Developments in Iraq

DEVELOPMENTS IN IRAQ

Governance 66

Security 71

Special Feature: Counting Casualties 79

Rule of Law 80

Economy 87

Public Services 101 4section

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GOVERNANCE

As of October 20, Iraq’s Council of Representatives Tatweer initiativestodevelopGOIministries;more (CoR)hadyettoagreeonwhoshouldbethe than 70% are Iraqis.270 country’sPrimeMinister.Forinformationon Tatweer staff have worked over the last two this protracted process of government formation, years with the Ministry of Planning and Develop- seeSection1ofthisReport.Notwithstandingthe ment Cooperation (MoPDC) to create a road map delay in forming a new government, the Gov- for implementing more than 2,800 projects, at an ernment of Iraq (GOI) ministries continue to estimated cost of $186 million, under Iraq’s newly conduct daily business under the supervision of approved National Development Plan (2010–2014) directorsgeneralandothersecond-andthird- (NDP). As a complement to this work, Tatweer level officials. staff have completed automation of the approval formforcapitalbudgetprojects,whichishosted inIraq’sGovernmentAssistanceDatabase(GAD). U.S. Capacity-development TheGADhasnowbeenformallyinstitutedatthe Programs MoPDC, and all ministries and provinces will be required to use the electronic approval form to The United States administers several long-running initiate capital projects.271 capacity-development programs aimed at assisting USAID and the United Nations Development alllevelsoftheIraqigovernment—national,pro- Programme (UNDP) have entered into a partner- vincial,andlocal.U.S.programshave,forexample, ship to implement a larger system that would host workedwiththeMinistryofElectricitytocreatean theGADmoduleandunifyallothercapitalproj- ElectricityMasterPlanundertheMinisterialCa- ectdatabasescurrentlytrackedbytheMoPDC. pacity Development program, provided support for The new Iraq Development Management System the March national elections under the Democracy (IDMS) will also host the Development Assistance andCivilSocietyProgram,andrebuiltinfra- Database module, which tracks international structure through projects overseen by Provincial donor projects, as well as a new module to track ReconstructionTeams(PRTs).Forinformationon NDP projects.272 U.S. election support, see SIGIR’s July 2010 Quar- As the work of Tatweer concludes, USAID has terly Report, and for more on the PRT program, see announcedanewNationalandProvincialAdminis- Section3ofthisReport. tration Reform Project. USAID anticipates awarding one cost-plus-fixed-fee contract, valued at approxi- National Capacity Development mately $175 million, to continue capacity building in As of September 30, 2010, the United States Agency theGOI.Objectivesincludesupportforcivil-service for International Development (USAID) had reform, national policy management (including expended $264.65 million of the $309.43 million oversight of NDP implementation), and administra- allocated from the Economic Support Fund (ESF) tive decentralization. USAID expects cost-sharing to its National Capacity Development program with the GOI to be built in at a 1:1 ratio.273 (Tatweer, Arabic for “Development”). More than $14 million was expended during this quarter to Support for Provincial Governments strengthen Iraq’s national government.269 USAID The current phase of USAID’s Local Governance reported 225 personnel working on behalf of Program (LGP III) continues to support Iraq’s

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provincial governments in formulating and execut- Baghdad province and city governments made sure ing budgets, carrying out effective public outreach, alltheirdatawasinplaceevenbeforetheMOF andperformingotheressentialfunctions.AsofSep- instructions were released, and they were the only tember 30, 2010, all of the $150.96 million in ESF funds entitiestosubmitboththeO&Mandcapitalbud- allocated to the program had been obligated, and gets to the MOF by the June 30 deadline.276 nearly $84.8 million had been expended—$25 million during this quarter.274 AccordingtoUSAID,the Community Outreach results of LGP III capacity-building activities have USAID’scurrentphaseoftheCommunityAction begun to be demonstrated by Provincial Council Program (CAP III) works to promote citizen par- members and other local government officials who ticipation in local governments. As of September are acting to provide more consistent enforcement 30,2010,allofthe$179.90millioninESFfunds of policies, increase public participation in decision allocated to the program had been obligated, and In 2010, there have making, and employ more effective financial man- more than $117.90 million had been expended— been no mass agement and budgeting processes.275 more than $26 million during this quarter.277 migrations on the USAID reported that there had been consider- USAID reported providing training this quarter scale seen in the ableconfusionthisyearabouttheduedatesfor for hundreds of members of the more than 200 wake of the 2006 Iraqi provincial budgets. When the Ministry Community Action Groups it has established or bombing of the of Finance (MOF) finally issued instructions for reinstituted to plan and execute community-driven Samarra mosque. preparing2011budgets,itgavetheprovincesjusttwo development projects that create jobs for Iraqis. weeks to submit operations and maintenance (O&M) CAP III projects are supported by cost-sharing budgets,anddeadlinesforcapitalbudgetsremained commitments from local governments and com- ambiguous. Anticipating this, the LGP III provided munities,andtheyincludeinitiativestosupport advisory support to help prepare the budgets. widows, orphans, and minority populations. Ad- ditionally,theCAPIIIcarriesoutprojectsfunded Figure 4.1 bytheMarlaRuzickaWarFund,whichbenefits IDP and Refugee Returnees 2003–2010 Iraqis around the country who have been affected

200,000 bymilitaryoperations.Thisquarter,morethan207 ofthoseprojectswerecompleted.USAIDreported that the CAP III’s end date has been extended from 278 150,000 November 2010 to September 30, 2012.

100,000 Humanitarian Assistance

AccordingtotheUN,about1.8millionIraqis 50,000 are refugees and another 1.55 million Iraqis are estimatedtobeinternallydisplacedpersons(IDPs) because they were forced to flee their homes amid 279 0 sectarian violence. 2003 2004 2005 2006 2007 2008 2009 2010 In 2010, there have been no mass migrations on IDP returns 0 98,000 98,000 150,000 36,000 195,890 167,740 63,100 thescaleseeninthewakeofthe2006bombingof Refugee returns 55,429 193,997 56,155 20,235 45,420 25,370 37,090 16,390 the Samarra mosque, but several incidents this year

Note: Information for 2010 is reported as of 7/2010. Numbers affected by rounding. resultedinnewdisplacements.InFebruaryand

Source: UNHCR, “Monthly Statistical Update on Return,” 7/2010, www.iauiraq.org/documents/476/ March, the UN reported that 866 families from Return%20Update%20IRAQ%20JUL%202010.pdf, accessed 9/15/2010.

