daunting. United Nations-imposed sanc- tions and an international trade embargo, aimed at preventing the regime from acquiring ballistic missiles and weapons of mass destruction, limited the country’s capacity to recover.12 Iraq’s non-oil economy was especially hard hit. By the mid- 1990s, unemployment and under-employment exceeded 50 percent.13 Iraq’s • 5 • • Chapter 1 • gross domestic product, which peaked in 1990 at $74.9 billion, remained below $20 billion throughout most of the decade.14 Under Saddam, Iraq had plunged from a gradually advancing middle-income country to a poor and underdeveloped one. In its shift “from relative affluence to massive poverty,” 60 percent of Iraq’s population was left heavily dependent on the government-provided food ration for their livelihood.15 By the mid-1990s, these rations, delivered through the country’s public distribution system, provided only 1,100 calories per person per day, causing widespread malnutrition.16 Faced with rising social and economic instability, Saddam acceded in 1995 to a UN proposal, on the table since 1991, to allow the use of proceeds from controlled oil and gas sales to purchase food and medicine.17 Under the new “Oil-for-Food Program,” the UN managed monthly distributions of 450,000 tons of flour, clarified butter, peas, lentils, beans, sugar, tea, salt, and soap through a network of 44,000 privately owned corner stores. At one level, the program worked, effectively doubling the population’s per capita caloric intake.18 But beneath the sanctions and authorized oil sales, an illicit economy flourished. Institutionalized corruption infected both the government and the supporting UN programs, spawning powerful criminal elements within Iraq.19 The reversal in U.S.-Iraqi relations during Saddam’s rule—with Saddam first an ally and then an enemy—increased Iraqi suspicion that the West had designs on its territory and oil wealth. These suspicions—together with the effects of internal political violence, Saddam’s ceaseless propaganda, a corrupt public sec- tor, regular shortages of food, medicine, and everyday goods, and frequent U.S. bombing of air-defense installations in the no-fly zones—led to a siege mentality among many Iraqis. The peculiar mix of charity and harsh sanctions that defined the international community’s relations with Iraq in the years following the Gulf War presented a paradox. Saddam’s brutal secrecy and intrigue shrouded the inner workings of the Iraqi state, while the UN’s distribution scheme for goods and services provided the international organization with extensive connections in the country.20 Thus, in 2003, the UN sanctions committee had a list of every good it had permitted Iraq to import for about a decade, down to fuses in power plants.21 Although the UN’s records were not organized as a needs assessment of the infrastructure, a diligent review of them could have revealed how much cement a particular Iraqi factory produced or what spare parts an Iraqi electricity plant had ordered. • 6 • • Planning Begins • Initial Planning On September 29, 2001, Secretary Rumsfeld ordered a review of existing Iraq war plans.22 Shortly thereafter, General Tommy Franks, Commanding General of the U.S. Central Command (CENTCOM)—the combatant command with responsibility for the Middle East and Central Asia—removed a small group of key planners from the Afghanistan campaign and directed them to revise plans to attack Iraq.23 At the outset, Secretary Rumsfeld did not advise the planners to prepare for a lengthy occupying military administration after Saddam’s regime fell.24 He presumed that others in the government, probably the Department of State, would handle the governance aspects of “Phase IV,” military parlance for operations after the end of major combat.25 The concept of operations Rumsfeld and Franks devised in four videocon- ferences between Thanksgiving and late December 2001 focused chiefly on the combat phase. The war plan Secretary Rumsfeld briefed to President Bush on December 28, 2001, anticipated a rapid postwar handoff to a provisional Iraqi government and a minimal continuing military footprint.26 In early 2002, the State Department’s Bureau of Near Eastern Affairs launched the “Future of Iraq Project” to assess postwar requirements. Six days after the President named Iraq as part of the “Axis of Evil” in his January 29, 2002 State of the Union address, project director Thomas Warrick submitted an outline of sub- jects to Ambassador Ryan Crocker, then serving as Deputy Assistant Secretary of State for Near Eastern Affairs. The outline anticipated seventeen working groups, composed primarily of Iraqi exiles, that would evaluate post-invasion needs in areas ranging from rule of law and public finance to oil, energy, and anticorrup- tion.27 The project would serve both as a means to expand postwar planning and as a vehicle to consolidate competing Iraqi exile groups, who were involved with the project from its earliest days. White House coordination of nascent planning for Iraq began in the spring of 2002 during twice-weekly meetings of the National Security Council’s Deputies Committee, which comprises the second-in-command officials—or their rep- resentatives—from the Departments of State and Defense, the CIA, and the military’s Joint Staff.28 Ideas about how to handle the postwar phase took shape during these meetings. The Deputies Committee focused on three concepts: a liberation model in which Iraqis would quickly take charge through a provisional government; a military administration led by CENTCOM; or a civilian transi- tional authority, perhaps run under UN auspices. Irrespective of which concept or combination of concepts would apply, policymakers addressed three linked issues: how to secure public order, what relief and reconstruction operations • 7 • • Chapter 1 • would be necessary, and how to promote U.S. interests in Iraq’s longer-term economic and political stability.29 “One of our main themes was liberation rather than occupation,” Under Secretary of Defense for Policy Douglas Feith said. “There was this constant de- bate between those of us who said we’ve got to push the Iraqis forward,” Feith recounted, and others who judged that the Iraqis would be ready to govern them- selves only after several years.30 Reflecting the views of Secretary Rumsfeld, Feith advocated a rapid transition to Iraqi control. Drawing lessons from past nation- building efforts, he and Rumsfeld believed that minimizing the military’s presence would force local populations to rely more rapidly upon their own leaders to resolve problems. They were convinced that by limiting the military’s postwar role in Iraq, the United States could avoid the “culture of dependency” that had taken root in other post-conflict interventions.31 The U.S campaign in Afghanistan appeared to support the rapid-transfer ap- proach.32 After a small U.S. force achieved military victory, political authority passed to Hamid Karzai, an Afghan exile leader selected by a loya jirga—a grand assembly of Afghan tribal leaders—and subsequently appointed president of Afghanistan at an international conference in Bonn. Per capita reconstruction expenditure in Afghanistan had remained modest. Officials viewed this seemingly successful postwar transition as a vindication of the Administration’s break with conventional wisdom about nation building, buttressing arguments of Defense officials that Afghanistan should serve as the model for Iraq.33 The State Department argued against applying the Afghanistan model to Iraq. State experts believed that Iraqi exile leaders were unlikely to garner the same level of support from their countrymen as Karzai had enjoyed from Afghans. Moreover, State’s analyses suggested that Iraq would need a longer transitional period because of the need to reconcile Iraq’s competing ethnic and sectarian groups. The State Department advocated a U.S.-led “Transitional Civil Authority” that would govern postwar Iraq during a “multi-year transitional period to build democratic institutions.”34 This approach ultimately was embodied by the Coalition Provisional Authority, which ruled postwar Iraq from May 2003 to June 2004 ostensibly under the Defense Department’s aegis. Interagency Planning Accelerates By mid-2002, an invasion of Iraq remained in the realm of speculation for all but a handful of senior officials in Washington. The machinery of interagency planning in the National Security Council largely sat idle, leaving open the fis- sure between planning for war and planning for war’s aftermath. The differences among the three underlying policies for a postwar framework—rapid transfer to • 8 • • Planning Begins • Iraqi control, military administration, or civilian transitional authority—had yet to be seriously addressed, much less resolved. Nor had officials reached consen- sus on the public order and reconstruction requirements for each scenario.35 In August 2002, the President and his advisors enlarged the Iraq planning effort to include civilian agencies that ostensibly would administer the postwar phase. Iraq: Goals, Objectives, Strategy, a national security document signed by President Bush on August 29, 2002, articulated an evolving strategy that would employ “all instruments of national power” to free Iraq from Saddam. The docu- ment stated that the United States would “work with the Iraqi opposition to demonstrate that we are liberating, not invading Iraq, and give the opposition a role in building a pluralistic and democratic Iraq, including the preparation of a new constitution.” As for rebuilding, the U.S. strategy would: ...demonstrate that the United States is prepared to play a sustained role in the reconstruction of post-Saddam Iraq with contribution from and participation of the international community, that rapidly starts the country’s reconstruction, that preserves but reforms the current Iraqi bureaucracy and reforms Iraqi military and security institutions.36 Secretaries Powell and Rumsfeld and Vice President Cheney met with Iraqi exile leaders to show support and to express the seriousness of U.S. intentions.37 To help execute the ambitious mission envisioned by the August 29 docu- ment, the Joint Staff instructed CENTCOM that it should begin planning to administer Iraq for an interim period after the invasion. This order appeared to counter the earlier Rumsfeld presumption that the Defense Department would not bear principal responsibility for managing the country after the combat phase concluded. Despite the Joint Staff order, “there wasn’t a whole lot of intellectual energy being focused on Phase IV,” one of CENTCOM’s key planners said.38 While most of CENTCOM’s staff focused on Phases I, II, and III, Major Thomas Fisher and Major Ray Eiriz, two mid-level officers who had served in Bosnia and Kosovo, took charge of Phase IV.39 To jump-start postwar planning efforts across the government, National Security Advisor Condoleezza Rice established a National Security Council (NSC) Executive Steering Group on Iraq in August 2002 and asked Frank Miller, an NSC senior director, to chair it. The Joint Staff had already formed a political-military team to link detailed operational planning at CENTCOM with interagency planners in Washington. An energy infrastructure working group, a diplomatic working group, a global communications office, and a humanitarian working group eventually joined the planning effort.40 • 9 • • Chapter 1 • Under Secretary Feith also enlarged the Pentagon office responsible for Iraq policy planning. Until then, only four people in Defense’s Near East and South Asia Office had worked full-time on Iraq.41 Feith brought together a staff of about a dozen under a new “Office of Special Plans” to engage in large-scale planning for war. Later, officials working on the management of postwar Iraq would discover that this office had produced relevant analyses and concept papers that were not shared during interagency consultations or with those who eventually played a leading role in postwar Iraq—emblematic of the extensive compartmentalization of prewar planning for postwar Iraq.42 NSC’s Humanitarian Working Group Assessing how the war might disrupt the provision of food, water, and shelter fell to an interagency Humanitarian Working Group led by Elliot Abrams, an NSC senior director, and Robin Cleveland, associate director of the White House Office of Management and Budget (OMB).43 The working group, which began weekly meetings in Cleveland’s office in September 2002, included officials from the CIA, United States Agency for International Development (USAID), the Joint Staff, and the Departments of Defense, State, Treasury, Justice, and Commerce.44 One nightmare scenario loomed above all others—the possibility that Saddam would use chemical or biological weapons against an invading force or his own people. In the wake of such a disaster, hundreds of thousands or even millions of Iraqis might flee. Very large refugee flows were thought by Pentagon analysts to be the most likely challenge the United States would face in the aftermath of an inva- sion.45 Accordingly, Cleveland and Abrams focused their working group on how the U.S. government would respond to large-scale humanitarian contingencies. They also considered the role of the UN. Several officials initially resisted continuing the Oil-for-Food Program—which partially financed Iraq’s public distribution system, through which 25 million Iraqis received a monthly food staple—on grounds that it ceded too much control to the UN. But USAID and State officials argued that the program would help prevent starvation if food be- came scarce. A related question was how to administer oil revenues accruing under the Oil-for-Food Program. Several working group members again argued against continuing UN control, with State and USAID officials again urging that the international body was best suited to serve as custodian of Iraq’s oil wealth. Several rounds of adjudication through the Deputies Committee left the UN in control of the Oil-for-Food program and its revenues.46 Under the leadership of Elliot Abrams, the Humanitarian Working Group quietly coordinated with the international aid community to develop a “no-strike” list of civilian infrastructure, such as hospitals and power plants. To separate the • 10 • • Planning Begins • regime’s military command and control facilities from known civilian sites, the UN and NGOs familiar with Iraq nominated locations that the military would then cross-walk through an intelligence-community database.47 Although the working group had been chartered to evaluate only humani- tarian contingencies, its participants soon realized that Iraq’s infrastructure and ministries would play essential roles in postwar operations.48 Ambassador Wendy Chamberlin and Ross Wherry of USAID thus began a reconstruction assessment that considered what it would take to get the infrastructure and ministries up and running after the invasion.49 This raised a fundamental strategic question: how extensive should postwar reconstruction be? Reconstruction geared to repair war damage would differ greatly from attempting to reverse the deleterious effects of the Iran-Iraq war, sanctions, and Saddam’s own destructive policies.50 The lack of information about Iraq’s infrastructure and government insti- tutions made it difficult to determine what was necessary to restore essential services. “We never had anything more than a PowerPoint briefing,” a Defense official later commented. “We might have had some financial estimate papers, but it was a lot of back-of-the-envelope, ‘what will it take to fix the Ministry of fill-in-the-blank.’ It was all guesstimates made on top of suppositions.” 51 The few detailed reports reviewed by the working group suggested that sanctions had significantly limited Iraq’s recovery from the first Gulf War. For example, a UN assessment of the electrical sector concluded that a lack of spare parts left the system remarkably fragile. In light of Iraq’s substantial oil wealth, however, the scope of expected infrastructure repairs seemed manageable. The group assumed that long-term repairs could be undertaken and funded by the Iraqis.52 With military, political, and democratization plans developed out of sight of the Humanitarian Working Group, its members could consider only in general terms how reconstruction might help legitimize a new Iraqi state. The group asked for but never received a briefing on how public-order requirements would be met. It was also not permitted to examine the potential role of reconstruc- tion in civil administration. Department of Justice proposals to employ police trainers were dismissed as falling outside the group’s mandate.53 The Defense Department asserted that it had plans for postwar security well in hand.54 As one working group member said, it appeared that “a lot of things were decided but never discussed.”55 In the absence of direction from above, the working group’s co-chairs, Abrams and Cleveland, developed a set of core judgments about postwar Iraq. “It was taken as an assumption,” one participant said, “that the war would be brief, war damage would be minimal, and oil revenues would finance almost all of recon- • 11 • • Chapter 1 • struction.”56 They also assumed that the political people would somehow “pull a Karzai out of the hat,” and that the Iraqis would take care of the rest.57 Towards the end of 2002, with time running out and war a few months away, working group officials were putting in eighteen-hour days to make sure their parts of the plan came together. General Franks at CENTCOM did not seriously question the approach developed under Abrams’s and Cleveland’s leadership. Briefed twice by the working group’s members on their findings, General Franks reacted favorably. “On both occasions, he said this was good,” an official recalled. Franks said that the reconstruction and humanitarian planning “basically jibes with what we’re thinking.”58 Structuring Postwar Administration On October 15, 2002, Under Secretary Feith briefed the National Security Council on a proposed structure for CENTCOM’s military administration of postwar Iraq. The structure consisted of a military headquarters, known as Combined Joint Task Force-Iraq (CJTF-I), headed by a three-star general, and a civil administration, headed by a civilian “Iraq coordinator.” Both would fall under CENTCOM’s command. The briefing recommended that the Secretary of Defense be placed in charge of the entire effort, reflecting Rumsfeld’s view that political, economic, and secu- rity activities in postwar Iraq should not be managed by separate institutions.59 This proposed structure touched off a vigorous debate among interagency plan- ners. Lieutenant General George Casey, who would command military forces in Iraq from 2004 to 2006, later said, “We lost, in my view, two months while we fought over who was going to be in charge.”60 CENTCOM divided Phase IV into three overlapping stages—Alpha, Bravo, and Charlie.61 During Alpha, the military would have the lead; during Bravo, a U.S. civilian authority would move to the forefront; during Charlie, the Iraqis would take charge. “None of this was exclusive,” CENTCOM’s chief of war plans explained. “It was who dominated and who had the lead during those phases.”62 The “A-B-C” approach was a way for the military to conceptualize what and when certain tasks would have to be performed, given that planners did not yet know whether U.S. policy ultimately would call for a rapid handoff to Iraqi leaders or to a civilian transitional authority of longer duration. The phases were set; their duration was not. On October 18, 2002, Secretary Rumsfeld asked Feith to stand up the postwar planning office that would prepare for the civil administration of Iraq. But Rumsfeld canceled that order just a few days later. Feith later learned from Deputy National Security Advisor Steven Hadley that the reversal came from a • 12 • • Planning Begins • Presidential decision that the U.S. government should not engage in highly vis- ible postwar preparations while in the middle of international efforts to defuse the threat posed by Iraq without war.63 These decisions reflected a strategic resistance to bringing postwar planning into the open. All the interagency Iraq planning groups worked in secret. Few knew the others existed. Officials justified the extreme secrecy on the grounds that ongoing diplomatic negotiations would be undercut if Saddam knew that postwar planning was well underway. “There was a reluctance to pull that all to- gether,” Feith explained, “because, while you’re saying that you want to resolve this dispute through non-military means, there’s a sense that you’re contradicting yourself if you’re not only planning for the war but planning for the postwar.”64 While postwar planning efforts progressed under strict secrecy, the build-up of troops and materiel around Iraq’s borders continued—a necessary threat to make diplomatic negotiations credible in the eyes of Saddam. The structure of postwar administration and the mechanics of political tran- sition remained undecided through the fall. A revised version of the strategy paper, Iraq: Goals, Objectives, Strategy, issued in late October 2002, reflected the lack of a clear decision on these matters. Rather than articulating a detailed timetable for transition to Iraqi control, the memorandum spoke only of an interim administration that would provide for “external and internal security,” “humanitarian assistance,” and “the country’s political, economic, and security reconstruction.”65 Early Warnings As planning for the invasion moved forward, the Departments of Defense and State produced assessments of what could go wrong. In October 2002, Secretary Rumsfeld, Chairman of the Joint Chiefs of Staff General Richard Myers, Vice Chairman General Peter Pace, Deputy Secretary Wolfowitz, and Under Secretary Feith developed a “Parade of Horribles” memo that presented 29 possible catas- trophes the invasion of Iraq might engender. In retrospect, the memo proved remarkably prescient. Number thirteen was not finding weapons of mass destruc- tion. Other fears included sectarian and ethnic strife among Sunnis, Shi’a, and Kurds; the failure to capture Saddam Hussein; Iraq fracturing into two or three pieces; U.S. postwar involvement lasting ten years, rather than two to four; the cost of the postwar effort being too high; and a turnabout in world opinion.66 Rumsfeld shared the memo at an NSC meeting with the President, the Vice President, the Secretary of State, the National Security Advisor, and the CIA Director.67 In mid-December, Secretary Powell received a twelve-page warning—co- authored by Ryan Crocker, eventual Ambassador to Iraq—titled “The Perfect • 13 • • Chapter 1 • Storm.” This memo accurately warned that the struggle for dominance after the fall of Saddam would inspire violent clashes among Iraq’s sects, tribes, and ethnic factions, possibly leading to the country’s fragmentation.68 Deputy Secretary of State Richard Armitage believed that this memo was shared with the NSC, although members of Frank Miller’s Executive Steering Committee were not privy to it or to Rumsfeld’s “Parade of Horribles” memo.69 Caveats about what lay ahead could also be found in the history of nation building.70 Of the sixteen countries in which the United States attempted to implant institutions of democratic government over the past century, only four—West Germany, Japan, Panama, and Grenada—remained democratic a decade after U.S. forces ended their active involvement in governance. In three countries—Cuba, Haiti, and Nicaragua—intervention led to worse misrule and greater economic decline.71 Some political scientists and historians noted that Iraq’s social and political attributes could make the country inherently resistant to political reform by outsiders, and that any effort there would be unlike the U.S. occupation of Germany and Japan.72 Both Germany and Japan were highly de- veloped societies with homogeneous populations and established bureaucracies. Operational planning for their occupation began within months of the bombing of Pearl Harbor, and thousands of native speakers were trained.73 The potential difficulty in remaking Iraq’s political system was underscored in January 2003 by a then-classified National Intelligence Council assessment, Principal Challenges in Post-Saddam Iraq, which predicted that establishing a democratic system in Iraq “would be a long, difficult, and turbulent process.”74 CIA Director George Tenet and his deputy, John McLaughlin, did not highlight the find- ings of the assessment to interagency planners or ask that it be briefed to the NSC’s Executive Steering Group on Iraq or to the NSC’s Deputies Committee.75 Several other studies outlined how the expected difficulties of regime change would affect the military and civil missions in Iraq.76 The most comprehensive was by Conrad Crane and Andrew Terrill of the Army War College Strategic Studies Institute. In coordination with the Army Deputy Chief of Staff for Operations, Crane’s interdisciplinary team began work on their study in October 2002. Two dozen officials from the Joint Staff, Joint Forces Command, and the Departments of Defense and State vetted its interim findings in mid-December. Published February 1, 2003, the report identified 135 tasks that military and civilian agen- cies would need to perform across 21 categories of activity.77 The Congress also examined postwar scenarios. On August 1, 2002, the Senate Foreign Relations Committee held a hearing at which members heard warnings from scholars about potential challenges an invasion of Iraq could bring. It would be the only congressional examination of postwar scenarios before the • 14 • • Planning Begins • Congress authorized the President to “use the Armed Forces of the United States as he determines to be necessary and appropriate” to defend the United States against the threat from Iraq and to enforce UN resolutions regarding Iraq.78 Although six committees and two subcommittees held more than a dozen hear- ings subsequent to the vote in Congress to approve the use of force, most of the hearings focusing on post-Saddam Iraq did not occur until just before hostilities began in March 2003.79 The Future of Iraq Project By late 2002, participants in the State Department’s Future of Iraq Project began formulating their own vision of postwar administration. Working independently of other planning teams, fourteen of the project’s seventeen working groups met between July 2002 and April 2003, bringing some 200 Iraqi exiles together with government and international experts.80 The project identified a range of issues that an invading army inevitably would confront, from the possibility of politi- cal violence to the decrepit electricity, oil, and water infrastructures. The richly developed reports constitute the single most rigorous assessment conducted by the U.S. government before the war. Although the findings of each working group did not amount to an operational plan, their reports contained facts and analysis that could—and in some cases did—inform operational planning. Several factors—particularly timing—kept most project findings from in- fluencing interagency deliberations. Of the fourteen working groups that did meet, many carried their deliberations into 2003—too late to influence pre- war planning.81 Moreover, the completed reports proved of varying utility. The Transitional Justice Working Group, for example, offered a detailed analysis of Iraq’s political-military establishment. The specific suggestions it contained came close to constituting an action plan on the legal front. Others, such as the Public Health and Humanitarian Needs Working Group, offered only a generalized set of recommendations drawn from previous international crises. The NSC’s Executive Steering Group invited the project’s director, Thomas Warrick, to brief the group shortly before the invasion, but the project’s unwieldy reports—which in toto ran more than 1,000 pages—could not be easily reduced to a set of slides that policymakers could absorb.82 Warrick’s briefing did not raise a single issue for decision and was not viewed as useful at the time. To plan- ners preparing for war and a short postwar operation, the Future of Iraq Project did not look like a coherent operational plan.83 Only when Warrick produced an edited volume of findings after the war began could the project be seen as a comprehensive guide to issues the United States could face—and, by then, was already facing.84 • 15 • • Chapter 1 • Perhaps most critically, the project’s reports did not capture the attention of the State Department’s senior decision-makers. Secretary of State Colin Powell and his Deputy Secretary Richard Armitage did not use them to bolster their cautionary views or to push for more detailed planning on worst-case scenarios. Without a high-level patron, the project’s reports lacked the visibility and clout to reach key decision-makers in time.85 “I never felt that the Future of Iraq Project was embraced or connected to the actual planning effort for regime change,” Ambassador Ryan Crocker said, “and the farther we went into the calendar, the more noticeable that became.”86 Fragmented Planning The divergence Crocker noticed was the consequence of a planning process that had been fragmented from its beginning. For nearly a year, the NSC exercised loose coordination over separate efforts by State and Defense and did not seek the participation of post-conflict experts at USAID. The marked separation be- tween civilian and military preparations, which had existed since late 2001, was followed by further fragmentation within the interagency planning process, which had begun in earnest in August 2002. Even as officials thought they were moving toward an integrated master plan, the building blocks of that plan were being developed in a piecemeal fashion that rendered risks and needs less visible. The reasons for the fragmentation were in part bureaucratic, but, in an im- portant sense, they were also the product of higher-level strategic judgments. Calls for better-integrated planning and greater capacity to address worst-case scenarios were subordinated to the views of Defense Department officials who were committed to a rapid transfer of power. The liberation approach they and others backed became the operative strategy, with the White House elevating it to official U.S. policy by late fall 2002.87 As the fall turned to winter, NSC officials moved to integrate this vision of regime change into operational plans being prepared by the government’s civilian agencies. USAID was among the first to be mobilized. • 16 • • Planning Begins • Essential Services Overview: Prewar Levels in Iraq Metric88 Pre- invasion Electricity Production Megawatts 4,075 Oil Production Million Barrels per Day 2.58 Iraqi Security Forces Soldiers and Police 1,300,00089 Telecommunications Landline Subscribers 833,000 Mobile Subscribers 80,000 Iraq’s electricity sector suffered from years of inadequate maintenance and poor management under Saddam.90 According to the International Monetary Fund (IMF), Iraq’s monthly electricity production, from March 2002 to March 2003, averaged 4,075 megawatts per day.91 The distribution of power under Saddam heavily favored Baghdad, which received between 16 and 24 hours of power per day, while the average Iraqi household outside the capital received power for just 4 to 8 hours per day.92 The U.S. Department of Energy estimated that Iraq’s oil production fell to 2.0 million barrels per day (MBPD) in 2002, but increased to 2.58 MBPD just before the war.93 Although oil production itself is not an essential service, oil feeds the refineries that produce petroleum products for domestic consumption, is critical to electricity generation, and provides Iraq with much of the revenue that sup- ports other services. • 17 • Chapter 2 The Agencies Engage We needed to be thinking at a much different order of magnitude of what is required to reconstruct a failed state, in the context of a U.S. military invasion. James Kunder USAID Deputy Assistant Administrator for Asia and the Near East (2002-2004)* In 2002, the United States Agency for International Development administered nearly $7.5 billion in foreign aid programs.1 Its 2,000 employees and 5,000 con- tractors worked in more than 100 developing countries across the world.2 Many in government nonetheless viewed USAID as a minor player running small projects in faraway places. Despite its relative lack of capacity, USAID was fast becom- ing an essential player in the late 2002 planning for postwar Iraq. The National Security Council assumed that USAID’s disaster response teams could help contain humanitarian crises that might follow the invasion, and that its develop- ment know-how could help repair Iraq’s infrastructure and support the country’s transition to democracy. Some Pentagon planners—particularly those unfamiliar with USAID’s missions in Bosnia, Kosovo, and Afghanistan—imagined that the agency had vast powers to rush in civilians behind the troops and establish conditions that could lead to the soldiers’ deployment home. USAID officials first learned of their expected role in Iraq well after war planning had begun. Notably, USAID Administrator Andrew Natsios was not formally consulted in the early planning phases.3 Ross Wherry, who ultimately directed much of the agency’s reconstruction preparations, began to learn about Iraq planning in mid-2002 through a series of chance encounters, cryptic notes, and indirect suggestions that the agency should develop contingency scenarios.4 The agency did not become formally involved until August 2002, when USAID Assistant Administrator Wendy Chamberlin was asked to serve on the NSC’s Humanitarian Working Group. White House officials would ask several USAID officials to join the planning efforts over the next month.5 The agency’s Asia and Near East Bureau soon took charge of reconstruction planning, while the Bureau for Democracy, Conflict and Humanitarian Assistance prepared for humanitarian relief operations.6 In early October 2002, Administrator Natsios formed USAID’s Iraq Task Force, chairing * SIGIR interview with James Kunder, USAID Acting Deputy Administrator, February 15, 2008. • 18 • • The Agencies Engage • its weekly meetings thereafter to coordinate the agency’s efforts. Several hundred USAID employees eventually would work full time on Iraq plans.7 When it came to mobilizing resources for possible humanitarian disasters in Iraq, USAID officials proceeded with full Administration support.8 Mobilizing reconstruction resources, however, was a different matter. The NSC conceived of reconstruction primarily in terms of brick-and-mortar work, but USAID viewed such rebuilding as only part of a long-term social and political transformation necessary to achieving a fully democratic Iraq.9 This divergence reflected larger disagreements among the President’s advisors over what the postwar mission in Iraq demanded, making for a difficult and tense planning process.10 In every as- pect of the effort—in both the humanitarian and reconstruction areas—complex contracting regulations and time pressures pushed USAID’s capacities to the limit, exposing structural weaknesses in the U.S. government’s capacity to mo- bilize for contingency relief and reconstruction operations.11 USAID’s Vision for Post-Conflict Iraq, first drafted in October 2002, stated the Administration’s emerging policy that “reconstruction will aim to bring Iraqi facilities back to a modestly improved pre-conflict level.” It also included this pointed—and, in retrospect, markedly accurate—assessment: “complete recon- struction to the economic and institutional capacity of 1980 (conditions prior to the Iran-Iraq war) will require years of public investment.”12 Planning to Prevent a Humanitarian Disaster The fear that Saddam would severely damage his own country in response to a U.S. invasion drove much of USAID’s humanitarian planning. “What happens if Saddam blows up the dikes, the dams, floods the country?” Natsios asked.13 Refugees also were a paramount concern. In response, USAID mobilized its cadre of U.S.