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Ninewa province fled to surrounding areas. The Figure 4.2 UN reported another 941 families displaced from Returnees by Province, 2009–2010 MaytoJulyfromnorthernbordercommunities after cross-border bombing raids by the Turkish andIranianairforcesthattargetedKurdishmili- Dahuk tants.However,theUNreportedthatmostofthose displacedduringthefirsttwoquartersof2010have Erbil Ninewa returned home.280 Overall, the total number of IDPs and refugees Tameem Sulaymaniyah returning to their homes in the first half of 2010 droppedby29%comparedwiththefirsthalfof2009. Salah Al-Din Figure4.1showsthenumberofreturneesfrom2003 Baghdad through June 2010.281 As Figure 4.2 shows, most Diyala IDPs and refugees who have returned in the last year have settled in Diyala and Baghdad provinces.282 Anbar Kerbala Babylon Wassit

USAID/OFDA Update Qadissiya USAID’s Office of U.S. Foreign Disaster As- Missan Thi-Qar sistance (USAID/OFDA) assists IDPs and other Najaf vulnerable populations by providing life-saving 60,000–94,500 Basrah support,improvinglivingconditions,andmiti- 10,000–60,000 2,000–10,000 gating the impacts of conflict-related and natural Muthanna 1,000–2,000 disasters. Its activities include distributing es- 500–1,000 sential emergency relief commodities and shelter 1–500 kits; expanding access to water, sanitation facili-

ties, and essential health services; and providing Source: UNHCR, “Monthly Statistical Update on Return,” 7/2010, www.iauiraq.org/documents/476/ income-generation opportunities and economic Return%20Update%20IRAQ%20JUL%202010.pdf, accessed 9/15/2010. recovery support. In FY 2010, USAID/OFDA provided more than $45 million in humanitar- Ministry of Displacement and Migration (MoDM) ianassistancetovulnerablepopulationsinIraq, in operating Iraq’s Return Assistance Centers includingIDPs.Nearly$33millionofthetotal (RACs).RACsfacilitatethesafeandvoluntary was committed this quarter.283 return of IDPs and refugees to areas of origin by The UN reported USAID/OFDA support enables grantees to connecting them with GOI assistance to which that most of those respond rapidly when emergency needs arise in they are entitled. As of June 2010, five RACs and displaced during the vulnerable communities and areas of insecurity. For branch offices had registered more than 167,000 ﬁrst two quarters of example, when Iranian military forces carried out returning IDPs and provided legal services to 2010 have returned aerial attacks against Kurdish groups in Sulaymani- nearly 24,000 people.285 home. yahandErbilprovincesinMayandJune,aUSAID/ OFDA grantee (International Organization for DoS Bureau of Population, Refugees, Migration) provided emergency relief commodities and Migration Activities from pre-positioned stockpiles in Erbil province to The Program for Human Security and Stabiliza- approximately 500 families, or 3,000 individuals.284 tion, which is implemented by the International In addition, USAID/OFDA funds the Inter- Organization for Migration, is an initiative with nationalMedicalCorps,whichsupportsthe Iraq’sMinistryofLaborandSocialAffairsand

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MoDM to focus on the socioeconomic reintegra- Table 4.1 tion needs of returnees and their host communi- Iraqi Admissions to the United States ties. The program works toward reintegration and Fiscal Year Number of Admissions sustainable income generation by building the 2007 1,608 capacity of the MoDM and strengthening local 2008 13,822 authorities. The Department of State (DoS) Bureau 2009 18,838 of Population, Refugees, and Migration funds 2010 through 9/22 19,674 program activities in eight provinces: Baghdad, Total 53,942

Diyala, Ninewa, Anbar, Babylon, Basrah, Erbil, and Source: DoS, PRM, response to SIGIR data call, 10/3/2010. Sulaymaniyah.286 progress in five key areas: governance, political Diyala Initiative development, national unity (political reconcilia- TheGOI-ledDiyalaInitiativefocusesonfa- tion), economic development, and the rule of law. cilitating the return and reintegration of persons Admittedly based on the “subjective evaluations of displaced to and within Diyala province. The U.S. behavior derived from the consolidated judgments government and international partners sup- ofPRTpersonnel,”theMMQAratesprovincial port the effort, which is still in the early phase of capacityineachareaasbeginning,developing, implementation. Project activities include sector sustainable, performing, or self-reliant.289 and vulnerability assessments at the village level, For an overview of the July 2010 assessment, see community-awareness health campaigns, rehabili- Figure 4.3. This quarter, there were few shifts in tation of shelters in 63 villages, and rehabilitation province rankings:290 or construction of schools. Preliminary plans are • Economic Development. The MMQA reported underway for the expansion of the Diyala Initiative increasedlevelsofeconomicdevelopmentin to Baghdad.287 Babylon and Basrah provinces, attributable to a more robust banking sector and increased small- Resettlement in the United States business activity. The other assessed provinces SinceFY2007,almost54,000Iraqishaveresettled remained unchanged. in the United States—49,996 as refugees and at • Governance. Fourprovincesimprovedtheir Since FY 2007, least3,946onSpecialImmigrantVisas(SIVs)that performance, while the other 12 remained almost 54,000 Iraqis are awarded to select Iraqi translators and their unchanged. In Baghdad, PRT members observed have resettled in the dependents (DoS only tracks SIV holders who elect an increased level of media engagement with United States. resettlement benefits through DoS’s PRM).288 For theProvincialCouncilandimprovedbudget ahistoricallookatIraqiadmissionstotheUnited supervision. In Salah Al-Din, more transparent States since FY 2007, see Table 4.1. budget execution processes were reported. In Di- yala,thePRTnotedincreasedbudgetexecution activity and more inclusive strategic planning Progress toward Provincial processes. In Tameem, modest improvements Self-reliance were reported in the delivery of essential services andgovernmentaltransparency. Since 2006, U.S. PRTs have been assessing de- • National Unity. Inassessingaprovince’slevel velopment of provincial government capacities of “national unity,” PRT members observe how to govern effectively. In July, the latest Maturity conflicts are resolved among conflicting parties Model Quarterly Assessment (MMQA) for 16 and whether sectarian enclaves are moving provinceswasreleased,providingdetailsof toward mixed and reconciled communities.

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Figure 4.3 PRT Maturity Assessments, by Province, as of 7/2010 Economic Development Governance National Unity

Dahuk Dahuk Dahuk

Erbil Erbil Ninewa Ninewa Erbil Ninewa

Sulaymaniyah Sulaymaniyah Tameem Tameem Sulaymaniyah Tameem

Salah Al-Din Salah Al-Din Salah Al-Din

Diyala Diyala Diyala Baghdad Baghdad Baghdad Anbar Anbar Anbar Babylon BabylonWassit Kerbala Wassit KerbalaBabylon Wassit Kerbala Qadissiya Qadissiya Qadissiya Missan Missan Missan

Najaf Najaf Najaf Thi-Qar Thi-Qar Thi-Qar Basrah Basrah Muthanna Muthanna Basrah Muthanna

Change Change Change from 4/2010 Province from 4/2010 Province from 4/2010 Province

2 Babylon, Basrah 4 Baghdad, Diyala, 0 Tameem, 0 Salah Al-Din 1 Baghdad 14 0 15 12 Political Development Rule of Law

Dahuk Dahuk

Ninewa Erbil Erbil Self-Reliant Ninewa

Tameem Tameem Sulaymaniyah Performing Sulaymaniyah

Salah Al-Din Salah Al-Din Sustainable Diyala Diyala Developing Anbar Baghdad Baghdad Anbar Wassit Babylon Beginning Babylon Kerbala Kerbala Wassit Missan Qadissiya Not Reported Qadissiya Missan Najaf Thi-Qar Najaf Thi-Qar Basrah Muthanna Basrah Muthanna

Change Change from 4/2010 Province from 4/2010 Province

2 Tameem, Missan 2 Basrah, Tameem 0 0 14 14

Note: The Regional Reconstruction Team stationed in the Kurdistan Region reports on three provinces (Dahuk, Erbil, and Sulaymaniyah) as one entity.

Source: U.S. Embassy-Baghdad, OPA, response to SIGIR data call, 8/30/2010.

Fifteenprovincesremainedthesame,butBagh- • Political Development. Tameem and Missan dad province declined—from “sustainable” to provinces demonstrated improvements in politi- “developing.” Baghdad’s slide was attributed to cal development. In Tameem, the PRT observed acrimonious political wrangling among mem- a marked increase in the local populace’s engage- bers of the Provincial Council and the continued mentinthepoliticalprocess,whileinMissan, segregation of many of Baghdad City’s formerly more incremental improvements were noted. integrated areas into more distinctly Sunni and • Rule of Law. ImprovedrankingsinBasrahand Shia neighborhoods. Tameem provinces recognized increases in judicial capacities.◆

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SECURITY

Iraq has remained susceptible to violence and insecurity through the post-election period of ne- gotiationstoformanewgovernment,andahigher level of security is unlikely to occur until political progress and development are more fully realized. When the U.S.-Iraq Security Agreement (SA) went into effect on January 1, 2009, the Iraqi Security Forces (ISF) assumed immediate responsibility for ensuring the physical security of Iraqi citizens. On September 1, 2010, U.S. military support for that Destructionofunexplodedordnanceatalocationoutside ISF and civilians roletransitionedformallytotrainingandstability Bassami, Iraq, on July 13, 2010. (U.S. Army photo) continue to suffer operations, with nearly 50,000 personnel operating disputed areas, saw the largest drops. Violence was daunting casualties. under these mission requirements:291 up from last year in Babylon, Basrah, Missan, and • Advise, train, mentor, and equip the ISF to Anbar provinces.292 progress toward assuming a Minimum Essential Notwithstanding improvement during Rama- Capability (MEC) standard. dan,whichhastraditionallybeenatimeofincreased • Conductcounterterrorismoperationsthatare violence, ISF and civilians continue to suffer daunt- led by the ISF. ing casualties. The Department of Defense (DoD) • Provide support to U.S. Embassy-Baghdad, the reported that, from June 1 to September 10, 2010, UN, and other organizations engaged in min- nearly 3,000 Iraqis (2,022 civilians and 904 ISF) isterial and institutional capacity development werewoundedand784Iraqis(499civiliansand within the GOI. 285ISF)werekilled.Duringthesameperiod,131 U.S. citizens (117 military personnel and 14 civilians) These activities, however, are also transitory as werewounded,and10U.S.citizens(8militaryand theU.S.Forces-Iraq(USF-I)nearstheSAdeadline 2civilians)werekilled.293 forU.S.forcestodepartIraq.Althoughcurrently Coordinated, mass-casualty attack campaigns scheduledfortheendof2011,thetimingofU.S. continue,reflectingthefragilestateofsecurityin redeployment remains subject to security condi- thecountry.Theseattacksappeartobeethnosec- tions in the coming year, and transition plans for tarian targeting or attacks against GOI institutions theU.S.EmbassyandotheragenciesoftheU.S. and their leadership. Leaders of the Sons of Iraq governmentwillguideenduringaspectsoftheU.S. (SOI)continuetobetargetedforassassination. engagement with Iraq. BetweenJuly1andOctober8,2010,32SOImem- This quarter, the average number of security in- bers and leaders were assassinated. According to cidents per day was up significantly from last quar- DoD, insurgent groups, including al-Qaeda in Iraq ter (see Figure 4.4), but there was a notable drop in (AQI),seektodiminishtheeffectivenessoftheSOI detonated mines and improvised explosive devices throughtargetedkillingsandotherformsofin- (IEDs), and violence coinciding with the Ramadan timidation,aswellastheco-optingofdisgruntled religious observance (August 11–September 11) SOI members who perceive the GOI has failed to wasdownnearly18%fromlastyear.Baghdadand honor its commitments to the program. The extent provincestothenorth,wheretensionsremainover of infiltration reportedly varies by region.294

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Figure 4.4 Average Security Incidents per Day, by Quarter, 1/2004–9/2010

250 38% 3Q 2004–3Q 2010 200 73% Worst Quarter (2Q 2007)–3Q 2010 150 18% 3Q 2009–3Q 2010

380% 2Q 2010–3Q 2010 100

0 2004 2005 2006 2007 2008 2009 2010

Sources: MNF-I, responses to SIGIR data calls, 10/6/2008, 7/2/2009, 3/31/2010, and 4/1/2010; CENTCOM, responses to SIGIR data calls, 1/10/2009 and 2/22/2010; USF-I, responses to SIGIR data calls, 3/31/2010, 7/7/2010, and 10/4/2010.

Overcoming the perception among the SOI and mass-casualty attacks are down this quarter from publicthattheGOIisnotcommittedtotheSOI last, DoS reported that AQI continues to carry programremainsoneofthebiggestchallenges. out coordinated events—primarily against GOI Persistent late pay, transition to menial jobs, lack of institutions and the ISF—through multiple-device adequateISFprotectionandsupportatthecheck- bombings and other methods. AQI’s front group points, and the belief that SOI are being unfairly claimed responsibility for a suicide bombing on targeted for arrest all contribute to SOI distrust of August17thatleftmorethan50Iraqisdeadandat the government. USF-I is reportedly working with least 100 wounded. The victims had been waiting in the GOI to address these issues.295 lineatanIraqiarmyrecruitmentcenterwhenthe This quarter, the International Zone (IZ), home attack occurred. Other attacks in August targeted Alarms sounded to most central Iraqi government institutions and local government and police forces across the regularly at the U.S. Embassy-Baghdad, came under daily mor- country,andcivilianmarketplaceswerebombed.297 Embassy compound tar and rocket attacks. SIGIR personnel reported In an incident on September 19, 2010, six car bombs this quarter. experiencing at least 23 major incidents during weresetoffinBaghdadandFallujaaspartofa the month of September. One of the rockets hit coordinatedattackthatkilledatleast30Iraqisand the home of the former speaker of the Council woundedmorethan100.298 On July 29, 2010, at least of Representatives, injuring several of his body 16 security officials were assassinated in Adhamiya, guards. Alarms sounded regularly at the Embassy a predominantly Sunni district in Baghdad.299 compound this quarter.296 As a result of what appears to be an escalation of at- For an update on security indicators, see tacksonISFpersonnel,trafficpolicethisquarterbegan Figure 4.5. arming themselves with high-powered weapons.300