-based and international NGOs that carry out the agency’s humanitarian missions. The agency’s disaster relief expert, Jonathan Dworken, chaired regular meetings in the USAID crisis room to plan their deployment. USAID’s Office for Foreign Disaster Assistance built the largest Disaster Assistance Response Team in the agency’s history.14 USAID’s Office of Transition Initiatives (OTI), which works to stabilize countries making the transition from violence to peace, also mobilized much of its staff to work on Iraq planning.15 Programs to prevent or minimize acts of reprisal and to maximize high-visibility projects that would symbolize U.S. goodwill were geared toward best-case, worst- case, and middle-range scenarios.16 Food was also a top priority.17 The World Food Program, the food-aid branch of the UN, was deemed best suited to manage the logistics; it had the capacity to rush in 600,000 metric tons of food to feed 25 million people each month.18 In • 19 • • Chapter 2 • the early fall of 2002, the Director of USAID’s Office of Food for Peace alerted World Food Program officials in Rome that hostilities in Iraq might be immi- nent. Robin Cleveland, co-chair of the NSC’s humanitarian working group, then authorized up to $200 million for the World Food Program to survey roads, identify warehouses, and preposition trucks, supplies, and staff.19 It was the first U.S. down payment on postwar Iraq. Success in Iraq would depend significantly upon synchronizing civilian relief efforts with military combat operations. In early November 2002, a contingent from the NSC’s Humanitarian Working Group spent two days at CENTCOM headquarters in Tampa, Florida.20 The Humanitarian Planning Team, as this contingent came to be known, worked to improve coordination between plan- ners at CENTCOM and USAID.21 In Tampa, the planning team and its military counterparts walked through what each agency and the military would do in the event of mass civilian casualties, refugee flows, and disruptions in the water and food supply. Institutional differences made this joint planning difficult.22 In the view of some USAID officials, CENTCOM planners had a circumscribed view of post- war operations. Military planning naturally emphasized the combat phase. “They were very focused on operations orders: take this hill by this date, take this cross- roads,” Wherry said. USAID planners realized that meeting humanitarian needs would fall almost entirely on their shoulders.”23 Planning for Reconstruction The evolving postwar plan called for a shift to reconstruction efforts once hu- manitarian needs were met. The scope of reconstruction would depend upon the amount of damage.24 The Humanitarian Working Group developed reconstruc- tion plans for various sectors and assigned an agency to lead each one. USAID would bear responsibility for most sectors, including health, water and sanitation, electricity, education, transportation, telecommunications, and agriculture/rural development. It also would complement governance efforts by the Department of State. Officials at Treasury would handle plans for financial recovery and eco- nomic development. Oil was assigned to the Pentagon.25 Wendy Chamberlin, Ross Wherry, and Christopher Milligan managed USAID’s reconstruction planning.26 The agency’s institutional culture embraced a concept of development that went beyond merely rebuilding what war de- stroyed. Physical rehabilitation of damaged infrastructure would be one step in a larger democratic transition. Neighborhoods would need to elect their own governing councils to restore civil order. Teachers and civil servants would have to stay on the job. Employment programs, micro-lending, and other economic • 20 • • The Agencies Engage • stimuli would be offered alongside programs that fostered reconciliation. This conflict transformation framework had informed international peacekeeping missions in Somalia, Haiti, Bosnia, and Kosovo.27 USAID officials proposed that it should also be adopted in Iraq. White House officials were skeptical. This was exactly the kind of nation build- ing the Administration had wanted to avoid. Robin Cleveland, co-chair of the NSC’s Humanitarian Working Group, articulated a more limited view of U.S. objectives, insisting that only war damage would be repaired; the new Iraqi state would do most of the rebuilding, paying for it with Iraqi oil revenues. USAID planners, however, warned that achieving a stable and economically prosperous Iraq would require significant U.S. investment.28 The postwar policy for Iraq envisioned a democratic state that would threaten neither its regional neighbors nor U.S. interests. “Security, humanitarian assis- tance, and reconstruction aid,” National Security Advisor Condoleezza Rice stated, would be deployed “in support of this vision.”29 How much reconstruc- tion aid would be enough to achieve these goals was a matter of dispute between White House and USAID officials. The U.S. postwar strategy had a two-phased approach. USAID would at- tend first to providing food, water, public health, and emergency electricity. Once Iraq stabilized, it would expand its focus to improving basic infrastructure, including electricity, roads, irrigation systems, hospitals, markets, and schools. The overarching goal of infrastructure repair was to return service delivery to pre-conflict levels. Alongside physical reconstruction, USAID planned to promote economic renewal by bolstering Iraq’s private sector, improving its banking system, and modernizing its agricultural economy. One of the primary goals was to establish a regulatory regime favorable to private enterprise that would, in time, make Iraq competitive in the world market. USAID put forth its plans, recognizing that fostering democratic governance in Iraq based upon the rule of law would be an enormous challenge. The Department of State had the lead on developing a specific governance strategy, with USAID participating by preparing assistance programs that would help reform Iraq’s local governance. USAID expected State to provide guidance, but in the absence of a detailed framework from the Department, the agency de- veloped its own plan in which authority over funding many civic services would devolve to local governments, which had no previous experience in managing the delivery of essential services or administering the rule of law.30 This proposed radical restructuring of Iraqi governance institutions was meant to promote a clean break from Saddam’s highly centralized control. • 21 • • Chapter 2 • USAID’s approach to reconstruction embraced the Administration’s transfor- mational ambitions for Iraq, but also revealed the gulf between those ambitions and the limited resources that White House officials were willing, at the time, to commit. These differences came into stark relief when USAID’s Vision for Post- Conflict Iraq contrasted the goals for each sector with the status of Iraq’s dilapidated infrastructure. In the electricity sector, for instance, restoring service to prewar levels depended on finding enough portable generators and securing adequate supplies of fuel, substantial logistical challenges in a country with minimal refining capacity.31 A similar gap between goals and resources existed in the agricultural sector, Iraq’s largest industry after oil. Fostering “commercial processes and a market- based food economy” would require repairing irrigation systems on more than two million acres of land, engaging in extensive technology-transfer programs, and immediately providing assistance for upcoming rice and barley harvests.32 To meet the education sector’s goal of reopening schools for the new term, the United States would need to repair 3,000 schools and provide supplies and in- structional kits to 12,500 more.33 Conflicted Planning Planners framed reconstruction policy for postwar Iraq by setting benchmarks in each sector at one month, three months, six months, and twelve months. These benchmarks developed through a sustained back-and-forth debate between White House officials and those at USAID and other agencies. For example, OMB’s Robin Cleveland argued that the number of schools rehabilitated would be a good indicator for progress in the education sector. But the idea of counting buildings was anathema to USAID, whose subject-matter experts insisted that the percent- age of children in school would be a more accurate measure of progress toward primary-education goals. The number of schools became the benchmark. Cleveland’s demands often pushed planners beyond what they believed they could reasonably deliver. Missing from the intelligence, according to USAID’s Wherry, were assessments of the economy, governance, agriculture, and other “soft” aspects of Iraq’s condition. “If it couldn’t be got by a satellite, we just didn’t have it,” he said.34 At one point, Chris Milligan was directed to establish indicators for the transportation sector. “I had a turn-around time of four hours to determine how many miles of roads would be re-opened or repaired,” he said. To meet the deadline, he went to the USAID reference library, researched the available data on Iraq’s road networks, and provided his “best estimate” based upon limited information.35 The estimate went directly into USAID’s Vision for Post-Conflict Iraq. “A targeted 50 percent, or about 2,200 kilometers, of economically important roads and bridges open to high speed traffic,” was the sector goal.36 • 22 • • The Agencies Engage • USAID Reconstruction Sector-Goals Timeline Immediate Post Conflict 60 Days 6 Months 12 Months 18 Months Water and Sanitation Rubber water bladders and purification equipment for up to one million displaced persons. Generators will be provided to power water systems pumps as required. Repairs will begin on up to 10 urban water systems, assuming secure access to them. Dependable minimum water supply will have been re-established in 15 cities. Water systems will begin to be returned to local control. Revenue generation will be an issue at that point. Dependable minimum water supply will have been re-established in all cities greater than 25,000 persons. Primary sewage treatment will have been restored in ten urban centers. Public Health Delivery of medicines and consumable surgical supplies to treat injured civilians and operate medical facilities. Basic health services will be available to a targeted 25% of the population, and maternal/child health up to 50% of the populations, in secure areas. Basic health services will be available to a targeted 50% of the population, and maternal/child health up to 100% of the populations, in secure areas The reformed Ministry of Health will begin operating the health care system. Referral hospitals will be functioning in 21 urban locations. Basic Health services available to the entire population. Advanced surgical services available. Transportation Damage assessments will be reviewed to prioritize reconstruction efforts. Repairs to Umm Qasr and Basra International proceed. Port of Umm Qasr and Basra International Airport reopened for humanitarian traffic. Flour mills connected to seaport. A targeted 50%, or about 2,200 kilometers, of economically important roads and bridges are open to high-speed traffic. Ports of entry for highways are appropriately controlled. Reconstruction of roads, rail and barge landings completed to minimal level. The Ministry of Public Works will be restructured, and furthered transportation assistance will make a transition to being the responsibility of the Ministry and local governments. Install emergency generators at hospitals, pumping stations, other priority sites. Electricity A targeted 550 diesel- driven emergency generators will be installed. Rapid assessments conducted as security permits, and a power restoration plan prepared. 15% of the high voltage (132Kv and 33Kv) distribution net repaired, including rehabilitation of a targeted 50 substations and 5 generation plants in key urban areas. 40% of the previously served population has electricity. Generation of 6,750 MW achieved. An additional 60 substations and another 5 generation plants operational. Total electric supply a targeted 75% of pre-1991 level, with electricity reaching most, if not all, of the urban population. Prevent destruction of land records, ration lists, public documents. Local Development Identify key local leaders and councils; connect them to opportunities for relief and reconstruction assistance, using small grants for immediate assistance as appropriate. Radio stations operating in secure areas. Reconstruction offices established in all 18 provinces to coordinate projects and facilitate service provision. Interim local assemblies have clear roles and responsibilities. Local governments counterbalance recentralization tendencies; interim democratic institutions demonstrate representative and transparent local governance. Local administrations have responsibility for revenue generation for local services. Economic Governance Technical assistance teams will begin work outside Iraq to prepare for the needs of the Finance Ministry and the banks. Technical teams ready to move into Iraq to assist a vetted Iraqi financial leadership team. Small business lending facility prepared to open. Central Bank and MOF operating. Central Bank and SOMO cooperate on oil sales and food imports. Permissive environment for private banks. If a new currency is needed, ready for issuance. Programs promote competitiveness and global trade MOF handles all government payrolls. Legal framework is hospitable to private business. Privatization of state- owned businesses is occurring. Widespread access to private commercial banks. Source: USAID, Vision for Post-Conflict Iraq, February 19, 2003. Although some USAID officials had taken part in interventions in Bosnia, Kosovo, and Haiti, the agency had not had a role in large-scale contingency relief and reconstruction operations since the Civil Operations and Revolutionary Development Support (CORDS) program in Vietnam.37 USAID’s office com- puters were not even outfitted to email the classified plans agency officials were developing. Each time its planners completed a new draft, they had to hand-carry copies to the White House.38 • 23 • • Chapter 2 • Navigating between agency views and White House demands proved dif- ficult. Realizing that he could not bridge some of the divides, USAID’s Milligan decided to “jump through hoops” to get as many resources as possible to mobilize contractors and agency personnel in advance of the invasion. “Just tell me what I need to do to secure the money so we can be reasonably prepared,” Milligan remembers thinking.39 Although members of the Humanitarian Working Group had disagreements along the way, at no point did they take these issues to the level of Frank Miller’s Executive Steering Group on Iraq or to Stephen Hadley’s Deputies Committee.40 By December 2002, USAID had arrived at a picture of what the agency thought it would take to reconstruct Iraq within the policy guidelines set by the NSC. Officials consolidated humanitarian and reconstruction plans in a huge spreadsheet that became known as the “horse blanket.”41 The horse blanket showed the order in which USAID would mobilize its workforce and the many contractors it employed. It was a checklist of what would need to happen inside the agency to get ready for postwar Iraq. In a briefing to the NSC Deputies Committee on December 10, 2002—with war just over three months away— Robin Cleveland and Elliot Abrams presented the Humanitarian Working Group’s final recommendations. Most of the brief- ing slides detailed humanitarian preparations; a few dealt with reconstruction and the complex Iraqi political situation that would emerge after the invasion.42 The presentation listed the assumptions on which the group had based its plans. A secure environment was first.43 The briefing also made clear that the working group had planned for only a modest intervention. After the meeting, USAID was “instructed to go full bore with detailed planning,” including drawing up the contracts to carry it out.44 USAID Mobilizes Contractors Like most U.S. civilian agencies, USAID had little in-house surge capacity. Almost all of its mission in Iraq would be executed by NGOs and the small circle of com- panies that traditionally bid on the agency’s contracts. By early 2003, six in ten of the personnel running USAID’s overseas missions were contractors, the result of a 37 percent cutback in government staff in the decade following the Cold War.45 “We lost a third of the Foreign Service and a third of the civil service in the mid- 90s,” Administrator Natsios said, “and we never got them back.”46 Mobilizing USAID’s contractors was complicated. By law, U.S. agencies must follow the Federal Acquisition Regulation (FAR), an encyclopedic compendium of rules governing federal contracting.47 The FAR values procedural fairness and transparency over expediency.48 Its mandatory reviews and restrictions would • 24 • • The Agencies Engage • later rankle officials in Baghdad, who thought its provisions were not well-suited for contingency contracting in a war-zone. A number of FAR exemptions allowed for flexibility in unusual circumstances.49 One of the most important was the “notwithstanding authority” clause, which permitted USAID’s Office of Foreign Disaster Assistance to award grants to relief organizations outside normal FAR processes, if international disaster relief demands required it.50 USAID had existing contracts for frequently used services, which enabled it to set up some postwar contingency programs for Iraq rapidly. These “indefinite de- livery, indefinite quantity” (IDIQ) contracts were held by firms that maintained ready-response capabilities. As planners identified needs, agency officials would issue “task orders” under an IDIQ contract, which the contractor would then carry out. Pre-authorization letters also enabled USAID to mobilize contractors and emergency-relief organizations before specific task orders were written or grants awarded.51 In extraordinary situations, agency officials could waive the FAR’s “full and open competition” requirement. On January 16, 2003, with war looming, USAID Administrator Andrew Natsios did just that, waiving the FAR’s full and open competition requirement for all war-related contracts. USAID’s late entry into planning, Natsios argued, made it impossible to use the normal bidding processes.52 The agency’s Inspector General later certified that USAID properly justified the waivers for each contract it let with less than full and open competition.53 A number of USAID’s contractors received urgent phone calls during this pe- riod. The day after Christmas 2002, Bruce Spake, Vice President at Development Alternatives, Inc. (DAI), heard from USAID official Rob Jenkins: “Bruce, we’re interested in talking to you about some possible work in a place in the Middle East. You read the newspapers, don’t you?” Jenkins asked Spake to write a con- cept paper for working in a destabilized country in the Middle East “without using that country’s name.” Spake turned in a paper the next day, and DAI was awarded a contract shortly thereafter. In February 2003, the company dispatched an advance team to begin operations in Kuwait, weeks before senior U.S. civilian leadership arrived in the region.54 USAID also awarded a total of $41 million in international disaster assistance to a broad array of NGOs, including Mercy Corps, Save the Children, and the International Rescue Committee.55 By the end of February, the agency had pro- vided $17.3 million for prepositioning relief commodities in theater.56 Contracting was more complicated on the reconstruction side, in part because USAID’s development ethos had long since moved away from viewing large infrastructure projects as catalysts for economic growth. Although the agency activated several of its standing IDIQ contracts, it still needed new contracts • 25 • • Chapter 2 • for the large-scale construction tasks looming ahead.57 Crafting their language was a crucial step in the mobilization process. To ensure that reconstruction policy formulated by the NSC translated into the right assets on the ground, contracting officers from USAID’s management bureau had begun working with experts across the agency in the late fall of 2002 to write the necessary “statements of work,” which are basic—but critical—descriptions of a project and what is required to implement it. Many of the statements of work mirrored the goals outlined in USAID’s Vision for Post-Conflict Iraq and the indicators developed by the NSC’s Humanitarian Working Group.58 Eleven teams finalized the statements of work in early December and wrote requests for proposals during the last two weeks of the year.59 “The instruction was...get in, get it [done], get out,” Ross Wherry recalls. But because USAID’s experts believed rebuilding would take longer, its contracting officers added op- tions to extend each contract.60 From February through May 2003, USAID awarded eight major contracts worth $1.3 billion, the largest short-term burst of contracting in the agency’s history.61 This was just the beginning. The agency would soon let many more contracts, and it would dramatically increase the value of those already awarded.62 The contracting surge put the agency in a cash crunch. Officials drew $110 million from existing accounts on an emergency basis, “mortgaging the fourth quarter of AID’s budget in order to do what we had to do in January, February, and March,” Wherry said.63 The Iraq Relief and Reconstruction Fund (IRRF 1), which the Congress created in April 2003, ended up funding most of these contracts.64 • 26 • • The Agencies Engage • USAID’s Initial Reconstruction Contract Awards Date Awarded Contractor & Sector Original Contract Amount ($ Millions) Original Contract Ceiling or Current Obligation ($ Millions) Contract Length Contract Type & Procurement Method 02/07/03 International Resources Group (IRG): Personnel Services Contract $7.000 $27.10 3 month, with 2 option years CPFF: Sole Source 03/17/03 AFCAP: Logistics $26.00 $91.50 2 years CPAF: Inter- agency agreement 18 months, with 2 option years CPFF: Less than full and open CPFF: Less than full and open Research Triangle Institute: Local Government I 06/01/03 CPFF: Less than full and open CPFF: Less than full and open 03/21/03 SkyLink Air: Airport Administration $10.200 $27.20 03/07/03 SSA Marine: Iraq Seaport Assessment $4.800 $14.32 1 year with no option year 04/11/03 $168.000 $241.91 I year, with 2 option years 04/11/03 Creative Associates, Inc. (CAI): Education I $62.628 56.50 1 year, 2 option years 04/17/03 Bechtel National: Infrastructure $680.000 $1,029.83 18 months CPFF: Less than full and open 04/30/03 Abt Associates: Health Systems $43.800 $23.03 1 year CPFF: Less than full and open Army Corps of Engineers: Architecture and Engineering Services Management Systems International: Monitoring and Evaluation $3.00 $38.09 1 year, 2 option years Interagency agreement 06/25/03 $5.038 $15.12 1 base year and 2 option years Task Order: RFP to all holders of IQC 07/24/03 Bearing Point: Economic Recovery I $79.583 $79.58 1 year with 2 option years CPFF: Less than full and open 10/15/03 Development Alternatives, Inc.: Agricultural Development $36.900 $106.70 1 year with two option years CPFF: Full and Open Source: SIGIR, “Iraq Reconstruction: Lessons Learned in Contracting and Procurement,” July 2006, 32. By far the most substantial IRRF 1 contract during this period—and the larg- est single contract ever let by USAID—went to Bechtel International on April 17, 2003: $680 million for major infrastructure reconstruction. The expedited bidding process shortened the procurement time normally required for so large a contract from seven months to three.65 Of the seven contractors invited to compete, only two submitted bids.66 The Bechtel contract’s statement of work reflected the planners’ beliefs that rebuilding Iraq’s infrastructure would help achieve U.S. foreign policy goals. “The • 27 • • Chapter 2 • U.S. government envisions a postwar reconstruction effort,” the statement read, “as a highly visual symbol of good faith toward building trust for economic, social and cultural benefits as well as for political stability in the region.”67 Five months later, USAID would increase the Bechtel contract’s value to $1.03 billion.68 Defense’s Oil Sector Plan As USAID planned for its sectors, the Department of Defense prepared for the oil sector, while Treasury focused on financial and economic recovery plans. Senior officials believed that a rapid post-invasion restoration of Iraq’s oil sector was cen- tral to achieving U.S. strategic goals. The prospect that oil revenues could finance Iraq’s reconstruction led the Administration to assert in March 2003 that total costs to the American taxpayer would be limited.69 With 115 billion barrels of known reserves and potentially 100 billion more lying in wait—the world’s third- largest reserves—Iraq, in theory, could rely exclusively on oil to provide not only electricity, gasoline, and cooking fuel, but also most of the revenue it needed for reconstruction.70 But Iraq’s dilapidated oil infrastructure stood in the way. During the 1991 Gulf War, the U.S. bombing campaign severely damaged the country’s refineries and oil distribution networks.71 The lack of proper main- tenance during the sanctions era further degraded the oil sector to the point that Saddam was unable to make use of a 1998 UN authorization that allowed oil sales to double.72 Despite the import of more than a billion dollars in spare parts and equipment under the Oil-for-Food program, Iraq’s production capacity only marginally improved during the latter half of the 1990s. On September 20, 2002, Under Secretary Feith established the Energy Infrastructure Planning Group inside the Department of Defense, placing it under the leadership of Michael Mobbs.73 Representatives from the Departments of State, Energy, and Defense, and the Central Intelligence Agency eventually joined.74 Formal meetings began in November, with draft plans due by mid-December.75 The task of determining how to revitalize Iraq’s oil sector far exceeded the U.S. government’s in-house expertise. The need to turn to a specialized private sector company led to the first significant—and the most controversial—contract in Iraq reconstruction. Although a number of firms could repair oil infrastructure, the decision to classify the oil cell’s planning restricted the universe of support- ing contractors to those with security clearances.76 Mobbs thought that the Houston-based firm of Kellogg Brown and Root (KBR), the prime contractor for the U.S. Army’s massive Logistics Civil Augmentation Program (LOGCAP), was a logical choice.77 LOGCAP is the Army’s standing IDIQ contract for the worldwide support of military operations, chiefly providing troops in the field with food, fuel, and billeting. • 28 • • The Agencies Engage • Just as USAID had outsourced much of its work in the years after the Cold War, the military also had turned to the private sector to perform work once done by its own personnel. Under the LOGCAP contract, which KBR held for all but a few years since the program’s inception in 1985, contractors provide services ranging from building bases to cooking food and doing laundry. LOGCAP grew out of the post-Vietnam downsizing of the armed services, reflecting the govern- ment-wide growth of outsourcing, which would dramatically affect the war and reconstruction efforts in Iraq.78 In World War II, one contractor was deployed for every seven soldiers.79 During the 2003 invasion, that number had increased to one for every 2.4.80 By 2006, contractors outnumbered soldiers in Iraq.81 KBR’s responsibilities under LOGCAP meant that it was already working in support of the Defense Department’s Iraq war plans. Mobbs wanted to capitalize on this existing relationship. Hiring KBR, though, could create the appearance of a conflict of interest, because Vice President Cheney was the former CEO of KBR’s parent company Halliburton.82 Under Secretary Feith raised this issue at a Deputies Committee meeting and even alerted the Vice President’s office. According to Mobbs, White House officials said the mission took priority over whatever political fallout might occur from granting a sole-source contract to KBR.83 A second possible conflict arose. The General Counsel of the Army Materiel Command ruled that asking KBR to assist the oil cell was outside the scope of activities permitted under the LOGCAP contract. The legal opinion acknowl- edged that a contract for the logistical support of military operations was not an appropriate vehicle for funding plans to repair a foreign country’s oil infrastruc- ture. The matter was forwarded up the chain, first to the Army General Counsel, and then to the Department of Defense General Counsel, who settled the matter on November 8, 2002.84 So long as the job did not extend to actual repair work, the opinion stated, the contract could go forward under LOGCAP.85 A task order for $1.9 million was issued to KBR the same day.86 The link between planning and executing oil sector repairs, however, could not be easily severed. On March 8, 2003, just three months after KBR had re- ceived its planning contract and one week before the invasion of Iraq, the U.S. Army Corps of Engineers (USACE) awarded KBR a $7 billion sole-source con- tract for repair work on Iraq’s oil sector.87 As the contracting documents reveal, part of the basis for this award was the previous task order issued to KBR.88 This would be the single largest reconstruction contract in Iraq and the largest known sole-source contract in U.S. history. A subsequent review by the Government Accountability Office (GAO) found that the original November task order was beyond the scope of the LOGCAP contract and that the Army Field Support Command should have prepared a • 29 • • Chapter 2 • written justification to authorize the work without competition.89 But Defense officials later justified their use of LOGCAP by citing overriding national security interests in getting planning started. “We certainly did not have time to run a competition to see who was going to support us,” Mobbs said.90 USACE mobilized to help with the oil sector work. General Robert Crear, commander of the Corps’ Southwest Division, established Task Force Restore Iraq Oil (RIO) as part of the plan to rush engineers into theater. Task Force RIO’s projected strength was 129 personnel, 90 of whom would be civilians.91 By February 2003, a Task Force RIO advance team had deployed to Kuwait. As Task Force RIO and the Energy Infrastructure Working Group proceeded, Frank Miller and NSC staffer Pamela Quanrud developed a longer-term plan for moving control of Iraq’s oil infrastructure back to Iraqis. Avoiding the perception that the United States would annex Iraq’s oil wealth for its own purposes was a crucial goal. Miller and Quanrud devised a way to manage downstream and up- stream production while also assembling a governing board of Iraqis. Decisions about Iraq’s oil wealth were not to be seen as made by the United States alone. Their plan was approved by the President—who came to call Quanrud “the pe- troleum lady”—in January 2003, when war with Iraq was two months away.92 Treasury’s Financial Reconstruction Plan The NSC gave the Treasury Department a unique mission for postwar Iraq— preserving and restoring the country’s financial system—that Treasury ultimately executed with success in the chaotic months after Saddam’s fall. Treasury officials recognized that the financial recovery of Iraq depended upon the simultaneous accomplishment of two interdependent feats: maintaining confidence in the country’s currency and restoring operations at Iraq’s financial institutions, in- cluding its central and commercial banks and the Ministry of Finance. Without a functioning financial system and a stable currency, commerce in Iraq—and thus much of ordinary life—would grind to a halt. Addressing these and other economic challenges fell to Treasury Under Secretary John Taylor, who, beginning in September 2002, led the agency’s Iraq planning efforts, along with Van Jorstad, George Mullinax, and David Nummy.93 Taylor established the Treasury’s Task Force on Iraq Financial Reconstruction, setting up offices in the Treasury Department’s Market Room. Taylor and his team soon found that reliable information about Iraq’s economy was almost nonexistent. The International Monetary Fund had not done a technical analysis of Iraq’s economy for twenty years, and Iraqi data-collection entities had atrophied under Saddam. Almost no bank in Iraq transferred money electronically, and the regime • 30 • • The Agencies Engage • had co-opted the once-functional Central Bank to “lend” money to Saddam’s cronies. There was also the issue of dealing with Iraq’s dual system of currency— the “Swiss” dinar used in the Kurdish region in northern Iraq and the “Saddam” dinar used everywhere else.94 Taylor worked with Iraqi participants drawn from the Future of Iraq Project and experts across the government to draft contingency plans to prevent a mone- tary collapse and stabilize Iraqi assets.95 The plan focused on securing key financial institutions after Saddam’s regime fell and then using seized Iraqi assets to pay the government’s employees and pensioners until a permanent system could be established. In support of this planning, the President issued an executive order on March 20, 2003—the day the war began—authorizing the freezing of Iraqi funds held in U.S. banks. The United States ultimately vested about $1.9 billion of these assets in the Treasury Department for—among other things—paying Iraqi salaries.96 NSC’s Asymmetry A striking asymmetry resulted from the NSC-led planning process: the U.S. government planned for the worst-case humanitarian scenario while it simulta- neously planned for the best-case reconstruction one. Humanitarian planning for postwar Iraq advanced smoothly because the humanitarian disaster contingen- cies involved were straightforward, and the President had backed the effort from the beginning. Consequently, humanitarian planners could mobilize any part of the government and were free to reach out to international institutions to obtain help in formulating what became a robust multilateral approach. By contrast, irreconcilable views of how extensive the U.S. financial and administrative role in Iraq might become impeded reconstruction planning. Repairing war damage ultimately became the policy goal, but little connection was made between how the rebuilding would—or even could—bring about a democratic transition.97 The reality was that most policymakers considered reconstruction a relatively minor issue. They saw USAID’s contract with Bechtel as a “standby” measure— for emergency use only.98 USAID officials—who, in 2002, had privately predicted a $90 billion rebuilding scenario over three to five years—could not have gotten “traction” for a large reconstruction plan with the officials to whom they reported in the interagency planning group.99 The responsibility for reconstruction, along with all the other bureaucratic and administrative duties playing out in the fragmented planning process, would soon fall under the Department of Defense, which, at Secretary Rumsfeld’s re- quest, would be given full responsibility for administering postwar Iraq. • 31 • Chapter 3 The Department of Defense Takes Charge It has long been a concern of mine that the U.S. Government lacks a standing capability in the area of reconstruction and that there is no long-established team of civilians, let alone an experienced joint civilian-military team, to handle the challenges of major post-conflict tasks.