Security Incidents Up and Mass-casualty Attacks Continue Iraqi Security Forces Overall, the average number of daily security incidents in Iraq has dropped 73% from the height Although the transition to stability operations with of violence in 2007; but compared with last quarter, anISFleadappearstobegenerallyontrack,there that number was up nearly five-fold. And although are indications that the stalemate over government

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Figure 4.5 Security Incidents and Fatalities in Iraq, 1/2004–9/2010

2004 2005 2006 2007 2008 2009 2010

Monthly Security Force and Contractor Fatalities

350 Iraqi Security Forces

300

250

200 U.S. Military 150

100

50 Contractors

0 Coalition Military (Non-U.S.) Monthly Security Incidents and Civilian Fatalities

7,000 Constitutional Security Incidents, Reported by MNC-I 6,000 Referendum Uprisings in Baghdad, Parliamentary 5,000 Falluja, and Najaf Elections Security Incidents, Reported by USF-I 4,000 Iraqi Elections and GOI 3,000 National Elections 2,000 Provincial Samarra Mosque Bombing Elections 1,000 Iraqi Civilian Fatalities 0

Annual Security Incidents per 10,000 People, by Province Anbar President Bush Muqtada Awakening Announces al-Sadr Declares Basrah and Sadr Council Formed U.S. Surge Cease Fire City Operations

Sunni Triangle Triangle of Death Disputed Internal Boundaries

Insurgency Civil Conflict U.S. Surge State-building and Consolidation 1/3/2004−2/21/2006 2/22/2006—5/2/2007 (>150,000 Troops) 5/1/2008—9/10/2010

> 50 incidents 20–50 incidents 10–20 incidents 2-10 incidents 0–2 incidents Sunni Shia

Note: Data not audited. Numbers affected by rounding. "U.S. Surge" denotes period when at least 150,000 U.S. troops were in Iraq. ISF fatality data for deaths that occurred before 1/4/2005 is not available. Security incident data from two sources are displayed: MNC-I, for 1/1/2004–6/24/2009 and USF-I for 4/1/2009–9/10/2010 (USF-I incorporates GOI reports). Security incident data for September 2010 was excluded from the line graph due to incomplete data. Iraqi Security Force fatalities and Iraqi civilian fatalities for September 2010 are totals through 9/23/2010.

Sources: DoD, Measuring Stability and Security in Iraq, 2/2006–9/2009; DoL, responses to SIGIR data calls, 11/25/2009, 1/5/2010, 4/12/2010, 7/7/2010, and 10/7/2010; The Brookings Institution, Iraq Index, 9/30/2010, pp. 4, 5, and 13; SIGIR, Quarterly Reports to the United States Congress, 4/2009, 10/2009 and 1/2010; GOI, response to SIGIR data call, 12/21/2009; MNF-I, responses to SIGIR data calls, 10/6/2008, 7/2/2009, 3/31/2010 and 4/1/2010; CENTCOM, responses to SIGIR data calls, 1/10/2009 and 2/22/2010; USF-I, responses to SIGIR data calls, 3/31/2010, 7/7/2010, and 10/4/2010.

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formation has been disruptive to the 2010 Train- Table 4.2 ingPlancalledforbytheSA.301 Other challenges Iraqi Security Forces, as of 9/30/2010 remain to the establishment of a fully capable ISF. Service Assigned Personnel a Theseincludethelackofareliableandsustainable Ministry of Defense Iraqi Army (IA) 205,410 logisticssystemfortheISF,corruptionwithinthe Training and Support 46,500 services, and the inefficient allocation of resources Air Force 5,000 302 (both human and fiscal). Navy 3,000 GOI reported that, as of September 30, 2010, Total MOD 259,910 a nearly 800,000 security force personnel were as- Ministry of Interior Iraqi Police 301,286 signed to the Ministry of Defense (MOD), Ministry Iraqi Federal Police 43,957 of Interior (MOI), and the Iraqi National Counter- Border Enforcement 60,605 303 Terrorism Force (See Table 4.2). Oil Police 29,411 Facilities Protection Service (FPS) 94,000 Status of the MOD Total MOI 529,259 AccordingtotheU.S.IraqTrainingandAssis- Special Forces 4,120 tanceMission(ITAM),MOD’sISFunitsarenow Total 793,289 regarded as counterinsurgency (COIN)-operation Note: Numbers affected by rounding. capable, and the Iraqi Army (IA) is now able to a Assigned numbers illustrate payroll data; they do not reﬂect present-for-duty totals. 304 generate a sustainable COIN force. More than Source: GOI,MOIIG,responsetoSIGIRdatacall,10/5/2010. 197,000soldiershavebeentrainedandorganized under13lightinfantrydivisionsand1mechanized division.Anadditional46,500soldiershavebeen throughprogramstopreparethemforserviceas trainers for new soldiers and to manage operations and sustainment support functions. Considerable work remains, however, for the MODtoachievethedesiredMECstandard.Multiple non-commissioned officer (NCO) schools are operating and graduating NCOs—from small-unit Commandoswiththe10thIraqiArmyDivisionloadontoU.S.Army leadership programs to weapons-specialty and large- helicopters during air assault training at Forward Operating Base organization leadership programs. ITAM reports GarryOwen,Iraq,onJune28,2010.(U.S.Armyphoto) thatdevelopingandprofessionalizingtheNCOcorps Iraq’scapacitytoaddressexternalthreats.Inaddi- remainsachallengebecausetheprocessofempower- tion to the ongoing tank training programs (which ingtheNCOrankshasfacedculturalbarriers.305 areplannedtostretchintolate2011),proposed U.S.trainingfortheMODisconductedatnine training in towed howitzers is projected to run centers, which accommodate up to 20,000 students from 2011 until mid-2012. In addition, ITAM-Air in individual, leader, and group training courses.306 Forceiscurrentlytraining12instructorpilotcan- Thecurrenttrainingregimeisfocusedontransi- didatestoserveasinstructorsintheT-6Aaircraft. tioningtheIAfromstabilityoperationstoexternal The first four instructor pilots are expected to com- defense. It attempts to build on a train-the-trainer pletetrainingbysummer2011,andtheremaining conceptthathasseentheMODassumeanincreas- eight by fall 2011.307 ingroleinleadingtheprogram. AccordingtoITAM,IAlogisticsandsustain- Training in mechanized and specialized equipment capability will likely fall short of the MEC ment is also underway and critical in addressing standard when U.S. forces redeploy in December

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2011.308 Althoughthecommandsandbasestosup- port logistics and sustainment are largely in place, ITAM reports that maintaining the equipment and infrastructure built with the Iraq Security Forces Fund(ISFF)andmanagingtheresourcestocarry outthemissioncontinuetobechallenges.309