* Donald Rumsfeld Secretary of Defense (2001-2006) In the wake of the October 2002 decision to delay establishing a civilian office in the Department of Defense to coordinate interagency planning for postwar Iraq, the existing planning groups pressed on independently.1 USAID created a de- tailed plan for humanitarian relief and reconstruction operations. A Department of Defense team prepared to restore Iraq’s oil infrastructure, and a team at the Department of the Treasury planned to restore Iraq’s financial infrastructure. An interagency humanitarian planning team, with representatives from agencies across the government, worked at CENTCOM headquarters. But the absence of a single coordinating office meant there was no management locus around which postwar planning could coalesce. “What was lacking,” Under Secretary Douglas Feith would later say, “[was] the integration.”2 The postwar structure briefed to the National Security Council in mid-Octo- ber—a three-star military headquarters and a parallel civilian administration—still existed only as a diagram on a briefing slide. The Administration lacked a consen- sus policy on key matters, such as the formation of an interim Iraqi authority and a timeframe for transferring power to it. “Liberation” had become the dominant assumption, but whether liberation could be easily achieved and stability secured was viewed differently by defense, diplomatic, and development officials. All the while, troops and materiel flowed to the Gulf. At CENTCOM headquarters in Tampa, Florida, the small building that housed Iraq war planners was a beehive of activity. Every week seemed to bring a new major event requiring action. First was the President’s speech to the UN in September 2002, then the war resolution before the Congress in October. Next came the issue of obtaining basing rights in the region. Periodically, yet another Rumsfeld-directed revision of the war plan would arrive, triggering * Donald Rumsfeld, former Secretary of Defense, letter to SIGIR, April 4, 2008. • 32 • • The Department of Defense Takes Charge • commanders’ conferences, new iterations of deployment schedules, and a bliz- zard of briefing slides.3 Through all of this activity, Phase IV got short shrift—but not without notice. Since late August 2002, the Joint Staff had worried that Phases I through III had swamped CENTCOM and that planning for Phase IV had fallen behind.4 The Joint Staff recognized that CENTCOM had devoted insufficient resources to in- tegrate government-wide postwar planning within Phase IV and to coordinate it with phases I through III.5 Majors Thomas Fisher and Ray Eiriz, the CENTCOM planners working on Phase IV, had other responsibilities that pulled them from their postwar planning work.6 On December 11, 2002, the Phase IV planners, spurred by the Joint Staff, started catching up. Major Fisher quickly initiated an intense postwar plan- ning session with a 40-person interagency team. Three days later, he briefed the Joint Staff on the draft Phase IV plan. It predicted rough going ahead. “We were assuming that there would be no government that moves in, so we were anticipating chaos,” Major Fisher said. “We did make the assumption that at some point there would be an international mandate, either of the Coalition or of the United Nations.”7 After Fisher’s briefing, the Director of the Joint Staff, Lieutenant General George Casey, realized that CENTCOM needed to augment the Phase IV effort, so he created a joint task force—designating it JTF-4—to supply 58 more personnel to help with postwar planning.8 Defense Leads Postwar Planning On December 18, 2002, the President used the phrase “war is inevitable” at an NSC meeting.9 The remark prompted Secretary Rumsfeld to launch the long- awaited civil-administration office that would help manage postwar Iraq. Soon thereafter, the President resolved the question of its chain of command. At Secretary Rumsfeld’s request, and with Secretary of State Colin Powell’s concurrence, the President placed the Defense Department in charge of all post- war activity.10 “State does not have the personnel, the capacity, or the size to deal with an immediate postwar situation in a foreign country that’s eight thousand miles away from here,” Secretary Powell explained.11 Lodging oversight of both military and civilian functions in the Defense Department, Rumsfeld had argued, would ensure a seamless transition from combat to reconstruction. A unified chain of command, running from the Secretary down through CENTCOM, would prevent the split between the military and civil reconstruction seen in Bosnia and Kosovo.12 The President formalized the decision on January 20, 2003, by issuing National Security Presidential Directive 24 (NSPD 24), consolidating responsibility for • 33 • • Chapter 3 • managing postwar Iraq in a new organization, the Office of Reconstruction and Humanitarian Affairs (ORHA), housed within the Defense Department.13 With a stroke of his pen, the President superseded the existing system for interagency postwar planning inside the NSC. This dramatic shift shocked some Iraq plan- ners. “Within a 24-hour period all of a sudden Robin and Elliot go away,” USAID Administrator Natsios said, referring to the Humanitarian Working Group led by Robin Cleveland and Elliot Abrams.14 “We were just stunned,” the agency’s acting Deputy Administrator James Kunder said. “It was our first insight into the fact that there were big processes going on that we were oblivious to.”15 As Defense officials consolidated control, the period of adjustment that followed was turbulent. Some compared the implementation of NSPD 24 to a hostile takeover. “You don’t need to worry about the nuts and bolts of basic reconstruction,” NSC Senior Director Frank Miller remembers two Defense officials saying. “It’s now an [Office of the Secretary of Defense] operation.” “Thereafter,” Miller said, “it was ‘you guys stay out, we don’t need your help.’”16 NSPD 24’s new arrangements directly affected CENTCOM’s Phase IV plan- ning. “There were two phases to the plan we had developed,” Major Eiriz said. First, the Humanitarian Planning Team would ensure that the rest of the govern- ment be “in synch” with CENTCOM’s plans for humanitarian contingencies. “Then there was going to be the reconstruction planning team,” to address the restoration of Iraq’s civil institutions and infrastructure. But after NSPD 24 was issued, CENTCOM stood down the Humanitarian Planning Team and assigned the reconstruction mission to JTF-4.17 Strategy and Force Levels The standing war plan for Iraq, developed by General Franks’s predecessors at CENTCOM, called for a half million troops—a number Secretary Rumsfeld and his aides thought much too high in light of advances in war-fighting technology and service integration.18 Relying on a large force would bring more troops into theater than needed, Rumsfeld argued, and would also constrain the President’s ability to respond quickly to any other provocations.19 “We got told that it was old think, too big, wasn’t innovative, and to readdress the planning using a dif- ferent set of assumptions,” said Colonel Mike Fitzgerald, CENTCOM’s chief of war plans.20 Secretary Rumsfeld pushed General Franks to develop a more flexible plan, one that would rely on fewer troops. “It was clear to the planners, over time,” Fitzgerald said, “that some of the assumptions we had made were not going to be accepted very well unless they went the way the Office of the Secretary of Defense was thinking.”21 The revised war plan significantly reduced aggregate • 34 • • The Department of Defense Takes Charge • force levels. General Franks ultimately recommended to the President that he send only 160,000 combat soldiers, two-thirds less than the number initially sug- gested by CENTCOM planners.22 The President questioned whether this lower troop level would affect security after the invasion. “In the area of law-and-order, the President and Rice asked Tommy Franks if it was covered,” Frank Miller recalled. “He said it was—‘every village will have a mayor, a lieutenant, captains, a structure.’ He was asked again if he was sure—he emphatically answered, ‘It’s covered.’”23 The Coalition ground forces commander, Lieutenant General David McKiernan, “really felt strongly about the inadequacy of the force,” said Colonel Mike Fitzgerald.24 The idea of fewer troops similarly unsettled CENTCOM Phase IV planners, as Major Fisher explained: The thing we kept going back to was we’ve only got so many people. Do you want them on the streets protecting people? Do you want them on the borders keeping WMD from get- ting away and keeping terrorists from getting in? Do you want them on the oil pipelines to keep the oil flow flowing? Do you want them handing out food to people that need food? Do you want them securing bank vaults and things of that nature? Do you want them conducting [medical programs] to build good will? I would sit there and talk to these people from [the office of the Secretary of Defense] and they’d say, ‘You know, we need to improve security on the borders.’ And I’d say, ‘Do you know when you stretch the border of Iraq out, it’s longer than our border with Mexico? How many divisions would you have to put in Arizona, New Mexico, California, Texas to secure our border?’25 Building ORHA On Thursday, January 9, 2003, Jay Garner, a retired Army Lieutenant General and president of the defense contractor SY Technology, was lunching at a res- taurant in New York when Under Secretary Douglas Feith called his cell phone. Garner had successfully led Operation Provide Comfort, a humanitarian mission in Northern Iraq, after the 1991 Gulf War. “We just got out of the Secretary’s office,” Feith said, “The Secretary would like for you to consider coming in and helping us put together a postwar organization.”26 Garner and Rumsfeld had served together on a federal advisory panel, and the Secretary thought it would be easier for a former military man—especially • 35 • • Chapter 3 • one who knew Iraq—to work with CENTCOM.27 Garner met with Feith and Rumsfeld the following week. When he agreed to lead ORHA, Lieutenant General Garner could not have known he was “embarking on mission impossible,” as one national security aide described his job.28 Just 56 days after ORHA moved into its empty Pentagon offices, the United States would be at war.29 Created by NSPD 24, ORHA started with no staff, was barely integrated into the military command structure, and—from day one—encountered hostility from the very parties whose activities it was asked to coordinate. Three military commands, two civilian agencies, and the circle of White House officials expect- ing to oversee postwar administration learned of Garner’s appointment after the fact.30 “Rumsfeld pulled the rug out from under them,” Garner recalls. “They never forgave us for that.” 31 The success of ORHA was premised on the idea that Garner would “opera- tionalize” plans that had already been well developed through the interagency process. But when Lieutenant General Garner arrived at the Pentagon, no master civilian plan was there to greet him. “They hadn’t lined up anybody to brief us... we really had to find out what they were doing by word of mouth.” Garner later learned about the Office of Special Plans—Feith’s Pentagon unit dedicated to postwar planning—but its products, Garner said, were “never given to us, we never saw it, didn’t know about it.” Garner learned of the office’s existence just before the invasion, when one of his aides happened across it by chance.32 The logistical and staffing challenges inherent in starting ORHA from scratch were overwhelming. “We didn’t have a desk, we didn’t have an office, we didn’t have a telephone, we didn’t have anything,” Garner recalls. Arabic linguists, re- gional specialists, and military planners were nowhere in evidence. Garner himself started work on a volunteer basis when the Pentagon was unable to process his hiring as a temporary employee.33 Lieutenant General Garner moved quickly to build a team. He brought in retired Lieutenant General Ron Adams as his deputy and hired retired Lieutenant General Jerry Bates and Colonel Paul Hughes as senior advisors. Colonel Thomas Baltazar was assigned by Feith’s office, and Chris Milligan came over from USAID. USACE sent Major General Carl Strock to be ORHA’s seventh mem- ber. National Security Advisor Condoleezza Rice meanwhile urged government agencies to provide more personnel to support the fledgling organization.34 Garner organized ORHA into three pillars: humanitarian assistance, civil administration, and reconstruction.35 When Chris Milligan moved into the Pentagon the week of January 20, 2003, he helped Garner and Bates flesh out the pillar structure.36 The reconstruction and civil administration pillars would oversee Iraq’s 22 ministries. To get the ministries back on their feet, an American • 36 • • The Department of Defense Takes Charge • “senior advisor” assigned to each would serve as the liaison between ORHA and the new Iraqi government. Garner wanted a U.S. government agency in charge of each pillar. “Adams and I sat down,” he remembers, “and we put State Department over humanitarian affairs, and we put State Department over civil administration, and we put USAID over reconstruction.”37 It was a division that reflected each agency’s expertise, as well as existing interagency plans. But Rumsfeld objected to Garner’s decision, demanding that a Defense official control all three pillars. “I had a running gun battle with the Defense Department on who were the leaders of each of these pillars,” Garner recalled.38 Secretary Rumsfeld eventually relented, claiming only the civil administration pillar as Defense’s own, but he still questioned the appropriateness of several of- ficials selected by State and USAID. “The White House,” Rumsfeld later wrote, “believed [the selections] would not be a good fit within ORHA.”39 Garner named Ambassador George Ward to lead the humanitarian pillar, with Dick Owen, a USAID official, as his deputy. USAID official Lew Lucke took charge of the re- construction pillar, with Christopher Milligan in the deputy slot.40 Finding a lead for civil administration proved difficult.41 Feith eventually nominated Michael Mobbs, who had overseen the department’s oil-planning cell.42 The State Department immediately protested the appointment of a lawyer rather than a professional diplomat to such a key position. Under Secretary of State Marc Grossman told Garner that Mobbs was unqualified for the job. Garner brokered a compromise in which Ambassador Barbara Bodine, an experienced Arabist who had previously served in Baghdad, would join ORHA to support civil administration and provide experience that Mobbs lacked.43 Unable to assemble a large civilian support staff quickly, Garner filled much of the rest of his staff with military personnel. When he asked the Joint Chiefs for 90 military personnel, Lieutenant General Casey, Director of the Joint Staff, initially refused. “No, too many people,” Casey said, telling Garner that ORHA would not be operating 24 hours a day. “If you think we’re not going to have a 24/7 operation over there,” Garner thundered, “where the hell have you been in your career?”44 Only after Garner scheduled a meeting with Secretary Rumsfeld to protest the refusal did Casey relent.45 The staff Garner cobbled together was an ad hoc team—a portent of things to come in post-invasion Iraq. Many of the leadership positions were filled by officials pulled from retirement or outside government. Senior State Department officials were conspicuously absent. “There was not a lot of participation or en- thusiasm for the mission even at senior levels at the State Department,” George Ward said. “It was ‘if you don’t want us, we’re not going to play the game.’”46 • 37 • • Chapter 3 • Struggling for Resources and Control As ORHA organized itself at the Pentagon, JTF-4, the Joint Staff’s Phase IV task force, was doing the same thing at CENTCOM headquarters in Tampa. In mid- December, Casey had tapped Brigadier General Steven Hawkins, his subordinate from operations in Bosnia, to command JTF-4. Hawkins arrived at CENTCOM the same day Garner was asked by Secretary Rumsfeld to lead ORHA.47 Phase IV planning was transferred from the CENTCOM planning cell to JTF-4 during the third week of January 2003, about two months before the invasion would begin.48 The division of duties between ORHA and JTF-4 was ambiguous. Hawkins saw JTF-4 as more than just an organization to assume control of CENTCOM Phase IV planning. Casey, who launched JTF-4 before ORHA’s formation, had intended it to become the command center for postwar operations in Iraq, led by a three-star general.49 In this formulation, JTF-4—not ORHA—would have the postwar operational lead after the fall of Saddam’s regime. Dozens of area specialists and the best military planners would help it work directly with USAID, the Department of State, USACE, and the Coalition Forces Land Component Command (CFLCC).50 ORHA’s creation fundamentally altered this vision, but the new arrangement was anything but clear. CENTCOM’s leadership was not happy with either ORHA or JTF-4. Although Rumsfeld envisioned ORHA as a “module that fit within the CENTCOM struc- ture,” military commanders viewed it as an unwanted interloper. “I was getting phone calls from Jay Garner, even after he deployed,” Feith said. “CENTCOM was referring to ORHA as ‘they’ and ORHA would refer to CENTCOM as ‘they.’”51 JTF-4 received the same arms-length treatment from CENTCOM. “I couldn’t even get office supplies back [at CENTCOM headquarters in] Tampa,” Brigadier General Hawkins remembered. “I went to the craft trade show at the Officers’ Club and took office supplies off of every display table,” he said. “That’s how I put the first pads of paper on the desk to put the task force together.”52 The cold receptions Garner and Hawkins received reflected the frustration within CENTCOM over the ever-shifting management of Phase IV. “What we had asked for was a Corps Commander and staff that was already developed,” Colonel Fitzgerald said in reference to the three-star command the Joint Staff en- visioned for postwar Iraq. “What we got [with JTF-4] was General Hawkins—a one-star general—and 50 great Americans trying to do great work, but with no guidance, no headquarters to accept them, no resources available. They were just orphan children.”53 Others at CENTCOM viewed ORHA and JTF-4 as the long-promised “inter- agency cavalry” riding to the post-invasion rescue. ORHA and JTF-4 personnel, however, had an opposite view, seeing CENTCOM as subject to their direction • 38 • • The Department of Defense Takes Charge • on postwar matters and obligated to furnish the military resources they needed to manage postwar Iraq. Each side tried to have its way. CENTCOM Commander General Tommy Franks cited an operational order that placed ORHA under his control. In response, Garner asserted his independence by invoking his reporting relationship to the Secretary of Defense and the Presidential charter for ORHA. “It was a continual battle on who worked for whom,” Fitzgerald said.54 In a period of three weeks, the Pentagon’s military and civilian leadership had launched what became competing postwar organizations. This failure in organizational unity hobbled the efforts of both ORHA and JTF-4 to mobilize for the mission. The resulting “confusion-of-command” dynamic foreshadowed problems that would afflict the Iraq reconstruction program in various ways over the next six years.55 Two Chains of Command ORHA’s Garner tried to broker a solution to the crossed lines of postwar au- thority. He asked that ORHA and JTF-4 be merged, with Hawkins becoming commander of “ORHA’s operational arm.” When this was rejected, Garner ad- vocated placing General John Abizaid, CENTCOM’s Deputy Commanding General, in charge of the Iraq theater, with McKiernan and Garner as co-equal subordinates.56 McKiernan would oversee security and troop movements, and Garner would handle civil administration, reconstruction, and humanitarian relief.57 It seemed logical to have a “military guy” in charge, Garner reasoned. “I didn’t own any helicopters, and I didn’t own any fuel, and I didn’t own any trucks,” he said.58 The Department of Defense weighed this option, but, on the eve of war, Rumsfeld backed away from it as well. Garner made one last phone call to Rumsfeld from Kuwait. “He finally got so mad at me, he said, ‘We’re not dis- cussing this anymore,’ and hung up.”59 General Franks also opposed a major postwar military command and told his planners he did not see a headquarters commanded by a four-star general—which the military would eventually create in June 2004—as necessary.60 Ironically, this chain-of-command confusion was exactly what Secretary Rumsfeld had hoped to avert by placing postwar administration under the con- trol of the Department of Defense. Yet, by establishing ORHA in parallel to JTF-4, and then not having the CENTCOM commander effectively arbitrate between them, Rumsfeld created the very situation he had sought to prevent. “I pointed out to the President and to Dr. Rice,” Secretary Powell said, “that they authorized and set up two chains of command.” “They said ‘no we didn’t,’” but then “checked and realized that’s what they had done.”61 • 39 • • Chapter 3 • ORHA Prepares While Lieutenant General Garner navigated through the colliding chains of command, his staff focused on preparing for postwar Iraq. The humanitarian pillar took charge of the food program and the disaster relief that the NSC’s Humanitarian Working Group had planned. Food, water, medicine, and shelter were being positioned in Kuwait and Jordan.62 The reconstruction pillar began using the new USAID contracts, especially the International Resources Group (IRG) contract for technical experts.63 Tom Wheelock, IRG’s chief of party, arrived at the Pentagon in February 2003 to augment ORHA’s reconstruction staff, which now numbered more than 30. He reviewed the reconstruction targets previously established by the NSC, and immediately noted that they went well beyond what could be accomplished with the level of funding provided. The $680 million Bechtel reconstruction con- tract, according to Wheelock, would be “a drop in the bucket.”64 The arrival of more USACE personnel into ORHA reignited debates about what reconstruction should accomplish. USACE saw physical rebuilding as reconstruction’s primary goal. “When [USACE] said reconstruction,” Major General Strock said, “[those at USAID] were not thinking of bricks and mortar and concrete. They were thinking of governance and human rights and those kinds of softer aspects of reconstruction, which are very important,” Strock said. “But at the end of the day, the laws of physics apply, and if you’re going to get water to people you need to understand Bernoulli’s equation.”65 The civil administration pillar was the least developed.66 Finding reliable information about Iraq was a challenge. CIA briefings on public services and ministry functions were of limited use. “Nobody could tell how many ministries currently existed in the Iraqi government,” an ORHA official said. Garner kept asking, “Where is my list of ministries?”67 Iraq’s Postwar Politics Ordinarily, a political-military plan would have clearly articulated a detailed strat- egy for engaging with the leaders of Iraqi factions in postwar Iraq. But because Defense officials intended to transfer control rapidly to an interim Iraqi authority, ORHA was told it would not need such a plan.68 “The expectations derived from policy set in Washington were that the establishment and devolution of authority to an Iraqi entity would proceed quickly,” an ORHA planner wrote, obviating the need for a governance strategy.69 Garner wanted a second opinion on how to approach the politics of Iraq. In late February, one of his staff placed a call to Len Hawley, a former NSC staffer with expertise in political-military planning. After evaluating ORHA’s staffing • 40 • • The Department of Defense Takes Charge • structure, Hawley advised Garner that—at a minimum—he needed a politi- cal deputy and a political intelligence section.70 Trying to govern Iraq with the civil-administration staff he had, Hawley said, would be akin to “running Fairfax County [a major suburban area in northern Virginia] with eight people.” Failure to move immediately to control the struggle for power would permit powerful criminal constituencies to develop. “In this kind of work,” Hawley said, “the clock ticks. Nothing can wait.”71 ORHA’s Resource Problem Iraq’s postwar politics was only one of many worries. At the end of February, just three weeks before the invasion, Garner was still trying to hire enough staff. The President authorized agencies to “detail” personnel temporarily to ORHA, but they were not compelled to do so—and few did.72 ORHA secured some person- nel through defense contractors, but these personnel were prohibited by law from formulating policy or managing government resources.73 To help solve its personnel shortfalls, Garner exploited a temporary-appointment category within U.S. law that is normally used to staff boards and commissions.74 These “3161 appointments” enabled ORHA and later the CPA to bypass the cumbersome hiring procedures required by civil service regulations.75 ORHA also needed administrative, logistics, and other operational sup- port. Colonel Robert Costello, detailed by the Department of Defense to serve as ORHA’s logistics chief, joined the team on January 27, 2003. With Garner’s approval, Costello immediately began using the LOGCAP contract to meet ORHA’s support needs. Costello developed a statement of work that envi- sioned an ORHA contingent in Baghdad of 200, with 50 more in three regional offices.76 Although the military staff ORHA needed was forthcoming, Garner ultimately had to rely on a commercial contract to supply the organization’s com- munications support because his request for dedicated military communications assistance was denied. This denial proved to be a consequential decision. Rather than being seamlessly integrated into the secure communications systems used by war planners at CENTCOM as well as McKiernan’s theater ground com- mand, ORHA had to rely on commercial services, such as Internet connections and personal email accounts. Unable to send or receive classified information, ORHA’s staff, at a critical juncture, would effectively be cut off from both war planners in Kuwait and officials in Washington. Securing resources for postwar relief and reconstruction was yet another battle. In several meetings with National Security Advisor Condoleezza Rice, Garner presented anticipated requirements for reconstruction funding.77 At each successive meeting, he brought Rice an ever-expanding list of requests, but few • 41 • • Chapter 3 • were granted.78 “I needed $28 million up front for judicial reform, indigenous media, food, refugees, internally displaced persons, and energy,” Garner recalls. “Never did get any of those.”79 Garner also approached Rumsfeld for reconstruction funding, but the Secretary was similarly unpersuaded by Garner’s long list. Garner laid out four rebuilding scenarios for Rumsfeld, from “do what absolutely needs to be done and no more” to “redo the whole country of Iraq.” “What do you think that’ll cost?” Rumsfeld asked. “I think it’s going to cost billions of dollars,” Garner said. “My friend,” Rumsfeld replied, “if you think we’re going to spend a billion dollars of our money over there, you are sadly mistaken.”80 In the five years following that remark, the United States appropriated nearly $50 billion for Iraq’s relief and reconstruction. The “Rock Drill” One month before combat operations began, representatives from all military and civilian agencies involved in postwar administration met together for the first time. The occasion was a “Rock Drill,” an interagency rehearsal convened by Garner. In a packed conference room at the National Defense University, ORHA’s staff joined officials from the NSC, the Vice President’s office, the Joint Staff, the Office of the Secretary of Defense, USAID, and the Departments of Treasury, Commerce, and State. Admiral James Robb, head of policy and plan- ning at CENTCOM, flew in. From Kuwait, Lieutenant General McKiernan dispatched Major General Albert Whitley, his British deputy, whom he had put in charge of Phase IV planning. JTF-4’s Brigadier General Hawkins was also there.81 Not everyone made it to the Rock Drill, and some of those who came had or- ders not to participate fully. Senior State Department officials were conspicuously absent.82 Officers from CENTCOM, CFLCC (CENTCOM’s ground combat arm), and JTF-4’s Hawkins arrived with instructions that limited the extent of their cooperation with ORHA. These “red lines,” an ORHA planner wrote, “re- lated both to the supporting/supported commander issue and to the feelings of inadequate force structure to address post-conflict planning requirements.”83 Most worrying, General Abizaid—who Garner assumed would be named the overall commander in Iraq—was absent.84 During the two-day conference, key ORHA officials briefed six aspects of their evolving strategy: planning assumptions; requirements; high-impact actions; measures of effectiveness at 30, 90, 180, 270, and 360 days; policy deci- sions required; and “showstoppers.” Security was the number-one showstopper. • 42 • • The Department of Defense Takes Charge • Official meeting notes state that “current force packages are inadequate for the first step of securing all the major urban areas, let alone for providing an interim police function.”85 Ambassador George Ward, head of ORHA’s humanitarian pillar, asked, “How am I going to protect humanitarian convoys, humanitarian staging areas, humani- tarian distribution points?” A flag officer who had flown in from CENTCOM said, “Hire war lords.” “Wait a minute,” Ward thought, “folks don’t understand this. There are warlords in Afghanistan, not in Iraq. There were no warlords to rent.” “At that point,” Ward said, “I thought this was going to fail because no one is paying serious attention to civilian security.”86 Dick Mayer, a former police officer and deputy director of the Department of Justice’s International Criminal Investigative Training Assistance Program, proposed that 5,000 international police advisors be rushed into Iraq to bolster rule-of-law efforts after the military victory. But no plans were made for such a deployment. “What happens to law and order in the meantime?” the meeting notes say. “We risk letting much of the country descend into civil unrest and chaos whose magnitude may defeat our national strategy of a stable new Iraq.”87 The lack of adequate reconstruction budgets was the second showstopper. “It seems likely that we will begin military action before we know whether sufficient Phase IV funds will be available,” the notes read. Everyone was desperate for skilled interpreters. Participants were told to expect “economic-related violence.” “We should expect to see the economically disadvantaged residents of Saddam City [the Shi’a slum in Baghdad, renamed Sadr City after Saddam’s fall] do a bit of Robin Hooding...in short, civil unrest will be the rule, not the exception.” The absence of a governance plan also concerned Rock Drill participants. “What sort of future Government of Iraq do we have in mind,” the summary notes read, “and how do we plan to get there?”88 The Rock Drill exposed problems created by the disjointed postwar prepa- rations. “It became clear,” said one participant, “that not everything was going to be as well organized by the civilians as it was by the military. In part the civil- ians either weren’t fully on board, or didn’t take [planning and preparation] seriously, or didn’t throw their best people at [the subjects]—but the civilians weren’t prepared.”89 Lieutenant General Garner noticed a man seated near the front who asked tough, insightful questions. It was Thomas Warrick. When Garner pulled him aside during a break, he learned that Warrick had led a year-long State Department study on postwar Iraq.90 Dumbfounded that no one had told him about the Future of Iraq Project, Garner asked Warrick to join ORHA on the spot. • 43 • • Chapter 3 • Briefing the President On March 10, 2003, just over a week before the bombing started, Garner briefed President Bush in the White House Situation Room on ORHA’s postwar plan. Rice, Rumsfeld, Powell, CIA director George Tenet, and General Franks sat around the table. Vice President Cheney joined by video link. Garner’s briefing slides outlined ORHA’s pillars, the gaps the Rock Drill re- vealed, and what remained to be done. He told the President that a tremendous amount of work was still necessary to make the interagency postwar plans opera- tional. Garner outlined his major concerns, including some of the “showstoppers” identified at the Rock Drill. He focused on the need to fund Iraq’s public servants, police, and army; to rush in international stability forces after Saddam’s fall; and to employ the Iraqi army for reconstruction.91 The President authorized Garner’s proposal to use the Iraqi army on re- construction projects. Envisioning something like the Depression-era Civilian Conservation Corps, Garner hoped to help demobilize the army and use it to populate a large labor force for reconstruction efforts. The plan, first developed by USACE’s Major General Strock, anticipated marching the disarmed soldiers into camps, forming 200-man construction units, and putting them immediately to work.92 Everyone in the situation room agreed that this was an excellent idea. The President was receptive to Garner’s briefing, asked a few questions, and thanked him for his service. The meeting was over in less than an hour.93 On the same day, Frank Miller presented the President with an overview of postwar politi- cal strategy, specifically addressing de-Ba’athification and recommending that it be undertaken lightly, so as to preserve Iraqi administrative capacity. The President approved Miller’s recommendation for a “light” de-Ba’athification policy. Two days later, Under Secretary Feith, echoing Garner, briefed the President that the Iraqi Army would not be demobilized.94 Feith also presented a plan to transfer governance authority shortly after Saddam’s fall to a new entity called the “Iraqi Interim Authority.” The President previously had decided against forming a provisional Iraqi government in advance of the invasion, a decision conveyed to the Iraqi opposition by Zalmay Khalilzad, the President’s Ambassador to Free Iraqis, in late February 2003 at the Salah al-Din political conference in Kurdish Iraq. Feith proposed brokering a formal power-sharing agreement between the new Iraqi Interim Authority and the U.S.-led Coalition shortly after Saddam was deposed. The leadership committee formed at the Salah al-Din conference, comprising Iraqi exiles and Kurdish leaders, would serve as the core group for the new authority, which would work in partnership with the Coalition’s tran- sitional authority.95 This concept would allow Iraqis to exercise some political control from the outset, with the Coalition controlling the pace at which power • 44 • • The Department of Defense Takes Charge • was transferred. The President endorsed Feith’s proposal. Because it was pre- mised on the notion that Iraqi governmental institutions would emerge from the war reasonably intact, the plan’s actual implementation would depend on the course of the war. The Eve of Departure Garner’s last week before deploying was a tough one. Shortly before his briefing to the President, Secretary Rumsfeld asked him to remove two key members of his staff—Thomas Warrick, head of the Future of Iraq Project, and Meghan O’Sullivan, a young State Department employee who worked in the agency’s Office of Policy Planning.96 Rumsfeld eventually permitted O’Sullivan to return, but Warrick was gone for good. A separate “hold” by the Department of Defense was placed on Garner’s request for seven ambassadorial-level appointments from the State Department, three of whom were Middle East experts. In exasperation, Secretary Powell told Secretary Rumsfeld, “Don, we’re trying to help.”97 The final surprise came on March 14, 2003, two nights before deployment. Late in the evening an aide called to say that Rumsfeld wanted to see Garner at eight the next morning.98 Rumsfeld told Garner that he was not comfortable with the people selected as ORHA ministerial advisors, and that he would rather make the appointments himself.99 “I’m going to give you a new set of ministry officials,” Rumsfeld said.100 Garner was incredulous. “It’s too late. I’m leaving tomorrow. In a month from now we’ll be doing this.” “No,” Rumsfeld shot back. “I want [Defense] to run all these.” Garner asked, “Is [Defense] going to run Agriculture? [Defense] is going to run Health?” Rumsfeld requested that Garner send a list of advisors essential to keep. “I never told anybody about this,” Garner said, figuring that “if they show up, we’ll give them the job.”101 Garner’s frustration led him to reflect on lessons learned just before he deployed. “The Administration started way too late,” Garner said. “We’ve only really been in business six weeks, and we only began to get people three weeks ago.” Garner nev- ertheless was hopeful that ORHA would overcome its late start. “We’ll get there,” he said. “It will look like hell, but we’ll all come together on the objective.”102 • 45 • Chapter 4 Staging in Kuwait The funding was too little, it was too late, and it was too damn hard to get. * Lieutenant General Jay Garner Director of ORHA (2003) In the six weeks since Jay Garner started work as coordinator of postwar relief and reconstruction, 167 military and civilian personnel had joined ORHA. On the morning of March 16, 2003, they gathered in a parking lot at the Pentagon to begin their journey to Baghdad. Secretary Rumsfeld stepped outside the building to wish the men and women of ORHA well. They then took buses to Andrews Air Force Base, where they boarded a chartered plane bound for Kuwait.1 In less than a week, the invasion would begin. Jay Garner had barely arrived in Kuwait before a second round of sparring broke out over senior advisors. Now the Office of the Secretary of Defense was calling to say that the candidates Rumsfeld was in the process of selecting had been superseded by new White House selections. The 23 senior advisors on board the flight—Garner’s original picks—would arrive in Kuwait unaware there had been two attempts to strip some of them of their positions. As he had done with Rumsfeld’s candidates, Garner decided he would ignore the White House appointees until they arrived—if they ever did.2 The start-up of ORHA had turned into a tug of war between cabinet secretar- ies. Ten of thirteen USAID contracts had yet to be signed. ORHA had no directive authority over military resources. Only about a dozen passengers on the flight knew any Arabic.3 So much of Garner’s time had been spent arguing over who was to deploy that he was still developing basic plans for managing postwar Iraq. Camp Villa General Franks placed ORHA under the operational control of the Coalition Forces Land Component Command (CFLCC), Lieutenant General McKiernan’s ground command in Kuwait. Garner wanted to co-locate with McKiernan’s head- quarters at Camp Doha, one of several U.S. military bases outside Kuwait City, but the advance party he dispatched found there was no room left at the base.4 ORHA would have to find its own place to stay. * ORHA/CPA Historian interview with Lieutenant General (Ret.) Jay Garner, former Director of ORHA, April 22, 2004. • 46 • • Staging in Kuwait • Garner turned to the LOGCAP contractor KBR, which quickly arranged quar- ters for ORHA at the Kuwaiti Hilton Resort. Locating the Coalition’s postwar headquarters at a four-star hotel seemed extravagant at first, but few alternatives existed, and the Hilton’s perimeter walls gave a measure of security. McKiernan’s soldiers, who slept in tents and portable trailers, dubbed it “Camp Villa.”5 ORHA’s staff members from USAID did not remain at the Hilton long, mov- ing instead to the Radisson, some 30 miles away, where the NGOs they worked with were staying. Garner’s logistics chief argued with USAID’s mission director, Lew Lucke, urging that it was important for all of ORHA’s staff to stay together, but Lucke saw advantages to the Radisson. Garner sided with Lucke, deciding that it was acceptable for USAID to co-locate with its implementing partners.6 This left ORHA, JTF-4, and CENTCOM’s postwar planners scattered among five places: on three sides of Kuwait City, at CENTCOM rear in Tampa, and CENTCOM forward in Qatar. Sophisticated military networks are set up to allow “real-time” communication of classified material, but without a supporting military communications unit, ORHA was unable to tap into these networks. Passing classified plans through the hotel’s Internet network would have been a criminal offense. Nor could the plans be discussed on unsecure phones. When Rumsfeld could not reach Garner on a protected line his first night in Kuwait, two aides brought a secure satellite phone on the next flight.7 The rest of the staff bought phone cards at the poolside gift store and did what they could with their personal email accounts. Garner soon found he could not buy much, either. The Army contracting command serving as ORHA’s purchasing department refused to “warrant” the officers sent to Kuwait with letters authorizing them to sign contracts on the government’s behalf.8 Without this crucial authority, ORHA could not purchase the resources it needed. The Defense Contract Management Agency stepped into the breach, but by the time Lieutenant Colonel Steve Elliot arrived in late March 2003 with a minimal staff, a long list was waiting.9 The $146 million ORHA had in its account, hardly enough for staff and supplies, was supposed to pay for interpreters, translators, start-up funds for a new Iraqi media, seed money for demobilizing the Iraqi military, and Iraqi expatriates to serve as subject- matter experts.10 Coordination in Chaos ORHA had barely unpacked its bags in Kuwait before war was unleashed in Iraq. Operation Iraqi Freedom began on March 20, 2003 (Iraq time).11 Shortly there- after, Garner’s deputy, Ron Adams, flew to Qatar to meet with General Abizaid, only to discover a large parallel universe of planners and plans at the CENTCOM • 47 • • Chapter 4 • forward command. “I felt frustrated, betrayed,” Adams said, “that we were having access to this kind of material and this kind of energy so late in the game.” “Why,” Adams wondered, “weren’t they co-located with us in February?”12 McKiernan’s staff at Camp Doha had its hands full. To the great displeasure of its commander, Brigadier General Hawkins, JTF-4 had been subsumed at Doha into the staff of Major General Albert Whitley, the British two-star gen- eral whom McKiernan had deputized to lead Phase IV planning for CFLCC.13 By the end of March, little of JTF-4 remained intact. Whitley and McKiernan supported Garner, at least rhetorically, but in the end they did not meet ORHA’s needs—not the least of which was the implementation of a unified Phase IV ef- fort. CENTCOM treated ORHA’s requests as low priority, setting many of its incoming communications in a pile that remained untouched until April 19.14 Garner was one of the few go-betweens among the four postwar-planning factions—ORHA, JTF-4, CFLCC, and CENTCOM. He demanded that every- one meet.15 On March 27 and 28, representatives from each staff convened at the Hilton, but no unified mission plan emerged, as Garner had hoped. With the war underway, all that could be done was de-conflict the separate plans in places where the execution of one would interfere with another. By the time two ORHA staffers managed to produce a unified plan, it was largely overcome by events.16 As Garner made last-ditch efforts to coordinate plans on the ground in Kuwait, the fight over personnel continued. Determined to keep as many of his senior advisors as possible, Garner contacted Secretary Rumsfeld by commercial email from the Hilton. “Sir, on Saturday you questioned the Agency leads for 12 of the 23 Iraq Ministries...We might not agree with State’s nominees, but they did step up to the plate a month ago and began nominating people,” Garner wrote. An enclosed chart outlined who among his senior advisors should stay and whom he could permit to go. “Of greater concern,” Garner noted, were vacancies in ministries for which the Defense Department assumed responsibility. Five of them still had no assigned senior advisor.17 Two days later, a briefing slide from the Office of the Secretary of Defense arrived. It listed a star-studded mix of former cabinet members, senators, and governors, both Republican and Democrat, as ministerial advisor candidates. Harvard President Larry Summers was listed for Finance; the former head of General Electric, Jack Welch, for Electricity; Bill Bennett for Education; and Senator Rick Santorum (R-PA) for Trade.18 Few had ever worked in develop- ing countries. None spoke Arabic. Secretary Powell reacted immediately. “We have identified qualified people to fill all eight positions that Garner assigned us. All have regional, functional management experience, several of them speak Arabic,” Powell wrote Rumsfeld. • 48 • • Staging in Kuwait • “We have frozen these assignments until you and I deal with this at an early op- portunity.”19 Powell’s intervention helped. Garner kept his State Department senior advisors. USAID Efforts As the invasion got underway, USAID accelerated its humanitarian assistance preparations. Dozens of NGOs and hundreds of workers were in position. Tens of thousands of hygiene kits, plastic sheeting, and blankets were at the ready.20 The UN World Food Program mounted the largest relief operation in its history, filling warehouses in Kuwait, Jordan, and Turkey with food, water, and medicine.21 To coordinate its army of relief workers, USAID set up a Humanitarian Operations Center in Kuwait. This meeting place for USAID and its NGO part- ners was about ten miles away from the Radisson in a compound donated by the Kuwaiti government.22 Maps, communications equipment, and computers were spread among the buildings. After USAID entered Iraq, it established similar Humanitarian Operations Centers across the country. Together with their mili- tary equivalent—Civil-Military Operation Centers—the humanitarian centers coordinated delivery of aid in each of Iraq’s regions.23 Behind the army of soldiers and the army of relief workers came a third orga- nized force—the army of contractors. They were the last to arrive. Because the order to begin the long and complicated contracting process was not issued until December 2002, most reconstruction contracts were not awarded until late April 2003. The compressed timetable meant that, at war’s start, many companies had yet to receive word on their bids.24 The gap was the inevitable result of a contracting cycle begun only ten weeks before war started—a consequence of excluding USAID from the planning process for an entire year. As soon as USAID and ORHA made the awards, contractors began mobilizing. But this usually entailed an extended process of activating staff and recruiting the “muddy boots” operators who know how to get things done.25 Notably, USAID did not award its major infrastructure contract to Bechtel until April 17—over a week after Baghdad fell—and the company did not deploy personnel into Iraq in any strength until May. Contractors working for the USAID’s Office of Transition Initiatives arrived sooner. The office used its IDIQ contract (SWIFT I) to mobilize its contractors immediately, including Development Alternatives, Incorporated, which had established a Kuwait office more than two weeks before ORHA arrived.26 • 49 • • Chapter 4 • Governance Questions Answered How military units would administer Iraqi territory under their control remained an open question as late as mid-March 2003. With no political-military plan formu- lated in Washington, CENTCOM moved ahead with its own ad hoc plan, deciding to establish Governorate Support Teams (GSTs) primarily from civil affairs units, whose reservist soldiers frequently brought applicable civilian skills. The GSTs would follow closely behind the invasion force, taking charge of towns once they fell under Coalition control. They would serve as the point of contact with town mayors and municipal governments across Iraq, helping to bring order by standing up town councils in places where none existed. The eventual transition to civilian control under ORHA and then to an interim Iraqi authority would open the door for the military’s exit.27 CENTCOM officers had presented a rough version of the GST strategy at Garner’s March 27-28 meeting at the Kuwait Hilton.28 CENTCOM’s GST plan was compatible with USAID’s Local Governance Program (LGP), which assumed that a national political process, overseen by the Department of State, would quickly shift the deposed regime’s centralized authority to local democratic entities. USAID proposed a “transfer” of central- government civil servants to the local level, paring back national ministries to their essential functions.29 Teams of experts funded by USAID’s LGP would arrive shortly after the invasion to help newly elected town councils improve education, health, water, markets, and roads. By devolving control directly to local officials and empowering them to spend U.S. reconstruction money, plan- ners hoped to quickly break Iraq from the pattern of centralized authoritarianism that had gripped the country for decades.30 Implementing these loosely coordinated local governance plans yielded a number of unanticipated consequences. Saddam’s regime had been like a giant octopus with tentacles reaching down into every village in Iraq through a sys- tem of ministry “directors general.” Through these directors general, ministries controlled the disbursal of resources in each Iraqi province. Coalition plans su- perseded the director general system, shifting authority to town councils created by GSTs or USAID’s LGP teams.31 This radical and rapid restructuring of local government would shape debates about Iraqi federalism for years to come. Governance plans at the national level were equally loose. Garner planned on using the “big tent” method to bring Iraqi leaders together to form a national interim government.32 This approach had worked reasonably well with the loya jirga process in Afghanistan, which had quickly named Hamid Karzai the leader of postwar Afghanistan. Garner hoped to use his good relations with the Kurds to help move quickly to the appointment of an Iraqi interim authority, as approved by the President on March 10, 2003. • 50 • • Staging in Kuwait • ORHA Expands In early April 2003, as ORHA continued postwar planning at the Hilton, its staff- ing needs kept growing. The Office of the Secretary of Defense estimated that the staff of ORHA might reach 1,268, plus a 600-person military police battalion provided for security.33 Even this estimate—many time higher than originally expected—would prove too small. After ORHA arrived in Baghdad on April 21, its staff quickly increased, even- tually peaking at 2,500—about eight times its original estimate of 350.34 Back at the Pentagon, the comptroller’s office was asked why there was such a huge rise in ORHA’s staffing. Dov Zakheim, the Defense Department Comptroller, responded: “ORHA projected staffing levels and budget requirements will vary greatly as they get a better grip on the requirements of their mission.”35 ORHA’s rapid expansion unsettled its contracting staff. Lieutenant Colonel Elliot, ORHA’s contracting officer from the Defense Contract Management Agency, had only three officers on staff with warrants to write contracts.36 As needs mounted rapidly and the details of contracts were often left unspecified, Elliot found he was forced to make policy decisions. “I’m making the decision as to what’s prudent. And that shouldn’t be my job. That should be the customer’s job,” Elliot said. From his perspective, “There [was] no planning”—it was all reaction.37 Views From Washington As ORHA struggled to carry out its mission, several Administration officials gave hopeful briefings. During an interview on April 23, USAID Administrator Natsios predicted that the cost of reconstruction to American taxpayers would be minimal. “The American part of this will be $1.7 billion. The rest of the rebuilding of Iraq will be done by other countries...and Iraqi oil revenues.”38 But National Security Advisor Condoleezza Rice offered a more cautious as- sessment in an April 4 press briefing. “Our goals are clear,” she said. “We will help Iraqis build an Iraq that is whole, free and at peace with itself and with its neighbors; an Iraq that is disarmed of all WMD; that no longer supports or harbors terror; that respects the rights of Iraqi people and the rule of law; and that is on the path to democracy.”39 The National Security Advisor was circumspect about the details of Administration plans. “Specific means of achieving these goals are being worked out now. Many can only be developed once Saddam’s regime is gone. To a large extent, the means to these goals will depend on things outside our current con- trol.” She further noted that the Administration did not know what conditions it would find inside Iraq. “We do not know, for instance, what damage Saddam Hussein’s regime may inflict on the Iraqi people in the regime’s last gasps. We do • 51 • • Chapter 4 • not know what we’ll find on the ground once the regime is gone—for instance, the condition of Iraqi natural resources or its infrastructure.” Rice pointedly observed that a long-term occupation was far from the minds of the President’s advisors. “ORHA is not a provisional government for Iraq, civil- ian or military. The goal is to transition responsibilities to the Iraqi people as soon as possible,” she said.40 Within weeks, this approach would be superseded when the Coalition Provisional Authority was installed to occupy and rule Iraq. Saddam’s regime fell the week after Rice’s briefing. Soon looting and chaos began to engulf Baghdad and many provincial capitals. As ORHA’s senior advi- sors watched their ministries burn on CNN, a fatalistic mood took hold at the Hilton. Garner had been so hopeful that things would all come together, but now he had grave doubts. ORHA was about to face a far greater challenge than harness- ing the interagency system. They were about to cross the berm into Iraq. • 52 • Chapter 5 Orha in Baghdad At the end of this there is [a] real simple truth. If you don’t plan and organize and rehearse together, you end up with ad hoc solutions during execution. [Iraq] is a classic case of not having done it all together.* Lieutenant General David McKiernan Commander of Coalition Forces Land Component Command (2002-2003) As the Coalition prepared for war, so did Saddam Hussein. In the fall of 2002, he declared a general amnesty, freeing thousands of violent criminals.1 As U.S. troops massed along the Iraqi border in the spring of 2003, Saddam deployed Iraqi military units both to defend against the invasion and to prevent a coup in the rebellious Shi’a south. Ministers made contingency plans, just as they had in 1991, to weather the conflict and repair damage once hostilities ceased.2 Saddam sent a memorandum instructing state agencies to sabotage infrastruc- ture, shoot dissident Shi’a clerics, and burn the regime’s records if U.S. troops entered Baghdad.3 As the country braced for impending attack, Saddam’s workers moved furni- ture out of his main palace and removed the palace doors to minimize damage caused by the concussion of bombing.4 Bank managers personally safe-guarded the financial data of customers at 170 branches across Iraq.5 The director of com- puter services at the Ministry of Trade secured in his home the list of every Iraqi household eligible for food rations.6 After the official Oil-for-Food ration list vanished amid looting, this copy was later used as a basis for registering voters in Iraq’s first democratic election.7 The Iraqi people also prepared.8 Shopkeepers boarded up their stores, women stockpiled food and water, and men headed to gun shops.9 Tens of thousands of families fled Baghdad and its suburbs for safety in the countryside. The reckoning began on March 17, 2003. In an Oval Office address, President George W. Bush gave Saddam Hussein and his two sons, Uday and Qusay, an ultimatum to leave the country within 48 hours. But they did not leave. Bombing started on March 20 (Iraqi time), and U.S. ground units rolled into Iraq the next day. * SIGIR interview with Lieutenant General David McKiernan, former Commander of Coalition Forces Land Component Command, December 5, 2006. • 53 • • Chapter 5 • Invasion The experience of the invasion force differed by region. In the north, a small num- ber of U.S. Special Forces troops linked with Kurdish Peshmerga, the armed force of Iraq’s autonomous northern region, which opposed Saddam. Together they pushed south against Iraqi Army units dug into defensive positions. In Baghdad, Iraqis had such confidence in the accuracy of American “smart weapons” that many watched the bombing from their rooftops, but the precision targeting had serious second-order effects. Telephone service ceased. Explosions broke pipes all over the city, causing sewage to contaminate what water still flowed out of the tap. Then, on April 4, power surges shorted out most of Baghdad’s electrical infrastructure. Much of the city went dark.10 Because Turkey and Saudi Arabia had denied U.S. troops passage, the main invasion force came through Kuwait. Special operations units captured oil fields and dams almost immediately, and oil engineers from Halliburton extinguished the few oil-well fires that were set. Thousands of troops with the Third Infantry Division and First Marine Expeditionary Force then pushed north. Rather than advancing methodically to capture and hold territory, the war plan called for a daring sprint to the capital.11 The idea was to put the regime down before it could deploy chemical weapons. Lieutenant General McKiernan’s troops sped by most population centers, avoiding combat in favor of pushing to Baghdad. The fast-moving U.S. invasion force meant that troops engaged Saddam’s forces only briefly in many towns. Some cities were occupied quickly, but in the west and north, U.S. troops did not arrive until weeks after Baghdad fell. Many Iraqis were left listening to conflicting accounts of the invasion’s outcome on regime and foreign radio broadcasts, never seeing troops from either side.12 The uniformed Iraqi military largely abandoned their posts after little or no fight, but sustained resistance materialized in many southern towns. Sandal-clad fighters in civilian garb, both foreign and Iraqi, used rocket-propelled grenades and pick-up trucks to organize ambushes that frequently turned deadly for the attackers as they encountered first-hand the lethal power of the invading force.13 “The enemy we’re fighting is different from the one we’d war-gamed against,” said Lieutenant General William S. Wallace, commander of V Corps, one of the main ground units.14 To General John Abizaid, the only Arabic-speaking senior commander in theater, the signs were ominous. Garner remembers Abizaid tell- ing him the first week in April: “I’ve been listening to everything they’re saying on the radio. I’ve been reading Al Jazeera, and I’m looking at what’s happening. I’m telling you. We’re going to have a guerrilla war on our hands.”15 • 54 • • ORHA in Baghdad • Initial Assessments Sixty-two people from USAID’s Disaster Assistance Response Team (DART)— the largest ever fielded—followed quickly upon the heels of the invading force.16 On March 27, DART members crossed into Iraq to assess the humanitarian situation in the port town of Umm Qasr, a major supply node in Iraq where 60 percent of Iraq’s Oil-For-Food imports were offloaded. British commandos had seized the port after sustained fighting. Elements from the U.S. Army’s 354th Civil Affairs Brigades began repair work after British troops took control.17 USAID’s DART team found the port in poor but working condition. Team members identified two back-up generators that, with minor repairs, could power the entire facility. Three grain vacuums were operational, and the port’s 24 silos were available for storage once swept for explosives. A day later, the Sir Galahad, a British relief ship carrying more than 230 metric tons of food, medicine, and blankets, was able to dock.18 All seemed to be going reasonably well. There were no major signs of hu- manitarian crisis, and no chemical weapons had been used. But worrisome news soon arrived from USACE, which had embedded Forward Engineering Support Teams (FESTs) in U.S. combat brigades.19 Traveling in Humvees equipped with a satellite link to their headquarters, these highly mobile military and civilian engineer teams quickly assessed the state of the power plants and other civil in- frastructure they came across during their advance into Iraq.20 The dilapidated infrastructure reported everywhere by FEST personnel confirmed USACE’s prewar assessment that a major reconstruction effort—on the order of $35 billion for a “middle-range” damage scenario—would be necessary.21 To augment the information from the FEST reports, Garner asked USAID’s DART team to shift its role and begin conducting infrastructure assessments. At first they refused.22 The team members were reluctant to take on activities that fell outside the mandate of a normal DART mission, which is to assess hu- manitarian conditions—such as food supply availability and likelihood of disease outbreak. Their leadership, at USAID’s Office of Foreign Disaster Assistance in Washington, was also averse to allowing the unarmed teams to operate in an environment where residual fighting continued.23 By the first week of April, the DART team’s failure to carry out Garner’s request threatened to unravel the frag- ile cooperation between the military and civilian communities inside ORHA.24 Garner was seething. “They refused to come in,” he said, “because it wasn’t permissive. You know, I have this civilian organization in this not-permissive environment in Suburbans, which are not hardened. Yet you [the DART com- mander] have $350,000 hard Mercedes. You have body armor, which these • 55 • • Chapter 5 • people [ORHA personnel] don’t have, and your people refuse to come in here, and they’re staying in very expensive hotels.”25 Ambiguity about lines of authority aggravated the situation. Did a USAID asset, the DART team, report to its agency headquarters in Washington or was the team now under operational control of ORHA, an office of the Department of Defense? Instead of appealing to the NSC for arbitration, Secretaries Donald Rumsfeld and Colin Powell had a “war of memos” trying to settle the issue. 