SIGIR Audit of U.S. Training for Iraqi Special Operations Force SIGIR’sauditoftheIraqiSpecialOperationsForce Theﬁrst11of140U.S.tankstobedeliveredunderapurchase agreement with the GOI arrive in Iraq’s Port of Umm Qasr on (ISOF) Program found that the ISOF’s demonstrat- August 7, 2010. (USF-I photo) edabilitytoindependentlyconductoperationsand missionsandtosustainitsequipmentandfacilities Iraq’s other 15 provinces. In conversations with was indicative of the program’s success. On the other SIGIR, the KRG’s Minister of Peshmerga Affairs hand, the long-term success of the ISOF lies in the statedthatcurrentplanscallforraisingtwonew The command GOI’s handling of two notable challenges. First, Peshmerga divisions, each numbering about 15,000 structure put in place the command structure put in place by the Prime troops. He noted that Peshmerga soldiers require by the Prime Minister Ministerraisesconcernsabouthowtheforcewillbe more advanced training—especially in intelligence raises concerns about usedinthefuture.Second,GOIsupportisuncertain collectionandanalysis—buttheKRGlacksasuf- how the force will be asseenbyitslackofadedicatedbudgetfortheISOF, ficient budget to fund such programs.312 used in the future. resulting in poor logistical and recruiting support Morethan500soldiersfromtheministrybegan and irregular payment of specialty pay. Although theirbasic-combattrainingcourseinSulaymani- SIGIRdeterminedthatthetotalcostoftheU.S.pro- yahonAugust2,2010.The11-weekcourseis gram is unknown, at least $237 million of the ISFF conducted to IA standards of performance and wasexpendedtoequipandsustaintheISOF.310 includes instruction on first-aid, leadership, marks- manship, navigation, and security operations. Kurdish Security Forces Once training is complete, the soldiers are slated The Kurdistan Regional Government (KRG) to return to Qara Anjir, near Kirkuk, for their as- continuestomakeprogressinitsstrategicgoalof signments.313 ITAM notes that it has one ongoing clarifying the roles of its Kurdish Security Forces, initiative to assist the integration of KRG forces which include: Peshmerga (military), Zervani (po- into the ISF.314 lice),311 Asai’ish (internal security), and Parastin/ Zenyari (intelligence). The integration of a trained, Equipment Capability: organized, and equipped Peshmerga into the ISF Foreign Military Sales remainspartoftheKRGstrategytoprotectIraq’s As of September 30, 2010, the GOI reported that bordersandprovidesecurityalongIraq’sdisputed 171 cases worth $5.92 billion had been obligated internal boundaries. Kurdish officials estimated byaLetterofOfferandAcceptancethrough that there are about 190,000 total Peshmerga per- theForeignMilitarySales(FMS)program.Iraq sonnel, and about 100,000 of them are currently has purchased tanks, helicopters, naval patrol on active duty. boats, training aircraft, and other equipment to In addition to patrolling the external and improvethecapabilitiesofitsarmy,navy,andair disputed internal borders of the Kurdistan Region, force. To operate and maintain this equipment, Peshmerga troops have also been called on by the IraqalsohasusedFMStopurchasetraining,sup- GOItoparticipateinISFsecurityoperationsin port equipment, spare parts, and maintenance

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and repair packages. The value of cases already deliveredtotheGOItotalsmorethan$2.8billion inequipmentpurchasesandnearly$1.2billion inothertypesofpurchases,includingtheUmm Qasr port rehabilitation.315 AccordingtoarecentGovernmentAccount- abilityOffice(GAO)report,thesecurityministries have used FMS transfers as a means of setting aside funds that remained unspent at the end of An Iraqi Air Force training aircraft shuts down after landing the fiscal year. For example, in April 2010, officials at Contingency Operating Base Speicher, near Tikrit, Iraq, on at the MOD said that they had received Ministry September 21, 2010. (U.S. Army photo) ofFinanceapprovaltotransfer$143millionof T-6A Texan II training aircraft—the third group itsunspent2009fundsintotheFMSaccount.Simi- of planes to be delivered since December 2009.319 larly,officialsfromtheMOIsaidthattheyplanned Additionally, in conjunction with Navy Day in to transfer $300 million–$350 million in unspent Iraq (September 26), the MOD oversaw a christen- 2009fundstotheFMSaccount.Ifapproved, ing ceremony for Iraq’s inaugural Swiftship patrol theMOIhassaidthatthiswouldbethefourth boat.FourteenadditionalU.S.-builtSwiftshipsare consecutive year in which it has executed a transfer scheduled for future delivery to the Iraqi Navy.320 aftertheendofthecalendaryear.Table4.3pro- The T-6A and Swiftships programs are jointly vides a summary of Iraq’s annual funds transferred funded by the two governments; the United States The ﬁrst 11 of 140 totheFederalReserveBankofNewYorkforFMS has assumed approximately 55% of the total cost of M1A1 Abrams tanks purchases through 2009.316 thesetwoFMSpurchaseprograms.321 for the Iraqi Army The United States is also using the ISFF to This quarter, 22 M1-17 Russian-made helicop- arrived this quarter. supplement Iraq’s FMS purchases. Under seven terswerepurchasedforIraqthroughtheFMS arrangements, the United States contributed about program—14fundedbytheGOIand8funded $550milliontopurchaseequipmentandservices.317 through the ISFF. The first two were delivered in As part of an FMS sales agreement between the August2010,andthenextfourarescheduledfor U.S.governmentandtheGOI,thefirst11of140 delivery in November 2010. Deliveries are expected M1A1 Abrams tanks for the Iraqi Army arrived to continue through next year.322 this quarter. The remaining 129 tanks and seven On September 25, 2010, the U.S. Administration recovery vehicles are scheduled to be delivered in approved Iraq’s request for 18 new F-16 aircraft monthly increments until about December 2011.318 forBaghdad’sAirForce.OfficialssaidthatDoD The GOI also received both aviation and mari- has notified the Congress of the proposed sale, time components of its FMS purchase program estimated to be worth $4.2 billion. The proposed this quarter. The Iraqi Air Force received three sale would allow the Iraqi Air Force to modernize

Table 4.3 Funds Set Aside for FMS Purchases by the MOD and MOI, 2006–2009 $ Millions 2006 2007 2008 2009 Total

Ministry of Defense 1,638 1,100 1,551 0 4,290 Ministry of Interior 169 0 671 404 1,244 Total 1,807 1,100 2,223 404 5,534

Source: GAOReportGAO-10-304,“Iraqi-U.S.Cost-Sharing,”9/2010,p.22.