26 Relations between the Departments of State and Defense had become increasingly tense in the late winter and early spring of 2003.27 Only when Garner phoned Powell and threatened to oust the DART teams did they agree to comply with Garner’s direction.28 ORHA Enters Iraq ORHA personnel first crossed into hostile territory on April 1 at the port of Umm Qasr, where the situation had deteriorated rapidly since the DART team’s first forays four days before. Coalition soldiers, who cautioned that they did not have enough troops to stop the looting, reported, on April 2, 2003, that more than 200 residents had carried off every useful piece of equipment at the port. Looters took desks and chairs, electrical generators, conveyor belts, and even a forklift. “Anything not nailed down” was gone, the DART team reported on its second visit.29 Work to rehabilitate the port was set back by weeks. The looting itself—the first major episode reported in Iraq—presaged a period of extraordinary difficulty that the Coalition would face in the weeks ahead. ORHA used Umm Qasr as a testing ground to calibrate its approach to the post-invasion environment. “We thought of Umm Qasr as a laboratory where we could see what worked and what didn’t,” an ORHA official explained. “It gave us a chance to get some real work done as opposed to just theorizing and writing position papers.”30 Restoring Umm Qasr presented three significant challenges. First was simply performing the brute physical work of reconstruction. The port was badly in need of dredging. Sunken obstacles and unexploded ordnance posed a danger to ap- proaching ships.31 The second was luring Iraqis back to work. Port workers who encountered Coalition soldiers were understandably skittish.32 The third was coordinating civil and military authorities, which proved extremely difficult, a precursor to similar problems that would burden the U.S. relief and reconstruc- tion endeavor in Iraq for years to come.33 On April 11, 2003, Lieutenant General Garner crossed into Iraq at Umm Qasr. He visited the port, delivered a speech before a newly formed town council, inspected a school, and was briefed by his staff. 34 He and his team then began making plans to move to Baghdad, which had fallen four days before. • 56 • • ORHA in Baghdad • Baghdad Falls British troops took control of Basrah on April 6. Baghdad began to capitulate the next day, after armored columns made “thunder runs” into the city center. As U.S. troops took over Saddam’s presidential palace on the Tigris River’s west bank, ju- bilant Iraqis, with the help of U.S. Marines, toppled the statue of Saddam Hussein in Firdos Square. Looting on a wide scale began that day, first on the fringe of the fighting and then later in plain view of American military patrols.35 In response, protective Iraqi militias sprang up in neighborhoods across the city, putting men with AK-47s atop makeshift barricades. Gunfire could be heard throughout the night as robberies and revenge killings took place.36 Deteriorating conditions on the ground began to supersede Coalition plans. The rush to the capital meant that fewer than two divisions—about 25,000 soldiers—occupied the capital, a city of about six million, amounting to an ap- proximate ratio of one U.S. soldier to every 250 residents. “That’s not enough to control a city of six million people,” Lieutenant General David McKiernan said.37 With U.S. troops scattered across Baghdad, looting seemed almost impossible to prevent. Patrols had no appetite or mandate to stop it, and McKiernan had orders to continue pushing troops north to carry out the search for weapons of mass destruction that were assumed to be in central Iraq. One option was to impose martial law and shoot looters on sight, but McKiernan could not bring himself to issue the order. “This is not just the Saddam Feyadeen that are in there looting the stores, it’s the population,” McKiernan explained. “It’s children and women. What are you going to do? What’s a soldier on the street going to do? Fire warning shots around them? The answer is, and I’ll accept full responsibility, I said ‘we are not going to shoot to kill. We’re not going to do that.’”38 Laith Kubba, a prominent Iraqi exile who helped found the Iraqi National Congress, later observed that the lack of an effective media organization from day one hamstrung the Coalition, which might have been able to calm the public had it communicated a clear message. “Iraqis are used to military coups. When they take place, they tune in to their radios,” Kubba said. “They wait for an announce- ment, number one, to tell them, ‘All important personnel working in electricity and water, report back to work, and you’ll be given access. Everybody else is under curfew from so-and-so hours.’ Instead there was a day, two days and three days of no authority.”39 The interactions between occupier and occupied were aggravated by the way troops were assigned to patrol zones. “We had divided the city up into target areas that didn’t have any relevance to political boundaries,” Lieutenant General Strock said. Some brigade commanders were spread across four neighborhoods. To Strock, the arrangement was far from ideal. “I remember saying, you know, • 57 • • Chapter 5 • it would be really nice if we could align up our security zones with our political boundaries and then you would have much more synergy.”40 The frequent movement of units from one zone to the next undermined the incipient personal relationships developing between commanding officers and community leaders. Yet another complication arose when civilians entered the mix. The military used a specialized system of grid coordinates to plot patrol zones, but civilians in ORHA, and the NGOs with whom they worked, normally used longitude and latitude to mark locations.41 The Coalition was literally not working off the same maps, adding unnecessarily to the confusion on the ground. ORHA Arrives in Baghdad Garner was eager to get to Baghdad, but the military leadership had a different view of when ORHA should deploy. “Tommy Franks didn’t want us to be there for 60 to 90 days,” Garner recalled.42 The CENTCOM Phase IV plan called for the military to secure Iraq for six to eight weeks before beginning the transition to civil administration. It was all part of the three stages of Phase IV. But Garner believed conditions were right for ORHA to start its operations, even if the timing was in advance of what military planners had expected.43 On April 17, Garner flew to meet Franks in Qatar. “I got in a big argument, pretty tense argument,” Garner said. “Look, Jay,” Franks told him, “there’s still fighting going on in Baghdad. The last thing I need is a bunch of damn civilians running around there and me having to worry about taking care of them. Dave McKiernan doesn’t have the force to do that.” “I realize that,” Garner replied, “but what’s happening is vacuums are being created and they’re being filled up with what you and I don’t want them filled up with, and the only way to prevent that is to get us in there.”44 “He was exasperated with me,” Garner remembered. “He finally just, kind of, shook his head and shrugged his shoulders.” The next day, Franks called to say that ORHA could go in. “We don’t have the force in there to give you the proper amount of security,” Franks said. “God bless you and good luck.”45 Garner immediately dispatched a small advance party. He followed two days later, on April 21, flying with his senior staff aboard a C-130 to Baghdad International Airport and traveling from there to the Republican Palace, one of Saddam’s grand edifices on the banks of the Tigris, which would house ORHA for its brief tenure.46 Most of the rest of ORHA’s staff drove up from the south in several convoys over the next week. During ORHA’s first days in Baghdad, achieving effective communications was again a debilitating problem. Some ORHA officials had Thuraya commercial satellite phones, but they were unable to receive calls inside the palace without an • 58 • • ORHA in Baghdad • outside antenna. No phone system was yet established, so the staff had to walk from office to office to communicate.47 With the Baghdad telephone exchange down, it was impossible to reach Iraqis. Commercial communications equipment acquired by ORHA had also failed to operate, leaving the Baghdad team out of touch with its regional offices in Erbil, Hilla, and Basrah.48 After an urgent call from Garner, Lieutenant General McKiernan dispatched a communications unit to the Republican Palace to connect ORHA to SIPRNET, the military’s classified network. Even with this support system, bottlenecks still impeded communications.49 Looting and its Consequences Two weeks had passed since Saddam’s regime had fallen. Outside the gates of the Republican Palace where ORHA was trying to set up shop, anarchy reigned. “We found the city in utter chaos,” said Richard Miller, one of six police advisors sent by the Justice Department. In some places, “corpses littered the streets, AK-47 fire was near constant, and looters operated with impunity.”50 Many government buildings had been destroyed. “A lot of the ministries turned out to be blasted cinders,” noted Ambassador Tim Carney, senior advisor for the Ministry of Industry and Minerals.51 “They not only took everything out of there, but they stripped the electrical wires out of the wall, and they stripped most of the plumbing out, and then they set the buildings on fire,” Garner said.52 Fires burned so hot that concrete in many build- ings exploded.53 ORHA advisor Christopher Spear waded into ransacked rooms filled three feet deep with paper debris. Clean-up crews hauled away six tons of scattered documents from the Ministry of Health alone. “We would say they took everything but the kitchen sink, [but] they took that, too,” Spear said.54 The looting quickly changed into organized theft by gangs of Iraqi criminals and insurgents trying to destabilize the country. In a military compound under nominal guard by U.S. soldiers, one of these gangs smashed through a rear wall and used a crane to remove valuable precision milling equipment used to manufacture Scud missiles. “They knew exactly what they were going for,” Spear said.55 Millions of dollars in cash stored in Rafidain and Rasheed bank branches and at the Central Bank were looted or destroyed, as were the contents of safety deposit boxes.56 “Organized crime found its golden opportunity,” the Iraqi poli- tician Samir Sumaida’ie said.57 Some government officials joined in the melee. In Mosul, a prison guard sold all the prison beds for scrap.58 In time, ORHA’s senior advisors would learn that the theft of Iraq’s assets had, in truth, started years before, when corrupt government officials began regularly selling ministry property “to pad their own pockets.”59 • 59 • • Chapter 5 • The looting went on for several weeks. “In a lot of cases,” Garner said, “after we began to try to reoccupy buildings, they still got set on fire. The Health Ministry got set on fire two or three times after we occupied it, because there just wasn’t enough force to provide security on everything.”60 The Oil Ministry was the only ministry to escape major damage. It was protected by Coalition troops as soon as they entered Baghdad, minimizing but not preventing looting. The ministry was reopened on May 2, in advance of others.61 To ORHA senior advisors, it stood as a symbol of what might have been. The oil infrastructure seemed to have emerged from the invasion largely in- tact. Fewer than ten oil well fires were set. But post-invasion looting in the oil sector went on for ten weeks, from March 20, 2003, through the end of May.62 Of the oil sector damage the Coalition had to repair, only one-third resulted from the war. The remaining two-thirds of the damage—amounting to $943 million—was caused by looting.63 The contours of post-Saddam political life could be seen taking shape in the patterns of destruction. Eleven of Baghdad’s thirty-three hospitals were protected by a Shi’ite militia. These hospitals survived completely intact but others left un- protected were stripped clean.64 Shi’ite militias also took control of the city of Amarah, preventing looting before it could get started.65 In isolated cases, loyal staff at public institutions held looters at bay. Thirty engineers secured the Basrah refinery by using heavy equipment to block the gates.66 The looting had three major effects. The first was its high cost. Estimates vary, but looting clearly caused billions of dollars in damage, greatly adding to the total cost of relief and reconstruction.67 The second—the looting of conventional mu- nitions depots—had severe long-term consequences for U.S. forces in Iraq. The war plan assumed that some elements of Iraq’s security forces would be used to “provide internal security,” including guard duty at the hundreds of arms caches across the country.68 This assumption did not hold. Thousands of tons of muni- tions were looted in the weeks after Baghdad fell, and some of it doubtlessly was later used to build improvised explosive devices that would be employed against U.S. personnel.69 The third effect—the lost opportunity to restore government services quickly—also had long-term consequences. With public institutions and criti- cal infrastructure reduced, in some cases, to smoldering rubble, ORHA’s senior advisors would have to rebuild ministries, not just restart them. The unexpected extent of the destruction dealt a critical setback to Administration plans for a rapid transfer of power and would eventually force a significant course change. • 60 • • ORHA in Baghdad • Troop Strength On April 21, the day Lieutenant General Garner arrived in Baghdad, Secretary Rumsfeld—following the advice of CENTCOM Commander General Franks— canceled the deployment of 50,000 additional combat troops scheduled to arrive in the region and ordered the withdrawal of the Third Infantry Division as soon as the First Armored Division arrived.70 Rumsfeld’s decision shocked some com- manders on the ground, including CFLCC Commander Lieutenant General McKiernan, who were counting on the additional manpower to provide a se- cure environment for post-conflict stabilization. The reversal also dumbfounded McKiernan’s CFLCC staff, that had just sat through two video conferences with senior Pentagon officials who had affirmed the decision to continue deploying forces.71 Garner called Rumsfeld and said, “You’ve got to stop this. You can’t pull troops out. In fact, we probably need more right now.”72 Paying for Reconstruction The widespread looting and the damage it wrought meant that the reconstruction funds the Congress had just appropriated would be inadequate to quickly restore Iraq’s essential services to prewar levels. On April 16, 2003, President Bush had signed Public Law 108-11 creating the Iraq Relief and Reconstruction Fund.73 The $2.475 billion congressional appropriation funded the program of humanitarian relief and reconstruction planned by the NSC, which had assumed that an extensive reconstruction would not be needed because Iraq’s infrastructure would remain largely intact after the war and that Iraqi oil revenues would fund most reconstruc- tion. On the same day, General Franks issued his “Freedom Message,” declaring the Coalition’s intention to “exercise powers of government temporarily, and as neces- sary.” Franks’s message also identified an entity, called the Coalition Provisional Authority (CPA), that would be responsible for the governance of Iraq.74 USAID was the largest recipient of IRRF 1 money, receiving just over 70 percent of the appropriation. A separate provision of the bill established an $800 million Natural Resources Risk Remediation Fund (NRRRF) to support emer- gency fire fighting, repair damage to oil facilities and related infrastructure, and preserve oil distribution capability. NRRRF funds were used to help pay part of the costs of Task Force Restore Iraqi Oil (RIO), administered by USACE.75 New Iraqi Politics Chaos on the ground threw the plan for a rapid political transfer to an interim Iraqi authority into confusion. On April 15, Garner and Presidential Envoy Zalmay Khalilzad assembled more than a hundred key Iraqi leaders in the southern city of Nassriya.76 To encourage leaders within Iraq to step forward, the United States • 61 • • Chapter 5 • excluded the heads of exile opposition groups, who had formed the Leadership Committee from the Salah al-Din conference. Although the Nassriya meeting was boycotted by several clerics and the Supreme Council for the Islamic Revolution in Iraq, a larger follow-on gathering was planned for Baghdad later in April.77 On April 22, Garner flew to meet with Kurdish leaders he knew from the hu- manitarian operation he led in 1991. He undertook this trip and other meetings with Iraqi politicians to further the process of forming an interim Iraqi authority, in accord with the President’s approved plan. “He was really pushing them both pretty hard,” Lieutenant General Strock said of Garner’s interaction with Ahmed Chalabi and Jalal Talabani. “He was playing hardball with them, saying, ‘Look, you guys got to stand up and come together and set aside your differences,’” Strock said.78 Secretary of State Colin Powell then dispatched Khalilzad and Ambassador Ryan Crocker to southern Iraq for talks on political transition, but there were intense disagreements over how to proceed.79 Garner was trying to carry through the standing plan for a rapid transfer.80 But in Washington, officials were con- cerned that conditions were not right for creating the interim authority. The next step would come on April 28, when more than 250 Iraqi leaders would convene a second political conference in Baghdad. ORHA’s Goals On April 24, 2003, Garner briefed CFLCC Commander Lieutenant General McKiernan on eleven goals he wanted ORHA to help accomplish. McKiernan and Garner both assigned a member of their senior staff to the leadership of each task. The goals were: 1. Security 2. Salaries Paid Nationwide 3. Return Police to Work and Train Them 4. Return Ministries to a Functional Level 5. Restore Basic Services to Baghdad 6. Prevent a Fuel Crisis 7. Purchase Crops 8. Solve Food Distribution Challenges 9. Install Town Councils Nationwide. 10.  Deploy and Integrate Government Support Teams With Local Government 11. Prevent Cholera and Dysentery81 • 62 • • ORHA in Baghdad • The goals Garner had set for himself were enormous, as were the obstacles to accomplishing them. For example, adequate and reliable power was unavailable. “It is a Catch-22,” senior oil advisor Gary Vogler explained.82 Without fuel oil, electric plants cannot produce electricity, yet without a steady supply of electric- ity, crude cannot be refined into fuel oil. In Basrah, Coalition personnel trying to restart essential services faced a simi- lar conundrum. “The circle was amazing,” JTF-4’s Lieutenant Colonel Joseph Morgan said. “Just in that one area, just looking at how we could turn on power, so we could turn on water, so we could turn on electricity.”83 Many of Garner’s other goals fell under the purview of the civil administration pillar, where plans were less developed and leadership weakest.84 The part of the mission that Rumsfeld told Garner would be least essential was now crucial, and ORHA was not well staffed to carry it out. ORHA’s Early Departure In the last week of April 2003, Baghdad was descending into further disorder. ORHA’s limited resources were consumed with finding ministerial staff members who had fled, reconstituting records, and locating workspace for almost the entire central government. Garner could not arrange enough military security escorts for his staff to move unfettered around the city. As for the rest of the country, ORHA had not established formal mechanisms for coordination with the military units occupying towns and villages across Iraq, much less with Iraqi leadership at the provincial level. Coordination was in short supply everywhere: between ORHA and Washington, ORHA and the military, and ORHA and the Iraqis.85 Suddenly Iraq seemed very large, and ORHA’s staff seemed very small. In this chaotic atmosphere, more than 200 Iraqi leaders arrived in Baghdad for the “big tent” meeting on April 28, 2003. Garner presided, with Ambassadors Khalilzad and Crocker in support. The political conference was attended by all the key Iraqi players, including representatives from the major Shi’a political party, the Supreme Council for the Islamic Revolution in Iraq. Under Garner’s guidance, the Iraqis at the conference resolved to create an interim government at their next meeting in four weeks. After the meeting, Garner announced this decision through the Iraqi and U.S. media. It appeared to some in Washington that the concept of an interim Iraqi authority might still be realized.86 But out of view, a significant change in strategy was developing. On May 6, just fifteen days after Jay Garner had arrived in Baghdad, President Bush announced that L. Paul Bremer III, a former ambassador and career Foreign Service Officer, as his new Presidential Envoy to Iraq. Bremer also would lead • 63 • • Chapter 5 • the Coalition Provisional Authority, the civil authority that General Franks an- nounced in his April 16 freedom message.87 Ambassador Bremer had first been approached at the beginning of April by senior officials in the Defense Department and the Office of the Vice President.88 Although Garner had been told when first appointed to lead ORHA that he would eventually be followed by a person with a diplomatic or political background, he did not learn of Bremer’s selection until Rumsfeld phoned him with the news on the evening of April 21, Garner’s first night in Baghdad. “I never saw CPA coming,” Garner said.89 He did not immediately tell his staff of the impending change. Bremer’s arrival would reflect a sea change in U.S. policy. ORHA was designed as a short-term holding mechanism, to be followed by a rapid shift to an interim Iraqi authority, mirroring the swift transition that occurred in Afghanistan. But the deteriorating situation in Iraq apparently had caused the White House to change plans. Zalmay Khalilzad, the President’s envoy to the Free Iraqis, re- called: “The idea that I was working on initially, with support from everyone in Washington, was to form an interim authority that we could work with. A deci- sion was made not to pursue that option until later, and therefore the Coalition Provisional Authority was established.”90 During the summer of 2003, the U.S. role in Iraq, under Bremer’s leadership, rapidly and massively expanded, far eclipsing the minimalist liberation vision that had set planning for war in motion a year and a half earlier, and superseding the quick transfer to an interim Iraqi authority that the President had approved at the March 10, 2003 NSC meeting. • 64 • • ORHA in Baghdad • Essential Services Overview: The Effects of Invasion Metric91 Pre- invasion Post- invasion Electricity Production Megawatts 4,075 711 Oil Production Million Barrels per Day 2.58 0.30 Iraqi Security Forces Soldiers and Police 1,300,000 7,000-9,00092 Telecommunications Landline Subscribers 833,000 0 Mobile Subscribers 80,000 0 Human Toll U.S Troop Fatalities- 139 Civilian Contractors93 - 1 U.S. Civilians- ~9 Iraqi Civilians- 7,413 Financial Cost ($ billions) U.S Funding- $3.45 Iraqi Funding- $0.00 International Funding- $0.00 Total Funding- $3.45 Production of electricity came to a near-complete halt during the 2003 invasion. By mid-April 2003, the grid was generating an average of just 711 megawatts of electricity per day.94 Postwar looting and sabotage had destroyed nearly 1,000 electrical towers, and the loss of numerous electrical control systems caused fre- quent blackouts in Baghdad.95 Without electricity, oil production also came to a standstill. Many oil facilities were safely shut down, but some oil stocks were destroyed by fire. Although pro- duction restarted fairly quickly, it averaged only 300,000 barrels per day—about one-eighth of prewar levels—in May 2003.96 Already in a state of severe disrepair, Iraq’s essential services declined precipi- tously after the March 20 invasion due to war damage, looting, and sabotage. ORHA had neither the time nor the resources to fix these problems. Thus, the CPA took them on, shouldering the responsibility for restoring broken essential services and distributing them more fairly among all Iraqis. • 65 • Part II The Coalition Provisional Authority Leads Reconstruction May 2003 to June 2004 Chapter 6 Charting a New Course But the President’s instructions to me...when I had lunch with him alone on May 6th, were that we’re going to take our time to get it right...The President had effectively, though perhaps not formally, changed his position on the question of a short or long occupation, having before the war been in favor of a short occupation. By the time I came in, that was gone.* Ambassador L. Paul Bremer III CPA Administrator (2003-2004) Ambassador L. Paul Bremer III landed in Baghdad on May 12, 2003, less than two weeks after President Bush appointed him Presidential Envoy to Iraq and desig- nated him to lead the Coalition Provisional Authority (CPA). Just under a month had passed since the first members of ORHA had settled into Saddam’s Republican Palace. But ORHA’s days were numbered. Bremer’s arrival and Garner’s quick de- parture marked the beginning of a significant shift in U.S. reconstruction policy. The new envoy, then 62 years old, enjoyed a solid reputation as a diligent, intelligent public servant. He had enjoyed a long career at the State Department, followed by distinguished private- and public-sector stints.1 But the choice of Bremer raised some eyebrows. Neither his Foreign Service background nor his private-sector work included experience in post-conflict peacekeeping, con- tingency operations, or reconstruction. He had never participated in a joint civilian-military operation, had little experience in international development, had never served in the Middle East, and did not speak Arabic.2 Ambassador Bremer was first contacted about leading the CPA in early April 2003, when the Vice President’s chief of staff, Lewis “Scooter” Libby, called to ask whether he would consider serving in Iraq.3 Meetings at the Pentagon soon followed, and, by the end of April, he was preparing to deploy to Iraq. All of this occurred just as Jay Garner was settling into Baghdad with his ORHA staff.4 Secretary Powell recalled that Rumsfeld telephoned him about this time to say that the White House wanted to remove Garner because he did not seem to be the right man for the job. When Rumsfeld asked Powell if he knew Bremer, Powell said yes and that he “didn’t have any reason to object.”5 Rumsfeld later said that the Administration always intended that Garner’s position within CENTCOM * SIGIR interview with Ambassador L. Paul Bremer III, former CPA Administrator, March 18, 2008. • 69 • • Chapter 6 • would be eliminated, and that a senior diplomat outside the military chain of command would be appointed to head the CPA.6 On May 6, the President appointed Bremer as envoy to Iraq, directing him to “oversee Coalition reconstruction efforts and the process by which the Iraqi people build the institutions and governing structures that will guide their future.”7 In a May 13, 2003 memo, Secretary Rumsfeld informed Bremer that he, as Administrator of the CPA, would be “responsible for the temporary governance of Iraq.” Rumsfeld directed Bremer to “oversee, direct and coordinate all executive, legislative, and judi- cial functions necessary to carry out this responsibility, including humanitarian relief and reconstruction and assisting in the formation of an Iraqi interim authority.”8 Ambassador Bremer took charge of a country in political and economic chaos, with no government, no electricity, and no functioning security forces. Not a single drop of oil flowed to export spigots. He now faced the daunting task of restoring virtually every aspect of Iraqi life, from reopening ministries to paying government salaries, from restarting essential services to providing healthcare, and from collecting garbage to cleaning sewage from the streets. The CPA quickly subsumed ORHA, retaining many of its members. Ambassador Bremer reported to the President through the Secretary of Defense. But, as a Presidential envoy, Bremer also reported directly to the President. “I was neither Rumsfeld’s man nor Powell’s man. I was the President’s man,” said Bremer.9 These parallel chains of command would create problems for the Iraq program. CENTCOM was tasked by Rumsfeld to “directly support the Coalition Provisional Authority by deterring hostilities; maintaining Iraq’s territorial in- tegrity and security; searching for, securing and destroying weapons of mass destruction; and assisting in carrying out U.S. policy generally.”10 Despite this order, unity of effort in Iraq proved elusive during the CPA’s early days because Ambassador Bremer and General Franks reported to the Secretary of Defense through separate channels. The Occupation Begins Within days of arriving in Baghdad, Ambassador Bremer issued three important directives. The first established the CPA as an occupying authority. The second banned certain Ba’ath Party members from public service. The third dissolved Iraq’s military and other security forces. CPA Regulation Number 1: Liberation to Occupation On May 16, 2003, Ambassador Bremer signed and issued CPA Regulation Number 1, establishing the CPA’s mission, authority, and responsibilities.11 The regulation provided that the CPA “shall exercise powers of government • 70 • • Charting a New Course • temporarily in order to provide for the effective administration of Iraq” for an undefined transitional period. The CPA would work: ...to restore conditions of security and stability, to create con- ditions in which the Iraqi people can freely determine their own political future, including by advancing efforts to restore and establish national and local institutions for representative governance and facilitating economic recovery and sustain- able reconstruction and development.12 This order also vested Ambassador Bremer with “all executive, legislative and judicial authority necessary to achieve [CPA’s] objectives.” Iraqi law would con- tinue in effect unless it was “suspended or replaced by the CPA.”13 The new regulation signaled a developing shift in U.S. policy. The postwar strategy for Iraq—approved by the President on March 10, 2003—assumed that the country’s governing institutions would survive the invasion and remain sufficiently intact to continue to administer the offices of government and pro- vide the Iraqi people with essential services. The President’s policy anticipated establishing an interim Iraqi authority with which the CPA would work to de- velop a political process for the eventual permanent transfer of sovereignty to a new, democratically elected government. The March 10 NSC Situation Room briefing to the President, however, did not define how the members of the new interim Iraqi authority would be chosen and what its authority would be during the postwar period.14 On April 28, 2003, the Office of the Secretary of Defense produced a briefing book on the development of the Iraqi Interim Authority, stat- ing that the Department and “the U.S. government interagency process have yet to decide upon a final structure for the IIA, and have not announced an approach or timetable for implementing the concept.”15 When Bremer arrived in Iraq on May 12, the United States did not have a well-developed plan in place for transferring political power to an interim Iraqi authority, despite operative orders anticipating a fairly imminent withdrawal of most U.S. forces. The unexpected complete collapse of Iraq’s governing in- stitutions, widespread and debilitating looting, and disagreements among U.S. government officials about the composition of the interim authority prevented the Coalition from promptly effecting the hoped-for quick transition. The absence of clarity on the way forward amid Iraq’s evolving post-invasion condi- tions was underscored in Under Secretary of Defense Douglas Feith’s May 15, 2003 congressional testimony, given the day before the CPA issued Regulation Number 1. He said: “We are pursuing [our] goals with a two-part determination: a commitment to stay and a commitment to leave.”16 • 71 • • Chapter 6 • Ambassador Bremer said that, by the time he was appointed, senior Washington officials had agreed that the political transition would take much longer than initially anticipated at the March 10 briefing. On May 6, President Bush told Bremer “to take the time necessary” to set Iraq on the path to democ- racy. Two days after Bremer’s meeting with the President, Secretary Rumsfeld presented a paper at his morning staff meeting stating that the transition from despotism to a democracy will not happen fast or easily. It concluded that it could not be rushed.17 The rapid policy change in Washington was slow to filter to Iraq, where both civilian and military leadership assumed that the March 10 strategy still con- trolled. When Ambassador Bremer arrived, ORHA’s Jay Garner and Zalmay Khalilzad, the President’s envoy to Iraqi exile groups, were actively engaging with Iraqi leaders, primarily from the exile community, to quickly form an in- terim authority. Bremer’s issuance of Regulation Number 1 effectively ended this initiative. On May 22, Bremer proposed a new political plan under which the Iraqis would form a governing council, produce a new constitution, and then hold elec- tions for a permanent government. On that same day, he submitted his first report to the President through Secretary Rumsfeld, stating that he had “re-launched the political dialogue with Iraqi leaders” and that “full sovereignty under an Iraqi gov- ernment can come after democratic elections, which themselves must be based on a constitution agreed by all the people.” The President wrote back, “You have my full support and confidence. You also have the backing of our Administration that knows our work will take time.”18 Meanwhile, CENTCOM was still following its original strategy. General Franks had issued orders in April—pursuant to prewar plans—to move much of the initial invasion force out of Iraq by the end of July. He anticipated a U.S. mili- tary presence in Iraq of “fewer than 30,000 troops by the first of August.”19 By May 1, 2003, CENTCOM had dismantled its forward command-and-control center in Qatar. Two weeks later, the Defense Department announced that Lieutenant General David McKiernan’s command (CFLCC) would soon leave Iraq and that his large headquarters would be replaced by a much smaller Combined Joint Task Force 7 (CJTF-7), led by Lieutenant General Ricardo Sanchez.20 During this period, Lieutenant General Sanchez repeatedly expressed concern to General John Abizaid about the ongoing troop withdrawals, while Ambassador Bremer also warned Washington that security was deteriorating.21 General Abizaid assumed command of CENTCOM on July 8. Three days later he issued orders halting the U.S. troop withdrawal. Forces withdrawn during that early summer included U.S. Army Engineer units that could have • 72 • • Charting a New Course • supported the incipient reconstruction mission. The loss of these units hampered the Coalition’s capacity to carry out quick-impact rebuilding projects during the CPA’s first weeks.22 CPA Regulation Number1, which made the CPA the occupying author- ity of Iraq and Bremer—in effect—a proconsul, “completely flabbergasted” many Iraqis, according to senior exile leader Ali Allawi, who would serve as the Minister of Trade, Defense, and Finance in successive Iraqi governments. Allawi was shocked that, “within the space of a few days, the entire process that was to lead to a provisional Iraqi government had been abruptly stopped, and then up- ended.”23 The change raised suspicions among Iraq’s indigenous tribal, political, and religious leadership, who chafed at the idea of an occupation by foreigners, after suffering under Saddam’s dictatorship for decades. On May 22, 2003, the UN Security Council approved Resolution 1483, rec- ognizing the CPA as the temporary governing authority in Iraq, directing it to work to “promote the welfare of the Iraqi people,” and advising it to “comply fully” with all obligations under international law.24 CPA Order Number 1: De-Ba’athification On the same day that he signed CPA Regulation Number 1, Ambassador Bremer issued CPA Order Number 1, a de-Ba’athification directive that stripped cer- tain former members of Saddam’s Ba’ath Party of political influence in Iraq. In his April 16 Freedom Message, General Franks already had done away with the Ba’ath Party, which had about two million members in 2003.25 Conceived in Washington and promulgated with little Iraqi involvement, the de-Ba’athification order eliminated all Ba’ath Party structures and banned “Senior Party Members”—those in the top four ranks of the party—from serving in Iraq’s public sector.26 The order also provided for the immediate dismissal of anyone in the top three layers of management in any government institution (including min- istries, state-owned enterprises, universities, and hospitals) if he or she had been a “full member” of the Ba’ath Party.27 Because the vast majority of senior officials in Saddam Hussein’s regime were Ba’ath Party members, the order effectively fired most senior leaders in Iraq’s government, severely depleting the bureaucracy of key personnel. The order also allowed for exceptions and waivers. Before the war began, interagency planners debated the delicate trade-off be- tween the need to eliminate the Ba’ath Party and the need to retain an effective administrative bureaucracy in postwar Iraq. A consensus developed favoring a policy to remove the Ba’ath Party’s most-senior ranks; but the meaning of “most- senior ranks” was left undefined.28 The intelligence community estimated that implementing the order down to the Party’s fourth level would affect “only about • 73 • • Chapter 6 • one percent of all party members or approximately 20,000 people, overwhelmingly Sunni Arabs.”29 Many in the Shi’a and Kurdish communities believed that a strong de-Ba’athification policy was crucial to prevent a Ba’athist return to power. Some senior U.S. officials opposed the de-Ba’athification order. They argued that it would strip Iraq’s governance institutions of key senior management and thus jeopardize the Coalition’s primary goal of stabilizing the country. For exam- ple, ORHA’s Jay Garner and the CIA station chief in Baghdad urged Ambassador Bremer to modify the order, believing the policy needlessly would create enemies for the Coalition and undercut national reconciliation.30 Bremer refused, saying he had his instructions from Washington.31 Most Iraqis agreed that some de-Ba’athification was necessary, but many believed that the CPA order had gone too far. For example, Nazar Janabi, the Director General for Defense Policy and Requirements in Iraq’s Ministry of Defense from 2004 to 2006, thought that only the top three levels of the Ba’ath Party should have been subject to the order. It would have had a far “less disen- franchising impact” if it had been restricted to just those levels, he said.32 The de-Ba’athification order arguably reached beyond what President Bush had approved on March 10, 2003, when the NSC’s Frank Miller had briefed him on the policy. The President had then determined that “we ought to re- move what we understood to be the top layer” of the Ba’ath Party (although no further definition was given to what the top layer comprised). Whether “the top layer” reached down to the fourth rung is subject to dispute. Miller believed that “the Ba’athist regime ought to [have been] dealt with in truth and reconciliation panels. Membership in the Ba’ath Party ought not to [have been] an immediate disqualification for office.”33 Whatever its reach should have been, the consequences of the de- Ba’athification order quickly became clear: it reduced the ranks of Iraq’s capable bureaucrats and thus limited the capacity of Iraqi ministries to contribute to re- construction. “The impact of this de-Ba’athification order was devastating,” said Lieutenant General Sanchez, Commander of Coalition forces in Iraq at the time. “Essentially, it eliminated the entire government and civic capacity of the nation. Organizations involving justice, defense, interior, communications, schools, uni- versities, and hospitals were all either completely shut down or severely crippled, because anybody with any experience was now out of a job.”34 Some of Iraq’s Sunnis equated the order with a “de-Sunnification” of the gov- ernment. Samir Sumaida’ie, a Sunni who became a member of the Iraqi Governing Council (IGC) and then served as Iraq’s Minister of Interior, criticized the order for focusing on removing people rather than getting rid of an outmoded ideology. “The whole thing was applied in a very negative way,” he said. “It was far too wide-ranging, • 74 • • Charting a New Course • and as a result, created a backlash. There were a lot of people who were just ordinary people who [joined the party simply because they] wanted to survive.”35 On May 25, 2003, Bremer signed CPA Order Number 5, creating an Iraqi De-Ba’athification Council to “investigate and gather information” on “the extent, nature, location and current status of all Iraqi Ba’ath Party property and assets” as well as “the identity and whereabouts of Iraqi Ba’ath Party officials and members involved in human rights violations and exploitation of the Iraqi people.” The council, composed entirely of Iraqis, was tasked to help the CPA Administrator identify and classify former Ba’ath Party members, eliminate Ba’ath Party struc- tures, and reclaim Ba’ath Party assets. Importantly, it also advised Bremer about who should be exempted from de-Ba’athification.36 The CPA gave the council responsibility for de-Ba’athification, but “did not provide enough authority, resources, or oversight for them to manage the process.”37 It eventually turned the de-Ba’athification process over to the Iraqi Governing Council.38 In November 2003, the Supreme National De- Ba’athification Commission replaced the Iraqi De-Ba’athification Council; Ahmed Chalabi, the Shi’a expatriate politician, served as its first chairman.39 CPA Order Number 2: Disbanding the Military One week after issuing the de-Ba’athification order, Ambassador Bremer handed down another momentous order that also had unanticipated and significant con- sequences. CPA Order Number 2, titled “Dissolution of Entities,” abolished seven institutions: the Ministry of Defense, the Ministry of Information, the Ministry of State for Military Affairs, the Iraqi Intelligence Service, the National Security Bureau, the Directorate of National Security, and the Special Security Organization. The order put every member of Iraq’s army, air force, navy, and air defense force, as well as the Republican Guard, the Special Republican Guard, the Directorate of Military Intelligence, and the Emergency Forces—some 500,000 men—immediately out of work, many without any compensation. Although the roughly 300,000 conscripts could receive a small termination payment, no soldier with the rank of colonel or above was eligible for either a termination payment or a pension.40 This CPA order surprised some policymakers in Washington. The NSC had not vetted the decision, and NSC Iraq coordinator Frank Miller said that the President had expected the army to continue after regime change because the Coalition could not “afford to put 300,000 men with guns in their hands on the street.”41 Secretary Powell first learned of the order at a May 22, 2003 NSC meet- ing at which Bremer, via secure video-teleconference from Iraq, announced his intent to issue the order the following day.42 • 75 • • Chapter 6 • “When the Army was disbanded,” Secretary Powell recalled, “I called Dr. Rice and said, ‘What happened?’ Nobody seemed to know about this and [her] answer was, ‘We have to back Jerry [Bremer].’ There was no meeting on it; there was no, ‘Gee, is this a good idea?’ You couldn’t even tell who had decided it...I saw Peter Pace, the Vice Chairman, a little later and I said, ‘Peter, did you guys know about this?’ He said, ‘Hell, no!’”43 The order was drafted by the CPA’s senior advisor for national security, Walt Slocombe, in consultation with the Office of the Secretary of Defense and cir- culated to senior military leaders, including the Chairman of the Joint Chiefs of Staff.44 Under Secretary Feith later acknowledged that it was an error in judgment for the Pentagon not to have discussed disbanding the army with senior-level of- ficials of other agencies before formally approving the issuance of the order. But he maintains that it was the right decision substantively because the Iraqi army was top-heavy with generals, otherwise badly organized, corrupt, and had been an instrument of oppression in Iraq.45 Slocombe later said that the order merely reflected facts on the ground because Iraq’s forces had essentially disbanded in the wake of the invasion. Moreover, the Kurdish and Shi’a leaders objected to any reconstituted version of Saddam’s army.46 Key U.S. generals in Iraq expressed concerns about the order before it was issued.47 CENTCOM’s Phase IV plan, approved by the President, anticipated using the Iraqi army to help stabilize the country and assist with reconstruction. To this end, the military had dropped leaflets across Iraq before the invasion urging soldiers not to fight and promising no reprisals against those who laid down their arms. Some U.S. ground commanders argued that the army had not “dissolved,” but that Iraq’s soldiers had gone home, awaiting direction. In each region across the country, U.S. brigade commanders had contacted Iraqi military leaders and, through them, had begun to reconstitute army units.48 To replace the disbanded forces, Bremer and Slocombe proposed creating a small volunteer Iraqi army.49 The plan called for the Coalition to train about 40,000 Iraqi soldiers, divided into three light infantry divisions, over the next two and a half years. The first division would be ready for deployment in the fall of 2004, the second division in the fall of 2005, and the third in early 2006.50 The plan would allow the “New Iraqi Army” to draw on carefully vetted officers from Saddam’s old force, but it had to exclude the top ranks of the Ba’ath Party and anyone from the inner circle of the old security forces.51 Leading Iraqis disagreed with the CPA’s decision to disband the army. Ali Allawi said Iraqi attitudes toward the army were far more complicated than Americans understood. The police (which were not disbanded) and other inter- nal security forces were “detested,” but the armed forces “generated considerable • 76 • • Charting a New Course • sympathy and respect throughout Iraq.” According to Allawi, the public at large saw the army “as an integral part of the identity of the state of Iraq,” and it was difficult, “even for the Shi’a, to accept a wholesale dissolution of the armed forces and to leave the country bereft of an army.”52 Laith Kubba—one of the founding members of the Iraqi National Congress, an advisor to the Future of Iraq Project, and later a spokesman for the Iraqi gov- ernment—said, “the measure to dissolve the Iraqi army was not a smart one.” Kubba believed that Ambassador Bremer needed the old army to help Iraq make the transition to democratic governance. “Now if that means you need to utilize some of the people who were in the bureaucracy, in the army, in the regime, and if they’re vital and crucial to make that transition, then you take them on board.” He added, “Alienating large numbers of people...was not a smart move.” 53 Within days of the announcement of the “Dissolution of Entities,” crowds of former soldiers gathered outside the CPA’s palace gates in Baghdad and around U.S. military compounds across the country, demanding the restoration of their salaries and pensions. In Mosul, where Major General David Petraeus was com- manding the 101st Airborne Division, disbanded military members demonstrated for several days in front of the city hall. Iraqi policemen shot and killed one of the protestors and wounded three others, sparking a riot. Over the next two days, eighteen of Petraeus’s soldiers were wounded, and two Humvees were burned. Riots in Baghdad and elsewhere claimed American and Iraqi lives. Ten days later, Bremer modified the policy, announcing that the CPA would pay salaries and pensions to members of the disbanded army.54 Major General Petraeus later said that the order to disband the army sparked an anti-Coalition sentiment that fueled the nascent insurgency in Iraq, igniting nationalist impulses against “the occupiers.” Petraeus believed that the order created “tens of thousands, if not hundreds of thousands, of additional enemies of the Coalition.”55 • 77 • Chapter 7 CPA’s Shortfalls Jerry [Bremer]—God bless him—he was never given a set of coordinated instructions from the Administration. He went in pretty much on his own.* General Colin Powell Secretary of State (2001-2005) When Ambassador Bremer arrived in Iraq, he ostensibly had at his disposal both U.S. appropriated funds and Iraqi money that he could use to fund gov- ernment operations and reconstruction programs. In April 2003, the Congress had approved $2.4 billion for the newly created Iraq Relief and Reconstruction Fund, which would become the primary U.S. funding account for Iraq’s reconstruction. The Office of Management and Budget apportioned the first appropriation to the Iraq Relief and Reconstruction Fund (IRRF 1) among five implement- ing agencies, with USAID receiving more than 70 percent.1 USAID already had marked these IRRF 1 funds for use before the CPA’s creation, and thus Ambassador Bremer had limited influence over how this money was spent.2 The CPA’s advisors, however, sought to shape specific job orders under the various IRRF 1 contracts USAID managed. Disagreements over these job orders marked the beginning of a disputatious relationship between the CPA and USAID. Unlike IRRF 1, Ambassador Bremer had virtually complete control over Iraqi money, which came from three sources: vested funds in U.S. bank accounts fro- zen by an executive order shortly before the March 2003 invasion; seized funds that Coalition forces had recovered in Iraq; and oil and gas revenues controlled by the UN under the Oil-for-Food program. The CPA would expend about $20 billion of these Iraqi funds by the end of its fourteen-month tenure.3 U.S. Funding In the April 2003 IRRF 1 legislation, the Congress directed that the funds be used to pay for “humanitarian assistance” and “rehabilitation and reconstruction in Iraq.” The Congress identified twelve humanitarian and reconstruction sectors for fund use, with the OMB apportioning the money among the agencies shown on the following chart.4 * SIGIR interview with General (Ret.) Colin Powell, former Secretary of State, February 4, 2008. • 78 • • CPA’s Shortfalls • Breakdown of Iraq Relief and Reconstruction Fund Apportionments by Agency ($ Millions) Source Agency Apportioned USAID $1,820.3 Department of Defense $518.3 Department of State $125.4 IRRF Department of the Treasury $6.0 U.S. Trade and Development Agency $5.0 Total $2,475.0 Source: Data as of September 30, 2004; CPA-IG, Quarterly Report to the United States Congress; October 2004, 55. USAID had initiated contracting for Iraq’s reconstruction in early 2003 and, by early May, it had awarded twelve contracts, obligating about $1.5 billion in IRRF 1 dollars. The agency divided the contracts between “hard” projects to re- store infrastructure and “soft” programs to support health, education, agriculture, and economic reform initiatives. Bechtel received the largest single contract, $680 million, for infrastructure projects in Iraq.5 After the March 2003 invasion, USAID quickly began to establish a presence in Iraq, and, by mid-summer, the agency had 30 offices open in 15 of the country’s 18 provinces, staffed by more than 400 people. Reflecting USAID’s transformation over the previous fifteen years into an agency heavily reliant on contractors, only about a dozen of the deployed personnel were full-time agency employees.6 Iraqi Funds In May 2003, the U.S. government, the Coalition, and the United Nations took several important steps to give the CPA access to Iraqi funds for reconstruction programs and to fund government operations. An executive order issued on the eve of the invasion permitted Ambassador Bremer to use $1.7 billion in vested Iraqi assets, which had been drawn from various banks and deposited into the U.S. Federal Reserve Bank of New York.7 During the invasion, U.S. forces seized about $900 million from various locations across Iraq, finding much of it in Saddam’s palaces. Bremer generally used the vested funds to pay Iraqi government salaries and the seized funds to support reconstruction projects. The U.S. military carried out many of the first reconstruction projects using seized funds, which marked the beginning of a critical program that Bremer would soon formalize in a CPA order as the Commander’s Emergency Response Program (CERP). Vested and seized Iraqi funds alone, however, could not cover the mounting costs of admin- istering and rebuilding Iraq. For that, the CPA depended on the Development Fund for Iraq (DFI). • 79 • • Chapter 7 • The DFI On May 22, 2003, the UN Security Council passed Resolution 1483 (UNSCR 1483), creating the DFI as the new repository for Iraq’s oil and gas revenues.8 The resolution required the deposit of 95 percent of these funds into the DFI account at the Federal Reserve Bank of New York, from which the CPA could draw to pay for “the economic reconstruction and repair of Iraq’s infrastructure, for the continued disarmament of Iraq, for the costs of Iraqi civilian administration, and for other purposes benefiting the people of Iraq.” The remaining five percent was deposited in the UN Compensation Fund for victims of Saddam Hussein’s 1990 invasion of Kuwait.9 UNSCR 1483 also created the International Advisory and Monitoring Board (IAMB) to provide oversight of the DFI and to ensure that the CPA used Iraqi revenues for the benefit of the Iraqi people. The IAMB’s membership included representatives from the UN, the World Bank, the International Monetary Fund, and the Arab Fund for Social and Economic Development. Notwithstanding the importance of the IAMB’s mission, the UN failed to appoint its members until October 24, 2003, and the board did not have its first meeting until December 5, 2003, more than six months after the CPA started using the DFI.10 At the end of May 2003, the UN transferred a billion dollars into the DFI account “to provide for immediate reconstruction needs,” and the CPA immedi- ately began using it to pay Iraqi governmental salaries and pensions and to finance initial reconstruction projects.11 Ambassador Bremer created a Requirement Review Board (RRB) to manage the DFI, and the RRB quickly started approv- ing projects, ranging from a $600 water pump to a $4 million radio system for the railroads.12 “For lack of a better [term],” noted Ambassador James Warlick, the CPA’s point person on the Oil-for-Food program, the DFI became CPA’s “bank account” for Iraq.13 On June 15, 2003, the CPA issued two regulations governing the DFI.14 One gave Ambassador Bremer complete control of the DFI funds, providing that he alone could direct their disbursement.15 The other replaced the RRB with the Program Review Board (PRB), directing it to use the DFI in a transparent man- ner to meet Iraq’s humanitarian needs, support the economic reconstruction, fund projects to repair Iraq’s infrastructure, continue disarmament programs, and pay for the costs of the country’s civilian administration.16 Program Review Board Bremer named his new director of economic policy, Peter McPherson, as chair- man of the PRB.17 Under McPherson’s guidance, the PRB reviewed numerous reconstruction project proposals, making recommendations to the Administrator • 80 • • CPA’s Shortfalls • on which the CPA should pursue.18 Ambassador Bremer instructed McPherson to “promote the CPA’s objective of actively involving Iraqis in the financial planning process, and transferring to the Iraqi interim administration the responsibility for budgeting Iraq’s financial resources”—but only one Iraqi representative was on the board.19 The PRB was also supposed to develop a comprehensive funding plan for the “relief and reconstruction of Iraq,” but it never produced such a plan.20 Because the CPA was legally deemed an “international organization,” Iraqi funds under its control were not subject to U.S. contracting regulations. The CPA thus developed its own contracting regulations, embodied in CPA Memorandum Number 4, which detailed the rules for using the DFI. Among other things, Memo 4 established conditions for the award of DFI-funded contracts and defined the documents required for each contract file. Notably, it put the CPA’s Head of Contracting Activity (HCA) in charge of executing all CPA contracts.21 The HCA also was directed to manage Iraqi ministry contracting unless the CPA’s Administrator had exempted a ministry after certifying that it had established capable contracting systems “adequate to ensure the transparent use and management of Iraqi funds.”22 By the end of the CPA’s tenure, Bremer had certified just two ministries. Nevertheless, Iraqi ministries regularly engaged in independent contracting, in breach of Memo 4, throughout the CPA’s du- ration. U.S. and international auditors later raised serious concerns about the CPA’s weak oversight of the DFI and its failure to enforce its own contracting procedures.23 Commander’s Emergency Response Program On June 16, 2003, Ambassador Bremer authorized the use of DFI funds for CERP, an important new program that enabled U.S. military combat units to use Iraqi funds for small-scale reconstruction projects to meet Iraqi needs. Three days later, Lieutenant General Ricardo Sanchez, Commander of CJTF-7, issued Fragmentary Order 89, outlining the regulations governing CERP and defining eligible projects as those for “the building, repair, reconstitution, and reestablish- ment of the social and material infrastructure in Iraq.”24 CERP grew into a key U.S.-funded reconstruction program in Iraq, ultimately receiving more than $3.5 billion in U.S. appropriations by the end of 2008.25 Shortly after creating the program, the CPA expanded CERP’s limits on proj- ect spending and strengthened its regulations, requiring commanders to appoint trained purchasing agents to document their use of CERP funds. General officers in charge of regional commands could receive $500,000 in CERP money for projects; brigade commanders could receive $200,000. The PRB approved ad- ditional tranches upon depletion of these allotments.26 • 81 • • Chapter 7 • The CERP made it possible for U.S. commanders to improve life in Iraqi com- munities by quickly repairing roads and bridges, rebuilding schools, improving health care, and removing trash.27 The program would later play a critical role in U.S. counterinsurgency efforts in Iraq. Staffing Problems Soon after arriving in Baghdad, Ambassador Bremer replaced ORHA’s pillars, organizing the CPA into political, economic, administrative, budgeting, and plan- ning sections, which roughly resembled the traditional embassy structure with which Bremer was familiar. The CPA absorbed 600 ORHA staff members but was still far short of what it needed to manage its burgeoning relief and recon- struction program.28 On May 21, 2003, Deputy Secretary of Defense Wolfowitz moved to ad- dress the CPA’s shortfalls by directing the Department of the Army to meet its administrative, logistical, and contracting needs.29 The Army promptly opened a contracting office at CPA headquarters in the Republican Palace in Baghdad, ap- pointing an Army colonel to lead the new office. When he arrived at the end of June 2003, he found that there were just three contracting officers on staff to manage all of the CPA’s work.30 He desperately needed more qualified personnel to help produce statements of work—the key element in defining a contract’s scope—and more lawyers to review contracting documents. Throughout the CPA’s tenure, the contracting office was grievously understaffed.31 These personnel problems were symptomatic of those afflicting the entire CPA. With no formal recruiting process in place, the CPA resorted to a “pull sys- tem” in which senior advisors determined their staffing needs on an ad hoc basis and then sent the requests to the CPA’s human resources office in Baghdad. The Baghdad office would then send the request to the CPA’s Pentagon office. 32 This procedure was too slow, so CPA officials in Iraq began recruiting staff directly from federal agencies and presenting them to human resources for immediate processing. 33 The CPA also suffered from a very high personnel turnover rate. Part of the cause was that, in the summer of 2003, the U.S. still expected a short stay in Iraq, and so most people signed up for three-month tours.34 Because of the CPA’s myriad personnel problems, the White House sent Katja Bullock, special assistant to the President for presidential personnel, to assist in developing a Joint Manning Document (JMD). Bullock promptly pro- duced a JMD that included personnel needs from federal agencies, contractors, and Coalition partners. Submitted to the Joint Staff by July 2003, the JMD called for a CPA staff of around 1,200 people, which would double its size.35 The Joint Staff quickly filled the military slots, but ignored the civilian ones because it • 82 • • CPA’s Shortfalls • had no mechanism in place for forwarding staffing requests to the civilian agen- cies.36 Colonel Dennis DeGraff, CPA’s personnel director, said that “the civilian [personnel] piece...just sat on somebody’s desk in [the Office of the Secretary of Defense].”37 At the end of 2003, Secretary Rumsfeld deployed a team to Iraq to assess the CPA’s personnel situation. Its report concluded that the CPA was “a pick-up organization [seeking] to design and execute the most demanding transforma- tion in recent U.S. history.”38 A CPA Inspector General audit of the organization’s personnel management system also found problems, noting that “CPA staffing needs changed constantly in terms of the number of required personnel,” and that the CPA could not keep an accurate count of its personnel.39 Throughout its tenure, the CPA operated with about one-third fewer people than it needed and turnover was constant.40 Retired Lieutenant General Jeffrey Oster, who served as the CPA’s deputy administrator and chief operating officer during 2004, observed: “If you couldn’t get somebody for 90 days, you’d take somebody for 60 days.” When the CPA dissolved on June 28, 2004, only seven people had served for the CPA’s entire fourteen-month duration.41 The 3161 Provision During mid-summer 2003, it became apparent that the CPA was going to be in Iraq longer than the few months the Pentagon’s leadership had hoped. Meeting personnel needs to support the occupation thus quickly moved up on the list of priorities. U.S. civilian agencies were failing to provide enough personnel, so the Pentagon established a new recruiting team within its White House Liaison Office to find and employ staff. Like ORHA, the new team used a special federal law designed for temporary organizations—Section 3161 in Title 5 of the United States Code—to fill CPA positions quickly. The 3161 provision permitted federal hiring free of the usual position classifications and competition requirements.42 Although the Pentagon’s recruiting team had an efficient and effective hiring tool, it still needed a pool of candidates with the right skills and experience to support a contingency relief and reconstruction operation. Because a ready pool did not exist, many of the personnel that the team recruited were poorly qualified for the jobs to which they were assigned.43 Furthermore, using the Pentagon’s White House Liaison Office as the locus for senior official recruitment exposed the effort to charges of politicization. By the spring of 2004, more than twenty percent of the CPA’s staff had been hired under the 3161 provision. Coalition partners contributed another thirteen percent, and around five percent were contractors. Only 149 of the CPA’s 1,196 staff were detailed from the civilian agencies. Most of these came from the State • 83 • • Chapter 7 • Department, USAID, and the U.S. Treasury. The Defense Department drew on its military assets to provide the rest.44 The civilian agencies in the federal bureaucracy failed to muster more staff for Iraq because they had neither the financial nor personnel resources to support a contingency operation.45 Also, the worsening security situation in Iraq proved a deterrent. Matching Skills to Jobs The CPA’s Office of Management and Budget staff exemplified the CPA’s per- sonnel problems. When Retired Rear Admiral David Oliver, the first Director of CPA’s OMB, started in June 2003, he requested 31 people to meet his enormous mission. When he left five months later, in November 2003, only four of his posi- tions were filled.46 Rodney Bent, who worked for OMB in Washington, replaced Oliver, finding severe shortages in staff numbers and skills. Bent discovered that none of his employees had ever worked on a budget before being deployed to Iraq. “I had a relatively young staff that was completely inexperienced and had no particular training either in the Middle East or on budget matters,” said Bent. “I would think, if we’re ever in this kind of situation again, that we’d want to draw on some of the professional staff that does exist” in Washington.47 The Iraq Reconstruction and Development Council Deputy Secretary Wolfowitz and Under Secretary Feith created the Iraq Reconstruction and Development Council (IRDC) to bolster cultural aware- ness and Iraqi outreach. First ORHA and then the CPA used the IRDC’s 150 members as technical advisors to Iraq’s ministries and provincial offices. These Iraqi exiles—most of whom were American citizens—had an ambiguous status that set them apart from their CPA colleagues (as well as from Iraqi nationals).48 Some CPA officials had concerns that some IRDC members brought potentially troublesome political baggage with them, including ties to factions controlled by exile politicians.49 A few IRDC members achieved success. For example, Dr. Sinan al-Shabibi later became the governor of the Central Bank of Iraq.50 But the IRDC program was far from an overall success. It suffered from severe attrition. In the waning days of the CPA, only 27 IRDC members still remained on CPA’s roster.51 A post-mortem of the IRDC effort found that it was poorly planned and inadequately managed.52 The difficult IRDC experience underscores the need for a preplanned, well-prepared cadre of experts who understand the culture, history, and economic foundations of a country undergoing a major relief and reconstruction operation.53 • 84 • • CPA’s Shortfalls • Although the United States was generally unprepared to take on a large-scale occupation and rebuilding mission in Iraq in 2003, one agency notably stepped up and performed its mission admirably. The U.S. Department of the Treasury, having dispatched a well-staffed and well-qualified team, worked first with ORHA and then CPA in 2003 to help prevent the collapse of Iraq’s economy. • 85 • Chapter 8 Treasury’s Triage The banking system [in Iraq] was in shambles. Electronic transfer of funds, widely made to people in developed countries, was virtually non-existent, making Iraq’s payment system the equivalent of a Model-T Ford.