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its inventory by acquiring Western interoperable fighter aircraft, thereby enabling Iraq to support its air-defense needs and coordinate more effectively with other foreign air forces.323

Status of the MOI AccordingtoDoDassessments,theMOIsecurity force is significantly behind the MOD in the attain- ment of the MEC standard. Only the Federal Police andOilPolicearecurrentlyassessedtobeopera- tionally capable, and the Iraqi Police (IP), Depart- ment of Border Enforcement, and Port of Entry Kurdish Zeravani Police demonstrate hand-to-hand combat skills after completion of a specialized Italian Carabinieri training services have demonstrated a basic capability and courseattheIraqiFederalPoliceSpecialTrainingAcademyat improvingtechnicalskills.AllMOIsecurityforces, CampDublin,Iraq,onSeptember27,2010.(U.S.Armyphoto) however, are expected to have gaps in funding, police.AlthoughDoDreportsthatmorethan command and control, and logistical infrastruc- 400,000 Iraqi police have received training and ture through the time of the U.S. forces drawdown areontheforce,thecapabilitiesoftheseforcesare in December 2011.324 DoD has recently raised unknown because no assessments of total force ca- the concern that, should Iraq’s police forces not pabilities have been made. SIGIR identified several achieveMECpriortotransitionofU.S.training weaknesses in U.S. program management, includ- to the DoS Bureau of International Narcotics and ing program planning and assessments, commu- Law Enforcement Affairs (INL) Police Develop- nications and coordination between organizations mentProgram,startinginJuly2011,therecouldbe performing the training, and oversight of contract enduringgapsinpolicecapability.325 police advisors. For more information, see Section ITAM conducts MOI training at 36 active train- 5ofthisReport.329 ingcenters,29ofwhicharesupportedbyINL-sup- plied international police advisors. Training centers Status of the Facilities Protection Service include police colleges and a range of centers for TheFPSistaskedwithsecuringandprotecting other services, from River Police and Federal Police more than 13,000 critical infrastructure locations training centers to Border Enforcement, Ports of throughout Iraq. These facilities include govern- Entry,andFacilitiesProtectioncenters.326 The current ment buildings, mosques and religious sites, focus—in addition to the one-time task of training hospitals, schools and colleges, dams, highways, andintegratingtheFacilitiesProtectionService andbridges.FirstcreatedbytheCoalitionPro- (FPS)—is to have a professionally trained, sufficient- visional Authority, the FPS comprises contractor DoD spent ly manned police force that is capable of defeating andGOIemployeeswhoareassignedtoparticular $7.3 billion since insurgencies, of creating an environment of internal ministries and operate under priorities set by those FY 2004 to train, security,andofenforcingtheruleoflaw.327 ITAM individualministries.OnJanuary1,2007,theFPS staff, and equip the reported that almost 22,000 MOI personnel com- wasestablishedasageneraldirectorate,underthe Iraqi police. pleted some form of training this quarter.328 MOI.AccordingtoDoD,allbuttheHigherJudicial CouncilandtheMinistriesofOil,Electricity, SIGIR Audit of Iraqi Police Training Industry, and Defense have transferred their FPS In its recent audit of the Iraqi police training personnel to the new directorate.330 program, SIGIR found that DoD spent $7.3 billion As of September 30, 2010, the FPS had approxi- sinceFY2004totrain,staff,andequiptheIraqi mately 94,000 personnel in service, including 17,000

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full-timeFPSpoliceand77,000MOIcontractors. Thedifferencesinemploymentstatus(andthe relatedpaydifferential)havecausedmultipleprob- lems because contractors earn only about half as muchasthefull-timepolicewhilefacingthesame hardships and dangers. USF-IreportedthatMOItrainingfor76,000 contractorstojointheIPwastostartbyOctober1, 2010, but the plan had not been formally authorized by the Minister of Interior. The training program anticipated that the transition to full IP status fortheFPScontractorswouldoccurin2011.331 ◆ USF-I personnel train Iraqi police. (USF-I photo)

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COUNTING CASUALTIES

2010 Security Incident Reporting, USF-I vs. GOI In early August 2010, USF-I publicly

Security Incidents disputed the GOI’s claim that July 2010 wasthedeadliestmonthforIraqissince 2,000 USF-I Data GOI Data 2008.332 According to USF-I data, 222 IraqiswerekilledinJuly,333 or less than 1,500 half the 535 reported by the GOI. These discrepancies could be the result of several factors, including the still-uncertain 1,000 security situation in Iraq, the smaller U.S.footprint,andthechaoticnatureof 334 500 the Iraqi health care system. This quarter, the GOI announced that theMinistryofHealthwillactaslead 0 June July August September agency on casualty data, aggregating its owninformationonIraqicivilianswith Iraqis Killed information from the Ministry of Inte- 600 rior (for police casualties) and Ministry of Defense (for military casualties).335 500 Although it is not clear whether the three

400 ministries have uniform data-collection andreportingprocesses,USF-Ihassaid 300 thatitsofficerswillcontinuetowork with Iraqi mid-level military officials to 200 improvetheaccuracyofthesereports.336

100 Acknowledgingthedifficultyofgath- ering timely and accurate information, 0 USF-I’s deputy commander for U.S. Divi- June July August September sion-Center stated that while he is “pretty Iraqis Wounded comfortable” with the statistics collected 1,200 by USF-I, they are not likely to be as accurate as they were when the United States 1,000 had six or seven brigades in Iraq.337 In September 2010, USF-I began reporting 800 theIraqicasualtynumberscollectedby

600 GOI’sMinistryofHealthasitskeysource for Iraqi casualty information.338 ◆ 400

200

0 June July August September

Note: September GOI data provided by the Ministry of Health; June–August GOI data provided by the Ministry of Interior; September USF-I data is incomplete (killed and wounded figures through 9/23; incidents through 9/10).

Sources: GOI, MOH, response to SIGIR data call, 10/2/2010; USF-I, response to SIGIR data call, 10/4/2010.

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RULE OF LAW

INL, the Department of Justice (DoJ) and its Fed- WiththedrawdownofU.S.forces,theUSF-I eral Bureau of Investigation (FBI) and Bureau of liaison to the CCC-I has merged into and is now Alcohol, Tobacco, Firearms and Explosives (ATF), headed by the Law and Order Task Force (LAOTF). and other U.S. government agencies work with LAOTF continues to facilitate hearings and trials at various GOI entities to reconstitute essential law CCC-I for detainees accused of terrorism and relat- enforcement and security institutions throughout edcrimes.LAOTFpersonnelactasliaisonstothe Iraq. Members of the Iraqi judiciary, the Higher judgesandfacilitatetheprosecutionofinsurgents’ JudicialCouncil(HJC),MOI,andtheMinistryof cases. LAOTF coordinates the transportation of the Justice(MOJ)arepartofthiscollaborativeeffort. detaineestocourtandalsodeliversevidenceand Within U.S. Embassy-Baghdad, the Office of the available witnesses. Although it remains a chal- RuleofLawCoordinator(ORoLC),ledbyaDoJ lenge arranging for witnesses to appear in court to official in Iraq, is responsible for coordinating these give testimony, the use of video teleconferencing rule-of-law activities.339 betweenIraqandtheUnitedStatesallowsinvesti- As part of the RoL program, INL provides gative judges to receive testimony of U.S. military the necessary funding for U.S. federal prosecu- members who are no longer in theater.342 torstoserveasOfficeofOverseasProsecutorial Development and Assistance Training (OPDAT) Courts Resident Legal Advisors and to lead PRT rule- Iraq’s court system continues to be overburdened of-law activities, which focus on strengthening by detainee cases. Civil and other cases outside the judicial capacity, security, and law-enforcement criminal system are proceeding almost normally capabilities, as well as advancing commercial and except to the extent judges are diverted to handle property law. Other PRT RoL initiatives focus the backlog in the criminal system, an effect that on improving anticorruption awareness and ad- is difficult to measure. The HJC reported a backlog dressingdetentionandrehabilitationchallenges of 10,872 cases at the Karkh court and 11,557 cases foradultsandjuveniles.INLhasmanagedcourt- pendingatRusafacourt,asofJune2010.Between Iraq’s court system house security upgrades, developed data manage- thefirstandsecondquartersoftheyear,docket continues to be mentsystemswithGOIpartners,andprovided backlog reportedly increased at Karkh by almost overburdened by fundingfortheJudicialDevelopmentInstitute 9%; at Rusafa, the backlog grew nearly 13%.343 detainee cases. (JDI), which trains judges, administrative staff, Forthenumberofcourtshandlingthesecases andHJCsecuritypersonnel.340 around Iraq, see Figure 4.6.