* John B. Taylor Under Secretary of the Treasury for International Affairs (2001-2005) When the first group of U.S. Treasury experts arrived in Baghdad in April 2003, they found Iraq’s financial system in ruins. Looters had ransacked the Rafidain and Rasheed banking chains and pillaged safe-deposit boxes. Just two of the 170 Rafidain branches, the largest bank chain in the country, were open.1 The vault of the Central Bank of Iraq contained only $350 million in gold and waterlogged bank notes. 2 Nearly a billion dollars in foreign currency had been withdrawn from the bank before the war. In early May, Iraq’s ministries were bankrupt, unable to pay salaries and pensions, and the country’s currency was dangerously unstable. The U.S. Treasury team worked through the spring and summer of 2003 to battle these devastating problems, shoring up Iraq’s banking system, resuming civil servants’ payments, stabilizing the currency, and securing a moratorium on repayment of Iraq’s international debts. Negotiations that began later in the year would significantly reduce this debt. These efforts, among the most successful and most important during the early CPA period, prevented the country’s financial collapse. But the larger goal of transforming Iraq’s statist economy into one pow- ered by free-market principles would prove much more difficult. Paying Iraqi Salaries In May 2003, the CPA began paying Iraqi governmental salaries and pensions, using vested and DFI funds. To end the inequities of Saddam’s payment system, Ambassador Bremer approved a four-tier monthly pay scale that permitted civil servants, based on their grade, to receive $50, $100, $150, or $250 per month.3 Treasury officials in Baghdad worked with the Iraqi Ministry of Finance to de- velop a roster of eligible civil servants and pensioners. Ministry officials, who had secured their payroll records when the war started, turned them over to the CPA, and Bremer’s senior advisors used them to develop employee registers for each * John B. Taylor, Global Financial Warriors: The Untold Story of International Finance in the Post-9/11 World (New York: W.W. Norton, 2007), 200. • 86 • • Treasury’s Triage • ministry.4 The senior advisors then requested budgets to pay salaries based on the new payroll grades. Some professions received instant pay raises. Teachers, for example, received $50 per month under the new system, a tenfold increase.5 The CPA initially used the $1.7 billion in vested Iraqi funds to pay salaries.6 The cash was packaged at the Federal Reserve Bank in New York, put on pal- lets, and flown to Baghdad for distribution. These money flights would occur continually over the next year, transporting more than $12 billion—or 237.3 tons of cash—from the United States to Baghdad to fund Iraqi budgets and re- construction projects.7 Ged Smith, the director of Treasury’s Office of Technical Assistance, remem- bered calling the New York Federal Reserve Bank to order the first shipment of $20 million in small bills: “The guy just laughed and asked, ‘How many planes do you have?’”8 When the money arrived, CPA’s senior advisors loaded bricks of cash—nicknamed “footballs”—into trucks and Chevy Suburbans, delivering them personally to their respective ministries to pay salaries and other costs. Senior Iraqi officials distributed the money to ministry employees.9 Although the payment process lacked the controls necessary for proper accountability, it met the urgent need to provide salaries, inject money into the economy, and prevent a political crisis. Treasury advisors to Iraq’s Ministry of Finance and the Central Bank moved quickly to establish a more controlled payroll system. By late June 2003, proce- dures were in place to pay government salaries through the Rafidain Bank, whose branches were quickly reopening. Forty-six branches were operating by August in Baghdad, with another 85 branches across the country.10 More than 90 percent of the salary payments during the CPA’s tenure—all paid with either vested or DFI funds flown from the United States—went from the CPA Comptroller to the Central Bank and then out to recipients through the Rafidain Bank chain.11 John Taylor, the Under Secretary of the Treasury, testifying before the Senate Foreign Relations Committee during the first week of June 2003, reported that more than 1.5 million workers and pensioners had already started receiving regular payments. He described the payments as an “initial financial life-line to the Iraqi people.”12 Although the CPA’s payments and new pay-scale provided a “life-line” for many Iraqis, they nearly caused a revolt among oil workers. “In the one-product economy that Saddam’s disastrous economic policies had developed for Iraq,” said Admiral Dave Oliver, Director of CPA’s Office of Management and Budget, “the oil workers were accustomed to being specially pampered and not reluctant to express their displeasure.” The CPA promised to come up with a new pay- scale by September, which “kept the oil and electrical ministries working without • 87 • • Chapter 8 • significant protest.”13 CPA Order Number 30 created thirteen civil-service clas- sifications, each divided into ten steps on a career ladder that mirrored that of the U.S. civil service.14 Flying Billions to Baghdad The CPA relied on the DFI to fund the operations of Iraq’s ministries and to pay for reconstruction projects. Held in a Federal Reserve Bank account in New York, DFI cash was flown to Baghdad in very large sums whenever the CPA requested. These shipments—the largest airborne transfer of currency in history—proved an enormous logistical challenge. A typical pallet of DFI cash had 640 bundles, with a thousand bills in each bundle. Each loaded pallet weighed about 1,500 pounds. The pallets were flown into Baghdad’s airport at night and were then driven to the Central Bank of Iraq for deposit.15 The first emergency air-lift of money to Iraq was for $20 million, but the shipments rapidly grew in size. In December 2003, the CPA requested a $1.5 billion shipment, at the time the largest single payout of U.S. currency in Federal Reserve Bank history.16 But that record was soon broken when, in June 2004, more than $4 billion was flown to Iraq, just before the CPA’s transfer of sovereignty to the Iraqi Interim Government. The Currency Exchange Before the war, U. S. Treasury officials were concerned about the two different currencies in circulation in Iraq. In northern Iraq, the Kurds used the old Iraqi currency, known as the “Swiss” dinar, so named because the currency’s original plates were made in Switzerland. In the south, Iraqis used the “Saddam” dinar, which bore Saddam Hussein’s picture. The fact that the Saddam dinar was em- blazoned with the dictator’s portrait was just one of its problems. It was also easy to counterfeit, had only two denominations in circulation, and had plunged in value since the 1991 Gulf War. 17 Treasury officials knew that a stable and unified currency system would be essential to Iraq’s long-term economic health, so they developed a currency ex- change program as part of the agency’s prewar strategy.18 In July 2003, Bremer announced the currency exchange plan, noting that the CPA would print and distribute new Iraqi banknotes and make them available to the Iraqi public in mid-October.19 The Central Bank of Iraq, with Treasury’s support, would manage • 88 • • Treasury’s Triage • the exchange and the “New Iraqi Dinar” would replace both the Swiss and the Saddam dinars.20 “Currently everyone in Iraq carries a reminder of Saddam in their pockets— on the banknotes they’re using,” Bremer said. “Shortly after October 15, the first batch of Saddam notes will go into the incinerator. At close of business January 15, 2004, Saddam notes will no longer be legal tender.”21 Between October 2003 and January 2004, the CPA carried out the exchange with armed convoys deliver- ing the new Iraqi dinars to 243 banks across Iraq. Insurgents attacked fifteen of the convoys, wounding eleven people.22 But the attacks did not stop the conversion. Iraqis exchanged their old dinars for new ones at banks across the country, with the old notes shipped to Baghdad for burning.23 President Bush hailed the exchange program as an important achievement: “A stable currency, a new currency, a currency without the picture of the dictator or tyrant, or the torturer, however you want to define him, is important for the future.”24 The new dinar was stable enough by the end of 2006 to begin appreciat- ing against the dollar.25 Relieving Iraq’s Debt Estimates of Iraq’s external debt in 2003 ran as high as $130 billion.26 Fearing that interest payments on the debt alone could consume most of the country’s income, Treasury made it a priority to persuade Iraq’s international creditors to forgive or restructure Iraq’s mammoth debt.27 It secured an initial agreement with the G-8—comprising the world’s top eight industrialized democracies—to give Iraq eighteen months before seeking interest payments on any Iraqi debt. Treasury then embarked on an intense negotiation process which eventually secured extraordinary debt relief for Iraq.28 In December 2003, President Bush appointed former Secretary of State and Secretary of the Treasury James Baker as his special envoy for Iraq’s debt to lead the negotiations. Baker heavily engaged with the Paris Club, a debt forum com- prising the world’s nineteen richest countries, eventually securing a commitment from Club members to write down Iraq’s foreign debt.29 At their economic summit in June 2004, the G-8 endorsed an IMF finding that Iraq’s debt should be reduced by 90 to 95 percent. Iraq’s new Minister of Finance Abdul al-Mahdi then asked the Paris Club creditors to reduce Iraq’s debt by 95 percent and to reschedule payments of the remaining debt over a 23-year period. The United States, Canada, and Britain supported the request. Baker’s negotiations over the next five months produced a hugely beneficial outcome: 80 percent of Iraq’s $38.9 billion debt to Paris Club creditors was forgiven.30 More significant debt forgiveness would follow over the next few years, which helped • 89 • • Chapter 8 • the country’s foundering economy to stabilize and begin to grow. The extraordi- nary elimination of much of Iraq’s debt since 2003 amounts to one of the most generous acts of collective international debt-forgiveness in modern times. CPA’s Economic Reform Agenda In May 2003, Peter McPherson, the CPA’s Director of Economic Policy, over- saw the CPA effort to pay Iraqi government salaries, restart the banking system, and manage the currency exchange program, he began to implement reforms to open Iraq’s economy to the free market.31 Some in the CPA contended that these reforms should be implemented gradually; others urged letting Iraqis re- solve their own issues regarding the country’s economic structure after the CPA left.32 The IMF warned that in transition economies like Iraq, “implementation of these reforms has typically been difficult and time consuming, reflecting the need to build political support for reforms to ensure that they are durable, and that adequate institutional capacity exists to ensure effective implementation.”33 But McPherson pointed to the IMF’s report on economic reform efforts in Eastern Europe, which concluded that the earlier reforms are made, the faster economic growth will occur.34 McPherson and his economic team moved briskly ahead, focusing much of the CPA’s reformist effort on Iraq’s state-owned enterprises and the country’s banking system. State-owned Enterprises After the March 2003 invasion, most of Iraq’s SOEs shut down because of loot- ing. Three wars and a decade of international sanctions had left them “seriously de-capitalized, asset-starved, obsolescent, inefficient, saddled with high pro- duction costs, over-staffed, and—as a result of looting—in a state of physical degradation.”35 But Iraq’s 192 SOEs were the “sole providers of essential public utilities and the leading providers of a large number of public goods and services as well as of consumer and industrial products.” They accounted for 90 percent of the country’s industrial capacity. Eleven different ministries oversaw various SOEs, which employed an estimated 500,000 people, or roughly one-eighth of the country’s workforce.36 The CPA considered three separate but related issues regarding the SOEs. First, how much budget support should it provide to these state businesses? Second, should the SOEs be able to draw upon their deposits held by state banks? And third, should the debt between the SOEs be cancelled?37 Regarding budgetary support, McPherson and the ministry advisors differed on the degree to which the CPA should assist the largely inefficient and outdated state-run businesses. The CPA did continue to pay all SOE salaries and, in the early • 90 • • Treasury’s Triage • days, gave some financial support to a number of SOEs in the electricity, oil, water, and health sectors. But McPherson, who saw the SOEs as vestiges of Saddam’s statist economy, did not want to risk wasting additional money on businesses about which the CPA had little knowledge. He demanded proof that support for the SOEs would stimulate the economy and, in time, create viable companies.38 Some of CPA’s senior advisors, however, pushed to have more money allocated immediately to the SOEs, which they saw as vital to Iraq’s economy.39 As to SOE bank accounts, McPherson made the controversial decision in July, when the two largest government banks began opening branches, to freeze all SOE deposit accounts at these banks. The move prevented individual SOEs from drawing on their accounts to purchase supplies, make needed capital improve- ments, or pay debts. McPherson was concerned about the viability of the state banks, which had recorded deposits amounting to about $2 billion but had only about $1 billion on hand.40 He feared that any attempt by the SOEs to withdraw their money could spark a run on the banks.41 At the same time that the CPA froze the SOE bank accounts, it also cancelled all of their debts. McPherson contended that the “maze of obligations between government entities” was so complicated and that so many records had been de- stroyed by looting, that it would take more than a year to sort them out and “even then you would not have an accurate record.”42 He concluded, with Bremer’s concurrence, that “we should clean the slate and move on.”43 McPherson said that many of the SOEs could not survive without huge subsidies, and that he wanted to fund only “those that could make practical use of CPA money.”44 Some members of the Treasury’s economic team and senior advisors to the ministries objected to these decisions. They contended that debt cancellation could weaken the Iraqi government’s long-term credit standing. Moreover, they argued that freezing the bank deposits and cancelling all the debt among the SOEs hurt the most viable companies—those with money in their accounts—and risked leaving Iraq without a manufacturing base and with a huge unemployment problem.45 There were also legal concerns about the CPA’s authority under inter- national law to effectively shut down much of Iraq’s manufacturing base.46 Timothy Carney—the CPA’s senior advisor to the Ministry of Industries and Minerals, which supervised a number of SOEs—urged that Iraqis should have a say in this significant economic decision. In a June 15, 2007 memo to McPherson, Carney warned that the proposed SOE policy “risks [undermining the] assets of the Iraqi people” and “was drawn up without adequate Iraqi participation.”47 The CPA changed course at the end of July, and started to provide additional operating budgets for those SOEs, such as the cement and fertilizer companies, that could produce goods and services needed to support reconstruction. By the • 91 • • Chapter 8 • end of August, about one-third of the SOEs had reopened.48 Dr. Sami al-Araji, an American-trained mechanical engineer who had been working for the Ministry of Industry and Minerals, criticized the policy on SOEs, because he believed they “would have been able to support the [reconstruction] work in the electrical, oil, health, water and sewerage, and transport sectors.”49 Banking Reforms During Saddam’s rule, banks functioned as “vehicles for storing and moving cash around the country and—in some cases—outside the country.” They were not commercially viable institutions that promoted economic growth.50 The CPA economic team and USAID agreed that Iraq’s banking sector needed modern- izing, but disagreed on how to do it.51 The CPA promulgated three orders to reform the Iraqi banking system. The first, issued on July 7, 2003, suspended the country’s old banking laws, which had allowed only the Ministry of Finance to authorize loans to government ministries, and gave the Central Bank of Iraq the “authority to determine and implement monetary and credit policy without the approval of the Ministry of Finance.”52 The second order, issued on July 14, 2003, created the Trade Bank of Iraq to manage DFI funds and to help Iraqi businesses finance the imports of goods. Noting that Iraq lacked “financial institutions capable of facilitating imports and exports of goods and services to and from Iraq,” the CPA autho- rized the Trade Bank’s capitalization at $100 million.53 The Trade Bank, one the CPA’s more important achievements, would issue letters of credit worth more than $16 billion over the next five years.54 The third banking order, issued on September 19, 2003, established rules for bank licensing, capitalization, and management.55 These orders collectively effected two major economic changes simultane- ously. They modernized the banking system—making it more structured and stable—and changed the credit system, giving more Iraqis greater access to capital. Under Saddam, Iraqi banks required hard collateral, such as houses, jewelry, gold, or property, to secure a loan. The CPA wanted the banks to make credit more available, hoping that increased access to financing would spur economic growth.56 The CPA’s banking reforms, however, did not have a significant effect on credit practices because the bank branches continued to require 100 percent collateral for loans. They could not quickly break their Saddam-era habits, even though the Finance Ministry had provided a written guarantee of 50 percent against possible losses made on small business loans.57 • 92 • • Treasury’s Triage • The Limits of Economic Change A number of factors constrained the CPA’s ability to make sweeping economic reforms in post-invasion Iraq.58 Disagreement within the Coalition’s ranks over the scope of economic reform measures, together with Iraqi opposition, stalled ambitious attempts to create a more open economy in Iraq and sidetracked SOE reform. There was never any serious discussion about the privatization of electric- ity, and the oil industry was considered off limits from the beginning. The deteriorating security situation and the November 15, 2003 decision to accelerate the return of sovereignty to Iraq made it all but impossible for the CPA to tackle other significant economic issues, like the state subsidies for food, electricity, and fuel.59 By the beginning of 2004, the CPA had set aside its free- market reform agenda, focusing instead on planning the political transition and implementing a wave of new reconstruction projects. According to Ali Allawi, who served as Minister of Trade during 2003, “there was not one [Iraqi] voice raised in support of the CPA’s economic plans.”60 • 93 • Chapter 9 Bremer’s Grand Vision We seem to have transitioned from a cautious beginning to requesting funding for everything without a plan or a thorough justification. And not only have the cost estimates been unrealistic, the entire postwar experience appears to have taken us by surprise. We were told that we would be welcomed with open arms by the Iraqi people and that Iraqi government institutions would be restored after a short hiatus. The vision of postwar reconstruction presented to Congress at that time was for many of us either hopelessly naive or grossly incompetent. * Representative Nita Lowey (D-NY) Chair, House Appropriations Subcommittee on State and Foreign Operations During mid-2003, several U.S. agencies and international organizations trav- elled to Iraq to conduct assessments on the country’s reconstruction needs. The resulting surveys projected rebuilding costs ranging up to $60 billion, far higher than prewar estimates. In the wake of these assessments, Dave Oliver, Director of CPA’s Office of Management and Budget, observed: “Our invasion seemed to have occurred just as the condition of the entire infrastructure teetered on the edge of the cliff of disaster.”1 The assessments also caused Ambassador Bremer to push the CPA to develop a new and much more ambitious reconstruction plan. His new vision embraced a rebuilding program many times larger than any previously proposed, which would require enormous increases in U.S. funding for Iraq’s relief and reconstruction. 2003 Assessments of Iraq Four organizations conducted major reviews of Iraq’s infrastructure and econ- omy during the CPA’s first three months: Bechtel, USACE, the UN, and the Center for Strategic and International Studies. Their reporting helped shape the next phase of the U.S. relief and reconstruction effort. * Representative Nita Lowey, Statement before the House Appropriations Subcommittee on Foreign Operations, Export Financing and Related Programs Hold Hearing on FY2004 Supplemental: Iraq Reconstruction Funds, September 24, 2003. • 94 • • Bremer’s Grand Vision • The USAID/Bechtel Infrastructure Assessment Bechtel’s first job under its $680 million contract with USAID was to assess Iraq’s infrastructure in six areas: surface transportation, aviation, buildings, water, elec- tricity, and the Umm Qasr Port in southern Iraq. During late April and May 2003, Bechtel teams surveyed dozens of sites across the country. What they found dis- turbed them. Iraq’s infrastructure had collapsed. They estimated rehabilitation costs at about $16 billion.2 Bechtel’s assessment identified five challenges then confronting the U.S. reconstruction program: (1) worsening security, (2) poor interagency coordi- nation, (3) limited access to information, (4) confusing contracting regulations (5) the prevalence of unexploded ordnance. The report predicted that Iraq’s deteriorating security situation would cause reconstruction costs to skyrocket. The ultimate success of the reconstruction program, Bechtel further noted, demanded improved coordination among the U.S. government agencies involved.3 Bechtel urged the CPA to adopt a new systemic approach to reha- bilitating Iraq’s infrastructure because: “Power, water, airports, rail, and the port are all integrated systems, and each has to be understood as critical components of an overall infrastructure network to arrive at the most economic and effective implementation plan.”4 The USACE Oil Sector Assessment In May 2003, USACE, working with Task Force Restore Iraqi Oil, KBR, and the Iraqi Ministry of Oil, surveyed Iraq’s oil infrastructure. USACE’s report ap- proximated oil sector damage at $457 million from the war and $943 million from postwar looting, estimating reconstruction funding requirements at $1.7 billion. But USACE advised that this figure could vary by as much as 40 percent.5 USACE’s assessment underscored the need to sequence and integrate oil facility repair with infrastructure work in other sectors. The electrical power grid depended on fuel from the oil sector, and oil production facilities required a steady supply of electricity. Power plants and oil facilities needed water to cool generators. The assessment found that “[a] failure of one component in the sys- tem [created] a related problem elsewhere in the system.”6 Systemic interdependence demanded a high degree of coordination between the Iraqi ministries of oil and electricity—coordination that would be missing for most of the next five years. USACE emphasized the importance of obtaining Iraqi input at every step of the rebuilding process, highlighting the need to build capacity so that Iraqis could properly operate and maintain the new parts of their infrastructure. Like Bechtel, USACE flagged the growing security problem as a major obstacle to further progress.7 • 95 • • Chapter 9 • The UN Assessment A joint assessment team from the UN and the World Bank spent the summer of 2003 in Iraq evaluating the country’s development needs, in part to prepare for a donors’ conference scheduled for October 2003 in Madrid. The team’s report documented the severe consequences of Saddam’s neglect of and under-invest- ment in Iraq’s infrastructure, economy, and social institutions.8 The UN calculated that rebuilding Iraq would cost at least $56 billion over three years, with $36 billion needed for health, education, agriculture, private- sector development, government capacity building, and the rule of law. The assessment addressed neither oil nor security, opting instead to include CPA’s $20 billion estimates for these sectors.9 Like Bechtel and USACE, the UN report warned that, unless the Coalition restored security across Iraq, the economic and political transformation of the country could not proceed: Security concerns are paramount to the Iraqi population, influencing their ability to move freely, engage in work and education, and participate in the burgeoning political process. Without security, progress in rebuilding the critical infrastruc- ture, health and education systems, and access to electricity and clean water that have been degraded and destroyed by years of corruption, conflict, neglect, and sanctions may be too slow to provide a noticeable improvement in the quality of life and reassure the Iraqi people of the benefits of a transition to an open and democratic society.10 The UN also emphasized the need to strengthen government institutions and to restore “core human services.” It identified factors that could impede Iraq’s recovery. High on the list was the requirement to restore the almost nonexistent executive and administrative capacities of Iraq’s public institutions, most acutely revealed in the absence of an effective financial management system.11 The CSIS Assessment In June 2003, at the request of Secretary Rumsfeld, John Hamre, president of the Center for Strategic and International Studies (CSIS), led a delegation of post-conflict reconstruction experts to Iraq to determine the country’s rebuild- ing needs. Hamre and his team visited nine of the country’s eighteen provinces and met with the CPA’s senior leadership. The CSIS report concluded that the United States faced an “enormous task” in Iraq, would have “to stay the course” for several years, and would need to provide significant initial funding for recon- struction programs.12 • 96 • • Bremer’s Grand Vision • CSIS also pointedly warned that the CPA had to address immediately the deteriorating security situation in Iraq. Hamre recommended engaging more Iraqis at every level of the reconstruction effort, expanding programs that could provide Iraqis with employment opportunities, and decentralizing political power to the provinces. The CSIS report advised that “[the] CPA must be given rapid and flexible funding,” adding that “business as usual” was “not an option for op- erations in Iraq, nor can it be for the funding.”13 A New Strategic Vision Concurrent with the outside assessments, the CPA’s Office of Strategic Planning drafted CPA’s Vision for Iraq, which supplanted ORHA’s Unified Mission Plan. 14 Dayton Maxwell, a former USAID official who had served with JTF-4 during prewar planning, was the senior civilian in CPA’s policy planning office, and Lieutenant Colonel Robert Polk was the senior military officer.15 They both had helped craft ORHA’s Unified Mission Plan before the war.16 The Vision for Iraq defined the CPA’s mission as working to achieve “the con- ditions for a free, sovereign, democratically elected representative government.” The document outlined, in general terms, five “core foundations” that CPA would lay to support Iraq through its democratic transformation: security, essential ser- vices and civil society, economy, governance, and strategic communications. The highest priority, according to the Vision, was “to create a secure and safe environment, without which the CPA recognized there could be little progress on other goals.” The CPA would work to restore security across the country by recruiting and training Iraqi police and military forces. Other goals included promoting a rapid transition to a market economy and establishing an effective rule-of-law system. The document called for new programs to develop democ- racy, to create equitable criminal justice processes, to implement a new and fair penal code, and to construct new courthouses and prisons. The success of the Vision depended upon a “coherent and coordinated information campaign” that would explain the scope and nature of U.S. programs to all Iraqis.17 In mid-July, Ambassador Bremer sent the Vision for Iraq to the Pentagon. “I am confident,” he wrote, “that this will put us on course for success.”18 By July 18, 2003, senior Pentagon officials had approved it.19 In the meantime, Ambassador Bremer had tasked Maxwell and Polk to ex- pand the Vision for Iraq by identifying specific tasks aimed at implementing the five core foundations, and they quickly completed a new detailed framework, entitled Achieving the Vision to Restore Full Sovereignty to the Iraqi People. In late July, Bremer took the framework to Washington for briefings with the Congress, senior Administration officials, and the press. The 30-page document was the • 97 • • Chapter 9 • CPA’s first attempt to develop, in some detail, the litany of actions required to achieve the core foundational goals of the Vision for Iraq. 20 The CPA’s Achieving the Vision suffered from some serious flaws. First, Iraqis were not sufficiently consulted on it. The Iraqi Governing Council, which was appointed on July 13, was never given a chance to provide advice on it. Maxwell and Polk expressed concern at the time that the CPA was handing the Iraqis a fait accompli—a plan they were “just going to have to eat.”21 The CPA also had established overly ambitious infrastructure outcomes before ascertaining baseline conditions and before determining costs. Moreover, the outcomes had unrealistic completion dates, some by October 2003, just three months later. The ambitious goals contained in Achieving the Vision included deploying 30,000 trained Iraqi police, re-establishing the Iraqi Border Guard, reopening all courthouses, building eleven new prisons and detention centers, reforming the ministries, improving electricity generation capacity to 4,000 megawatts, restoring basic health care services to prewar levels, rehabilitating 1,000 schools, and reopening the airports and railroads.22 Even under the best of conditions, achieving these outcomes on a short timetable was virtually impossible. Developing Iraq’s Budget In early July 2003, the CPA published a budget to fund ministry needs for the rest of calendar year 2003. CPA’s senior advisors, then serving as the de facto ministers for each ministry, compiled what data they could find and developed a budget totaling $6.10 billion. The CPA predicted oil revenues for the rest of 2003 to be $3.46 billion and expected $432.7 million from taxes and the state-owned enterprises, leaving a deficit of $2.2 billion. Bremer planned to cover the differ- ence with vested and seized Iraqi funds, the DFI, and new U.S. appropriations. The new Iraqi budget provided only $609.5 million for reconstruction and capital improvements.23 This could not begin to meet Iraq’s many reconstruc- tion needs. The CPA’s economic team knew that without a major infusion of additional funds, it would not be possible to realize any of the objectives listed in Achieving the Vision. On adoption of the 2003 budget, Ambassador Bremer ordered his senior advi- sors to develop, with their Iraqi counterparts, a 2004 budget. This effort produced more than $35 billion in ministerial requests, but Iraq’s projected 2004 