U.S.-funded Reconstruction Iraqi Justice System at the Palace of Justice The Rusafa Palace of Justice has been open for Followingthe2009bombingoftheMOJ,whichwas operation since September 2008. At the time of its hometoIraq’sjudiciary,theHJCrelocatedsomeof opening, this $11.6 million Iraq Relief and Recon- itsoperations.TheCentralCriminalCourtofIraq structionFund(IRRF)projectwasconsidereda (CCC-I)wasmovedtotheJDIinBaghdad,andthe key element in a rule-of-law complex that would HJCassumedprincipalresponsibilityfortheopera- serve as a model for other provinces. The facility tional costs of the CCC-I earlier this year.341 was built by the TAMA Company under contract

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Figure 4.6 engineering study with USACE to ascertain all Courts In Iraq necessary corrective actions, along with their cost. Basedontheresults,ISPOplanstoworkwiththe

Dahuk HJCtodeterminewhichremedieswouldbestbe handled by USACE and which should be handled Erbil Ninewa by the GOI.347 66 Tameem Sulaymaniyah 34

Salah Al-Din Judicial Protection 49 Diyala INLfundsandoverseesawiderangeofjudicial 49 Anbar Baghdad development programs in Iraq, including a judicial 45 71 securityprogramthatassiststheGOIinprovid- Kerbala Babylon Wassit 25 57 41 ingsecurejudicialhousingandtrainingforthe Qadissiya Missan 37 30 personnelwhoprotectitsfacilities.INLhasalso Najaf Thi-Qar 33 45 completedupgradestomorethan20courthouses Muthanna Basrah 21 54 andconductedanationwideassessmenttohelpthe GOIdevelopitsowncapacitytoenhancejudicial andcourtsecurityintheprovinces.348 Notwithstandingtheseefforts,theneedfor Note: The Higher Judicial Council did not provide the KRG court count. stronger judicial security remains critical. See Source: GOI, HJC, response to SIGIR data call, 10/2/2010. Figure4.7forthenumberofjudgesassassinated annually since 2003. In September 2010, INL The need for totheU.S.ArmyCorpsofEngineers(USACE), was advised that the buildings at the JDI are stronger judicial Gulf Region Division (GRD), according to the being used to house senior judges in light of a security remains same design specifications used to build U.S.-fund- recent national increase in attacks on judges. The critical. edcourthousesatKarkhandBasrah.344 HJC has responded by increasing staffing and Almost immediately after opening, PRT other subsistence and security support for the Baghdadreceivedreportsofproblemsatthefacil- full-timeuseofthefacility.349 In August 2010, ity indicative of poor design, construction, and the HJC began using security training materials materials—many identified by Iraq’s Chief Justice. that INL developed to train its new security staff AccordingtothePRT,itsattemptstobringGRD’s at the JDI.350 attention to the issue and enforce the warranty on workperformedtherewereunsuccessful.ThePRT Figure 4.7 reported that GRD repaired some obvious prob- Judges Assassinated, 11/13/2003–10/2/2010 lemsbutdeclinedtoaddressothers,andthecon- 12 tinuing deterioration of the courthouse has become 10 a serious impediment to PRT engagement with the Chief Justice.345 However, USACE reported that 8 it was not contacted about warranty issues until 6 after the warranty period had expired, and it had observedmodificationsbytheoccupantsofthe 4 346 facility that precluded further work by USACE. 2 To address these issues, as well as problems 0 posed by a lack of maintenance, the Iraq Strate- 2003 2004 2005 2006 2007 2008 2009 2010

gic Partnership Office (ISPO) is undertaking an Source: GOI, HJC, response to SIGIR data call, 10/2/2010.

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Prisons efforts to bring together judges and investigating GOIprisonsareoverseenbytheMOJ,withthe police, whose coordination remains critical to pre- IraqiCorrectionsService(ICS)conductingdaily paring and reviewing cases for adjudication.356 operations. As of September 30, 2010, the ICS In an August 2010 meeting between Iraq’s Depu- prisonpopulationincluded11,750pre-trialdetain- ty Minister of Justice and DoD, the GOI raised eesand12,269convicts.TheKRGoperatesitsown lingering concerns about prisons constructed by corrections service, with a reported total prison the U.S. government:357 population of approximately 2,223.351 • Chamchamal Prison. Last year, SIGIR in- At the end of this quarter, 219 detainees re- spectedthis$29millionINL-fundedfacilityand mained in U.S. custody. Since January 1, 2010, U.S. found that, although adequately constructed, forces have released 405 detainees and transferred Iraqi delay in staffing the facility prevented it approximately 5,591 detainees to GOI custody.352 from opening more quickly than would have During the quarter, four Iraqi detainees with al- otherwise happened. Although the MOJ partici- leged links to AQI escaped from U.S. custody at a pated actively in site visits and design reviews, During the quarter, Baghdad detention facility.353 AndinAugust,the theMOJsaidthisprojectisindicativeoftheU.S. four Iraqi detainees escape last year of British aid worker Margaret government’s failure to talk with and involve the with alleged links to Hassan’s killer from an Iraqi-controlled prison was GOIbeforebuildinginfrastructureprojects.358 AQI escaped from finally announced.354 • Basrah Prison. On October 5, the Basrah Prison U.S. custody at a A report published by Amnesty International in was turned over to the MOJ. This $9.3 million Baghdad detention facility. September highlighted many of the most pressing prisonhasabout1,200beds.Forthefirsttime, human rights issues confronting Iraq, including the MOJ engaged its own engineers in a prison thestatusofdetaineesheldbyU.S.militaryforces closeoutprocess,thusacceleratingthehando- and the ISF. The report’s chief concern involved verofthisfacility.INLreportedthatitworked “thousands of detainees who have already spent with advisors of DoJ’s International Criminal considerable time in prison without charge or trial Investigative Training Assistance Program to andwhomaybeatriskoftortureandotherill- incorporate MOJ concerns into the final work treatment in Iraqi custody.” Although Iraq’s 1971 requirements.359 Criminal Procedure Code provides for the rights • Taji Prison. MOJofficialsexplainedthatTaji ofdetaineestohumanetreatmentandspeedy prison personnel were having difficulty with adjudication, Amnesty International argued that re-fuelingoperationsbecausetheTajifacilityis thesesafeguardshavegonelargelyignored,andthe not equipped with any fuel storage tanks. DoD officials responsible for upholding them operate explainedthattheU.S.governmentpreferredto with impunity. The report strongly objected to the usefueltruckswhentheUSF-Iwasoperating transfer of Iraqi detainees held in U.S. military the facility.360 custody to the GOI under arrest warrants or other agreements, warning that these prisoners may face torture, prolonged incarceration without fair hear- Anticorruption ing, and death sentences.355 TheU.S.Embassy’sORoLChasinitiatedaCase In March, the GOI’s Joint Anti-Corruption Processing Working Group to study how to im- Council released Iraq’s National Anti-Corruption provetheinvestigationandprocessingofpretrial Strategy for 2010–2014 (NACS), which outlines detainees in GOI detention facilities. Additionally, Iraq’s anticorruption priorities and tasks specific theMinisterialCommitteeontheRuleofLawfor GOI agencies with responsibility for detailed sets Detentions met in late September to continue its of goals. Preparation of the NACS was carried out