revenues amounted to less than $13 billion, leaving a projected deficit of $23 billion.24 “No matter how we pared the list,” said Oliver, “we needed [over] $20 billion more than we had available.”25 Faced with a huge shortfall, Ambassador Bremer decided to ask the Congress for a dramatic increase in funding to support Iraq’s • 98 • • Bremer’s Grand Vision • relief and reconstruction. He would also look to the international community for significant contributions. In July and August 2003, Oliver and the CPA’s economic team developed a new supplemental funding request for Iraq reconstruction that would go to the Congress in September. They also shaped the U.S. proposal for the International Donors Conference planned in October.26 Asking Congress for Money In late July 2003, Dave Oliver directed the CPA’s senior advisors involved with in- frastructure to contribute to a new reconstruction plan, which would provide the basis for the new supplemental request. Oliver charged Dave Nash, a retired rear admiral recently arrived in Baghdad as the deputy senior advisor to the Ministry of Transportation and Communications, to coordinate the plan’s development.27 Just a few months earlier, Nash had been working as a construction man- ager in Birmingham, Alabama, for Parsons Brinckerhoff (a large U.S. contractor that would later receive sizable Iraq reconstruction contracts). He had made his career as a Navy engineer, rising to command the Naval Facilities Engineering Command and serving as Chief of Civil Engineers. Like many of the CPA’s early recruits, he was in Iraq on a 90-day contract. With a wealth of experience in large public-works projects, Admiral Nash arrived at the Republican Palace just as CPA’s leadership needed someone with significant construction expertise to develop an expansive strategy to rebuild Iraq’s infrastructure.28 After briefly considering asking the Congress for $5 billion, Nash and his plan- ners developed a much larger request. Working with CPA’s senior advisors, Nash pulled together a long list of infrastructure projects that would cost about $27 billion. After whittling it down to $20.3 billion, Bremer approved the proposal in early August and sent it to Washington. On August 15, 2003, Joshua Bolten, Director of the White House OMB, wrote Secretary Rumsfeld, objecting to the size of the CPA’s request. The White House had already told the Congress that it would not ask for additional funding for Iraq and Afghanistan in 2003. Bolten said the CPA would have to provide a detailed justification before the Administration would consider going back to the Congress to argue for more money for Iraq reconstruction.29 The CPA had hired Tom Korologos as a senior counselor. Korologos, a vet- eran lobbyist, addressed Bolten’s concerns in a memo to Bremer on August 17, 2003. “To delay getting our funds will be a political disaster for the President,” he wrote. “His election will hang for a large part on show of progress in Iraq and without the funding this year, progress will grind to a halt.” Korologos added that he did not believe that the Congress would turn down the supplemental request • 99 • • Chapter 9 • because “the faster the Iraq CPA succeeds, the quicker ‘our 150,000 boys over there’ will start coming home.”30 By the end of August, the CPA had answered Bolten’s demand for more data, producing a “Program/Integration Management Plan for Recovery, Reconstruction and Redevelopment of Iraq.” The plan’s stated objective was to “assist in restoring the stability of Iraq and the Iraqi economy by means of infrastructure and development.” It emphasized that U.S. funds were essential to meet Iraq’s critical infrastructure needs because oil production and revenues were stagnant.31 “These needs are immediate and urgent,” the plan asserted, adding that the CPA would “begin execution of these funds before the end of 2003.”32 The CPA’s answer satisfied Bolten. On September 6, 2003, OMB submitted a $20.3 billion supplemental request to the Congress. President Bush announced the next day that he had asked the Congress for a total of $87 billion to support Iraq and Afghanistan, including the $20.3 billion for Iraq’s reconstruction, noting: This budget request will support our commitment to helping the Iraqi and Afghan people rebuild their own nations, after decades of oppression and mismanagement. We will provide funds to help them improve security. And we will help them to restore basic services, such as electricity and water, and to build new schools, roads, and medical clinics. This effort is essential to the stability of those nations, and, therefore, to our own security.33 USAID’s Complaints USAID officials were perturbed by both the process and the substance of the CPA’s supplemental request, having been shut out from its development. They believed Bremer had acted “in a non-transparent way” and expressed grave con- cerns about the plan’s failure to include sufficient money for capacity building, democracy programs, agriculture efforts, and economic development.34 USAID Administrator Andrew Natsios sharply disagreed with the CPA’s premise that a large-scale infrastructure program would quickly create jobs and help solve Iraq’s most pressing problems. “Development is not building things,” he said. “It’s not engineering. It’s institution building.”35 USAID was particularly concerned about underinvestment in the agricultural sector, which, at the time of the 2003 invasion, was the country’s second-largest employer. Natsios was shocked to find that the supplemental had zero for ag- ricultural programs, which he said are essential “to stimulate the economy and keep all the young men in the rural areas,” rather than have them stream into the cities where they could be recruited as insurgents.36 • 100 • • Bremer’s Grand Vision • In August 2003, before the submission of the supplemental, USAID’s Baghdad office sent a memo to Oliver outlining its objections and encouraging him to revise the request so that it addressed Iraq’s long-term needs for capacity building and sustainability. Oliver responded that the Congress would not fund “soft” projects and that the request would not be changed.37 The dispute between the CPA and USAID intensified when USAID discovered that the CPA, a Defense Department organization, would manage all of the IRRF 2 funds. Lewis Lucke, USAID’s Mission Director in Iraq, complained to Oliver: To exclude us—especially considering the success we have achieved and are achieving to date in our programs, and the fact that we are a professional development organization that is by nature operational overseas—seems short-sighted and territorial in the extreme to the detriment of the overall U.S. mission in Iraq.38 USAID then developed its own $5 billion supplemental funding request, em- phasizing public health and education, the economy, government accountability, and technical support. It called for $3.25 billion to restore essential electricity, transportation, irrigation, and water infrastructure.39 The proposal gained no traction, either within the Administration or on Capitol Hill. Relations between USAID and CPA officials continued to deteriorate during and after the submission of the 2003 supplemental request. These breakdowns, both personal and bureau- cratic, would continue to affect the reconstruction program for years to come.40 Congressional Debates on the Supplemental During the last two weeks of September 2003, the Congress held seven hearings on the supplemental, during which members from both parties demanded to know why Iraq was not shouldering more of the reconstruction program’s finan- cial burden. Some argued that the United States should provide support through loans, while others saw CPA’s request as an extravagant “wish list.”41 “When I look at some of these justifications and when I look at some of the postwar planning in general, two thoughts strike me,” said Representative David Obey (D-WI), the ranking member of the House Committee on Appropriations. “It looks like it was put together by the president of an Optimists Club, rather than someone with an understanding of the world; and secondly, it looks like the execution plans have been put together more like an MBA term paper than a document that reflects a realistic understanding of the society that we’re wishing to operate in.”42 • 101 • • Chapter 9 • Senate and House committee members peppered the CPA with written “questions for the record” about contracting, management, and oversight. Some legislators were struck by the fact that the CPA request contained more than $15 billion for construction, but provided virtually no information about the contracting process. Others raised concerns that the CPA had failed to prioritize the sectors or projects within sectors and had not provided timetables for program completion.43 One member observed that a construction program of the size and scope proposed by the CPA would take five to seven years to complete in the United States. The CPA brushed off all objections: “Our estimates differ. While some of the most complex projects may take several years to complete, we anticipate that the majority of construction can be completed much sooner.”44 The Congress also raised concerns that the huge appropriation would serve as a disincentive to international donors. The CPA countered that Iraq would need between $50 billion and $75 billion for reconstruction—well above the supple- mental request—and that it planned on presenting a “rich package of projects that should appeal to the donors” at the Madrid conference in October.45 The Madrid International Donors Conference Creating that “rich package” fell to CPA’s Council for International Coordination. CPA Regulation Number 5 created the council on June 18, 2003, “to be the CPA’s focal point and coordination body for international assistance in the re- lief, recovery and development of Iraq.”46 Bremer tasked the council, chaired by Marek Belka—an economics professor who had served as Poland’s deputy prime minister and minister of finance—to coordinate assistance from governments as well as international and nongovernmental organizations, make recommenda- tions to the PRB on international assistance efforts in Iraq, coordinate with the IMF and the World Bank, and—most important—prepare for the October 2003 Madrid Donors Conference.47 As he organized for Madrid, Belka faced two significant challenges. First, he had to put together a plausible list of projects that interested donors might support. Second, he had to overcome the lack of interest on the part of certain countries, such as Germany, France, and Russia, that had opposed the Iraq inva- sion and thus might be disinclined to support Iraq’s economic recovery. Planning for Madrid suffered a devastating blow when, on August 19, 2003, a truck bomb destroyed the UN headquarters in Baghdad, killing the Secretary- General’s Special Representative, Sergio Vieira de Mello, and 21 others.48 This tragedy caused the UN to pull out of Iraq, and cast a pall over Belka’s efforts.49 The attack eventually led many countries to conclude that security was so bad in Iraq that contributing funds could have little positive effect in the near term. • 102 • • Bremer’s Grand Vision • On October 16, 2003, the UN issued Security Council Resolution 1511, which aimed to assuage international concerns about America’s expanding role and lengthening stay in Iraq. The new resolution stressed the temporary nature of the Coalition’s occupation and encouraged the United States to transfer sov- ereignty to the Iraqis as soon as practicable. Issued shortly before the Madrid Donors Conference, UNSCR 1511 was crafted in part to calm the concerns of donor nations about U.S. plans for Iraq and thereby persuade them to contribute to Iraq’s reconstruction.50 But it did not have this effect. On October 23 and 24, 2003, a total of 76 countries, 20 international orga- nizations—including the IMF and the World Bank—and 13 nongovernmental organizations participated in the Madrid Donors Conference. The United States pledged $18.4 billion (the amount of the pending supplemental), and the other countries combined pledged a total of $13.5 billion in grants and loans. Fewer than half of the attendees announced contributions. Germany, France, and Russia pledged nothing. Japan offered the most, contributing more than a third of the total non-U.S. amount pledged—$1.5 billion in grants for 2004 and $3.4 billion in loans.51 To help manage international donations, the UN created the International Reconstruction Fund Facility, which the UN Development Group and the World Bank would oversee. All qualified companies from any country could bid on contracts for projects paid for by the fund.52 Congress Passes IRRF 2 The Congress debated the CPA’s supplemental request during October 2003, and, on November 6, it passed the “Emergency Supplemental Appropriations Act for Defense and for the Reconstruction of Iraq and Afghanistan for Fiscal Year 2004,” allocating $18.4 billion to the Iraq Relief and Reconstruction Fund (IRRF 2). The Congress made the money available for two years, meaning that it had to be fully contracted by September 30, 2006. Notably, the Congress required the CPA to provide an accounting for all revenues—domestic and foreign, includ- ing Iraqi—used for Iraq’s reconstruction.53 The Act also created a new oversight office—the Inspector General for the Coalition Provisional Authority—which became SIGIR in October 2004. Although the Congress approved the CPA’s funding request almost intact, the legislators imposed greater controls and more oversight for IRRF 2, divid- ing the money among ten sectors and giving the CPA limited authority to make adjustments. The Congress provided that the CPA could shift up to ten percent from one sector to another, but no sector could be increased by more than twenty percent without congressional approval. • 103 • • Chapter 9 • Iraq Relief and Reconstruction 2 Sector Allocations ($ Billions) Sector Allocation Electricity $5.56 Water Resources and Sanitation $4.33 Security and Law Enforcement $3.24 Oil Infrastructure $1.89 Justice, Public Safety Infrastructure, and Civil Society $1.32 Health Care $0.79 Transportation and Telecommunications $0.50 Roads, Bridges, and Construction $0.37 Education, Refugees, Human Rights, and Governance $0.28 Private Sector Development $0.15 Total $18.44 Source: P.L. 108-106, Emergency Supplemental Appropriations Act for Defense and for the Reconstruction of Iraq and Afghanistan for Fiscal Year 2004, November 6, 2003. Numbers may not add up due to rounding. The IRRF 2 legislation stipulated that, in addition to the CPA, only five agencies could use the funds to implement reconstruction programs—the Department of Defense, the Department of State, the Department of the Treasury, the Department of Health and Human Services, and USAID. The Congress encouraged each to “provide significant financial resources, technical assistance, and capacity building to counterpart organizations led by Iraqis.”54 Section 2207 of the legislation required the OMB, in consultation with the CPA’s Administrator, to submit quarterly reports to the Congress on the status of IRRF 2 projects. The first Section 2207 Report was due on January 5, 2004, and it had to contain a complete list of proposed projects.55 The CPA now had less than two months to compile the list of projects, develop a spend plan, and build an office to manage what quickly had become the largest foreign reconstruction program for a single country in U.S. history. • 104 • Chapter 10 Contracting Billions for Reconstruction They [CPA] sat down in a four-day period and came up with a list of projects of what they wanted to do. And they were all high- end capital expenditures: build the big this, build the big that.* Lieutenant General Peter Chiarelli Commander, Multi-National Corps-Iraq (2006) In early November 2003, the Congress appropriated $18.4 billion to the Iraq Relief and Reconstruction Fund (IRRF 2). The CPA had established the Program Management Office (PMO) to oversee the burgeoning reconstruction program, and Bremer had appointed Dave Nash, the man who had helped develop the new reconstruction plan, as the PMO’s first director. Nash quickly shaped a new management structure for the CPA’s reconstruction efforts and began developing a program of projects. In the IRRF 2 legislation, the Congress required the CPA to produce a “spend plan”—a comprehensive list of projects, including estimated costs and timelines for completion by early January 2004. The $18.4 billion IRRF 2 program would included $12.6 billion for construc- tion projects and another $4 billion for procurement, including everything from personal protective gear, weapons, and vehicles for Iraq’s security forces to con- struction materials for the oil, water, and electricity sectors. The remaining $1.8 billion was for capacity development, governance, and economic reform pro- grams.1 Almost all of the IRRF 2 was designated as Defense Department money, meaning that the Pentagon was ultimately responsible for the use of this recon- struction money. Creating the Program Management Office The CPA created the PMO because USACE and USAID—the two U.S. agencies with established systems for managing large construction and international assis- tance programs—reported that they did not have the resources in Iraq to manage an $18.4 billion rebuilding effort. USAID said it did not have the staff or organi- zational capacity to manage more than a $5 billion program. USACE was just starting to establish its new office in Iraq—the Gulf Region Division (GRD)—to manage infrastructure projects, and it would not open until January 2004.2 * SIGIR interview with Lieutenant General Peter Chiarelli, former Commander of MNC-I, February 19, 2008. • 105 • • Chapter 10 • Ambassador Bremer had to move rapidly on his mammoth new reconstruc- tion plan to demonstrate the U.S. commitment to restoring Iraq’s essential services and promoting the country’s economic development. The question was how to do so. With USACE and USAID out of the picture, Admiral Nash persuaded Bremer that, by consolidating management of the entire program under the PMO and staffing it largely with contractors, the CPA could launch the IRRF 2 program by the end of 2003. To meet this timeline, Nash proposed outsourcing most of the management to private contractors. Steve Browning, who headed the CPA’s Office of Iraqi Infrastructure, warned Ambassador Bremer that it would be impossible to begin so large a program that quickly because contracting regulations demanded a rigorous bidding process. “You can’t get contracts in place by that time,” Browning told Bremer. But Nash had assured Bremer that, given the importance of the mission, the CPA could get special dispensation from the Defense Department to accelerate contracting processes.3 Although the Defense Department did expedite the process, it was not able to award contracts as quickly as Nash predicted. Dov Zakheim, the Under Secretary of Defense (Comptroller) and chief fi- nancial officer for the Department of Defense, initially opposed the creation of the PMO, which he saw as a form of “empire building.”4 He thought it a duplica- tion of existing USAID and USACE expertise. But Nash met with Zakheim at the Pentagon in mid-September and “convinced him that no entity in Iraq or Washington was going to take on this work with existing resources and using current procedures.”5 At the beginning of September 2003, the PMO had a staff of one—Admiral Nash—and no money. On September 9, Zakheim—despite his reservations about the office—allocated $10 million to it for “personnel, logistics and con- tractor support for approximately six months.”6 A week later, the Department of the Army authorized USACE to spend another $9 million to support the PMO.7 USACE then provided Nash with fifteen people from two private firms, Stanley Consultants and Michael Baker Corporation.8 Outsourcing Oversight Nash created a four-tiered organization to oversee the Iraq reconstruction effort: the PMO, the PMO Support Office, six Sector Program Management Offices (SPMOs), and twelve design-build contractors.9 Although the organizational structure included government supervision of contractors (as required by the FAR), Nash’s plan ultimately outsourced to private contractors much of the program-management and oversight responsibilities, thus diluting the govern- ment’s authority. • 106 • • Contracting Billions for Reconstruction • Iraq Relief and Reconstruction Design-build Program Management Structure PMO Electricity Sector Public Works/ Water Sector Communication Transportation Sector Buildings/ Education/Health Sector Security/Justice Sector Oil Sector PMO Support Office SPMO* SPMO SPMO SPMO SPMO SPMO Electricity D-B** Contracts Public Works/ Water D-B Contracts Communication/ Transportation D-B Contracts Buildings/ Education/Health D-B Contracts Security/Justice D-B Contracts Oil D-B Contracts *SPMO: Sector Program Management Office **D-B: Design-build Source: SIGIR, Iraq Reconstruction: Lessons in Contracting and Procurement, July 2006, 54. Staffed by a small group of government employees at the top, the PMO nomi- nally oversaw the entire operation. Immediately under it (on the organizational chart) was a private management company that worked with USACE in the PMO Support Office to supervise the six SPMOs, which were run by private contractors who supplemented a handful of government employees. Each of the six SPMOs supervised two design-build construction contractors that carried out projects in a specific reconstruction sector.10 Major General Ronald Johnson, the USACE Director of Military Programs, was Nash’s deputy director, and he supervised the overall reconstruction operation. USACE engineers provided much of the quality assurance for IRRF 2 contract execution. In January 2004, Major General Johnson became Commanding General of USACE’s Gulf Region Division and continued to sup- ply most of the manpower for reconstruction quality-assurance programs.11 To staff the management offices, Nash proposed hiring 100 government personnel to perform the inherently governmental management and oversight functions required by government regulations.12 But the PMO was never able to hire more than half the government staff it needed. Thus, it relied heavily—per- haps excessively—on the contractors in the SPMOs to oversee reconstruction. This unprecedented outsourcing of traditionally governmental responsibilities raised concerns on Capitol Hill.13 The six primary infrastructure sectors under the PMO’s aegis were: electricity; public works and water; security and justice; communications and transportation; oil; and buildings, education, and health. The SPMOs wrote construction require- ments and worked with the design-build firms to develop projects. USACE oversaw construction after project designs were completed and work had commenced.14 • 107 • • Chapter 10 • The twelve “design-build” construction contractors were awarded indefinite delivery, indefinite quantity (IDIQ) cost-plus contracts for design, engineering, and physical work in the sectors. To prevent conflicts of interest, contractors could not win management and design-build contracts in the same sector. The govern- ment also reserved the right to restrict any company to a total of four contracts.15 Start-up Problems At the end of October 2003, just before the Congress passed the IRRF 2 sup- plemental, the PMO had insufficient funds and too few personnel to operate effectively. Although Pentagon Comptroller Zakheim had authorized $10 million for the PMO, it took two months for the money to wend its way through the bu- reaucracy. The PMO did not receive this operating capital until mid-November 2003. According to Zakheim, OMB acted slowly in allocating the money. “The problem was that the OMB insisted on approval,” Zakheim said, “and OMB became kind of a black hole, from which funds would emerge on what appeared to be a whimsical basis.”16 The OMB demanded detailed descriptions from the CPA on how it planned to spend IRRF 2 dollars before it would release them.17 It released no IRRF 2 funds until after the CPA submitted its spend plan in early January 2004. When the Congress passed the IRRF 2 supplemental in early November 2003, the PMO consisted of Admiral Nash, two government employees detailed from USACE, and thirteen USACE contractors. Of the 100 government employees Nash requested, only 8 had arrived by January 2004.18 Staff shortages were not the only problem; the skills the new PMO employ- ees brought to the job were frequently not the right ones. A year after the PMO was created and just before the Program Contracting Office subsumed it in the summer of 2004, a frustrated Admiral Nash would have just half the number of people he needed—roughly one government employee for every $400 mil- lion the PMO was overseeing, or about ten times more than the average State Department contracting officer managed.19 The Contracting Plan In early September 2003, Admiral Nash notified Tina Ballard, Deputy Assistant Secretary of the Army for Policy and Procurement, that the CPA would need a major acquisition plan to award the IRRF 2 contracts. Ballard quickly assem- bled a joint Department of Defense team, which included contracting personnel from USACE and the Navy, to develop a Single Acquisition Management Plan (SAMP) for IRRF 2.20 • 108 • • Contracting Billions for Reconstruction • The SAMP established procedures for the award of twelve large IRRF 2 design-build contracts and six reconstruction management contracts. It created selection boards and developed guidelines to prevent conflicts of interest. To maximize flexibility, the SAMP provided that all contracts would be IDIQ con- tracts. These contracts allow for the provision of an indefinite quantity of supplies or services during a fixed period of time; they are used when the government cannot determine in advance the precise construction requirements.21 The SAMP team issued requests for bids in mid-December 2003.22 Only com- panies from the United States, Iraq, and force-contributing nations could bid.23 All proposals—except for those in the oil sector, which USACE had solicited dur- ing summer 2003—had to be submitted by February 5, 2004. The government received 53 bids on the contracts but made no awards until late March.24 Several factors caused the IRRF 2 contract-award process to be slower than Ambassador Bremer wanted. Because of concerns raised by the Congress about prewar sole-source contracting and IRRF 1’s many limited-competition awards, the SAMP source-selection boards scrupulously complied with the requirements of the Federal Acquisition Regulation. But complying with the FAR’s complex procedural requirements meant that more time was needed to review the bids.25 The Program of Projects The PMO built its project list based on the ten sectors defined by the IRRF 2 leg- islation. Nash and his fifteen USACE contractors, in consultation with the CPA’s senior advisors, developed the first master project list. The senior advisors had al- ready developed reconstruction proposals with their ministers, as part of the 2004 budget process, and they incorporated many of these into the IRRF 2 project list. The PMO tracked the projects by using Project Identification Forms (PIFs), which described the justification, scope, and estimated cost of each proposed project and gave it a priority.26 The information from 5,000 PIFs was entered into a “monster Excel spreadsheet,” from which the PMO derived its final project list.27 The quality of the project list was uneven. Some ministries, such as Water Resources, had complete designs sitting on the shelf that had been “waiting for Saddam to go away so they could build these projects.”28 But others had nothing. Moreover, some ministries disagreed with the CPA’s decisions. For example, the Ministry of Health favored building large hospitals, but the CPA wanted to focus on small primary-care clinics. Although Iraqis were accustomed to providing and receiving medical services through a hospital system, the senior advisor to the Ministry of Health believed that a network of clinics focusing on preventive and primary health care would most effectively and efficiently help Iraq meet nationwide health care needs.29 • 109 • • Chapter 10 • To estimate the costs for each project, the PMO took the base cost of each project and added fixed charges for security, transportation, procurement, pro- gram management, and award fees. The PMO estimated that security costs would add seven percent, a figure provided by Bechtel. Bechtel developed this figure, as- suming that the environment would be, in military parlance, “semi-permissive.”30 But by late 2003, Iraq’s security environment had drastically deteriorated.31 On December 1, the PMO presented a list of 1,706 prioritized projects to Ambassador Bremer and representatives of USAID, the military, and CPA’s senior advisors. This was the first time that most of the participants, including USAID, had seen a comprehensive project list.32 The group had nine days to review the plan and comment on it before Bremer sent it to Washington. “It was like a grocery list,” said Nash, “You could go down so far, draw a line, and that’s how much money you had, and then we took the rest of the projects and we said, ‘We’ll give those to the Iraqis.’” Projects that fell below the fund- ing cut-off for each sector were assigned to Iraq’s Ministry of Development, Planning, and Cooperation.33 The ministry was expected to find other donors to fund them.34 In mid-December 2003, after receiving the CPA’s program of projects, the OMB convened an interagency meeting to discuss it, inviting USAID Administrator Andrew Natsios to attend. Other participants included National Security Advisor Condoleezza Rice; her deputy, Stephen Hadley; Robin Cleveland, associate director of the OMB; the Pentagon Comptroller, Dov Zakheim; and Deputy Secretary of Defense Wolfowitz. According to Natsios, Cleveland—who had been skeptical about the CPA’s planned use of the IRRF 2 allocations—wanted him in the room because she knew he would make a strong argument against certain aspects of the proposed plan.35 Cleveland was right. Natsios told the group: “If this thing gets approved, you’ll have no money for elections, no money for rebuilding local governance, no money for building the university system, no money for the health system.” Calling the plan “a recipe for disaster,” he recommended reserving some of the money for non-construction projects and contingencies.36 Natsios strenuously objected to the CPA’s big infrastructure approach, arguing that it flouted the les- sons learned from decades of international development experience. Wolfowitz and Hadley responded to Natsios’s concerns by directing that $4 billion in IRRF 2 funds be held in reserve, preventing the PMO from immediately allocating or obligating that money.37 Two weeks later, Natsios received an angry call from Ambassador Bremer, accusing him of destroying the IRRF 2 plan. Natsios countered that CPA had put together an unrealistic and excessively optimistic construction timeline. Bremer • 110 • • Contracting Billions for Reconstruction • believed that, under his original plan, the CPA could have begun construction by March. But Natsios, who had managed Boston’s “Big Dig,” one of the largest and most problem-ridden construction projects in American history, viewed the CPA’s timetable as “utterly ridiculous.”38 On January 5, 2004, the OMB delivered the CPA’s project plan in the first Section 2207 Report, to the Congress. The submission included the first of what would become many requests for re-allocations of IRRF 2 funds. In this initial re- alignment, the OMB shifted funds within the security sector to allocate additional funds for democracy-building efforts, a step driven in part by the November 15, 2003 decision to transfer sovereignty to Iraq by June 30, 2004.39 Other readjust- ments included taking $150 million from the budget for the New Iraqi Army to augment the border enforcement program and moving $25 million from the wit- ness protection program to support democracy projects.40 The OMB observed that maintaining “flexibility in the allocation of resources among projects and for new projects” was critical, given the evolving security and political situations in Iraq.41 Managing Project Information The Congress authorized $50 million as part of the IRRF 2 supplemental to help the CPA meet its reporting and monitoring obligations. The OMB ap- portioned the money to the Department of Defense for the CPA’s operating expenses, but the PMO did not get any of this money until May 2004, a month before the CPA expired.42 The PMO’s leadership decided against adopting any existing project in- formation management systems, because none offered “the full complement of integrated capabilities” they believed they needed.43 The PMO developed a hybrid system, combining an asset-management program with off-the-shelf soft- ware, but the hybrid system did not work well.44 The PMO needed an integrated program management system from the start in order to stay on top of the pro- gram, track contracts, prevent overspending, and measure progress. But it would be many months before it had a usable system. “You lose track of a program, a big program like this with 3,000 projects, you never get it back,” observed Nash.45 The delay in creating an integrated informa- tion system that could track projects had long-term consequences, hampering p […اقتُطع العرض هنا — النص الكامل في ملف التنزيل]