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withassistancefromtheUNDPunderagrant Academy (IACA) to provide training support for managed by the U.S. Embassy’s Anti-Corruption Iraqi anticorruption officials. The IACA is a joint Coordination Office (ACCO).361 This quarter, effortbytheUnitedNationsOfficeonDrugsand SIGIR conferred with officials from Iraq’s three Crime and other stakeholders to support anticor- main anticorruption institutions—the Commis- ruption training programs in participating nations. sion of Integrity (COI), ministry inspectors general Iraq’s Council of Ministers reports that the COI (IGs),andtheBoardofSupremeAudit(BSA)—all willtaketheleadinadministeringtheanticorrup- ofwhomemphasizedthecentralityoftheNACS tion academy, which is being set up in a USACE- to their organizations’ work. builtfacilityoriginallyconstructedfortheMinistry of Health.364 U.S. Anticorruption Efforts As of September 30, 2010, ACCO had spent more Dismissal of Charges Against than$22millioninsupportoftheGOI’santicor- Former Minister of Trade ruption efforts. ACCO continues to engage with Earlierthisyear,theGOI’sformerMinisterof the GOI’s main anticorruption institutions and TradewasacquittedbyatrialcourtinBagh- work with USAID, the U.S. Department of Trea- dad,inoneofthetwocorruptioncasesbrought sury, and the UNDP on anticorruption initiatives againsthimbytheCOI.Thechargesallegedthat in Iraq. For example, of the $8 million committed theformerministerandhisbrotherorchestrated bytheUNDPtosupporttheCOI’spublic-edu- a scheme to steal millions of dollars from Iraq’s cation campaign, $3.5 million came from funds Public Distribution System, which hands out basic controlled by ACCO.362 foodstuffs to most Iraqi citizens. Immediately fol- This summer, ACCO began operating under lowingtheacquittal,theCOIappealedtheverdict, INL, with a staff of 8 that is scheduled to be reduced but on September 2, 2010, it was announced that in 2011. This reduced staffing will be offset inpart Iraq’s Federal Appeals Court had upheld the lower bytwonewlocalstaffhiresandadditionaladminis- court’s verdict dismissing the case. As of October trative and management support from INL.363 2,2010,theCOI’sothercaseagainsttheformer Minister of Trade remains pending.365 In November 2010, New Anticorruption Training Academy the GOI is scheduled In November, the GOI is scheduled to open a na- Commission of Integrity: to open a national tional anticorruption academy in the International 2010 Mid-year Review anticorruption Zone, and it has reached preliminary agreement Thisquarter,theCOIpublishedalistof15key academy in the with Austria’s new International Anti-Corruption achievements and indicators for the first six International Zone. months of 2010. Among them, the COI reports issuing 2,360 arrest warrants against GOI employees, including 52 against officials holding the rank of director general.366 Moreover, in the first twoquartersof2010,theIraqijudiciaryrendered guilty verdicts against 202 officials brought before thecourtsasaresultofCOI’sinvestigativework.367 Figure 4.8 summarizes the sentences received by these individuals. Despite these investigative accomplishments, the COI’s anticorruption efforts are still ham- peredbycertainprovisionsinIraq’sCriminal Classroom inside the new Iraqi anticorruption training academy.

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Procedure Code—most notably Article 136(b). Figure 4.8 Under this article, a minister can halt criminal Corruption Sentences, 1/1/2010–6/30/2010

proceedings against a subordinate. Twice repealed Total Number of Persons Sentenced: 202 andtwicereinstatedsince2003,Article136(b)re- mainsoperative,andtheCOIreportedthatitwas Fined, but Not Imprisoned invoked at least 95 times in the first half of 2010 in cases involving potential misconduct related to <3 Years about $920,000.368 AccordingtoMOI’sIG,Article136(b)wasre- 3–5 Years centlyinvokedtohaltaninquiryintotheconduct of the MOI general responsible for purchasing >5 Years

supposed “bomb detectors” from a company in Life in Prison Great Britain—devices that were little more than 0 20406080100 antennas connected to metal boxes (often derisively 369 Source: GOI, COI, “COI Key Achievements and Indicators from referred to as “magic wands”). January 1, 2010 to June 30, 2010,” www.nazaha.iq/en_body.asp?field= news_en&id=188, accessed 9/22/2010. Commission of Integrity: 2009 Report InAugust2010,theCOIissueditsAnnual Report Figure 4.9 for 2009.Accordingtothereport,theCOIreceived COI Cases Referred for Judicial Action, 2004–2009 7,797 allegations of corruption in 2009, 53% of whichwerefiledanonymously,andreferred 1,000 1,084individualstothecourtsforadjudication.370 Figure4.9showsthenumberofcasesreferredan- 800 nuallybytheCOIforjudicialactionsince2004. AccordingtotheCOI,296peoplewereconvict- 600 ed on corruption charges in 2009 as a result of its 400 investigations; 39 held the rank of director general 371 or higher. This marked a three-fold increase over 200 the97convictedin2008.372 Of those convicted 0 in 2009, sentences had to be rendered in absentia 2004/2005 2006 2007 2008 2009 for 41% of cases (121 persons).373 As Table 4.4 Note: The COI began operations in the second half of 2004. In September indicates, most 2009 sentences were for crimes of 2007, COI’s first Commissioner sought refuge in the United States because of threats against his life. Cases with multiple defendants are often forgery and embezzlement. reported as a single case; thus the number of individuals brought before the bar as a result of COI investigations is higher than the number of Other highlights from the Annual Report for cases referred. 374 2009 include: Source: GOI, COI, Annual Report for 2009, For the ﬁrst time, • Freezing overseas accounts. For the first time, www.nazaha.iq/pdf_up/189/p05-1.pdf, accessed 9/22/2010. the COI detected the COI detected and froze a significant amount and froze a signiﬁcant of money—approximately $5 million—that • Credential fraud. 282arrestwarrantswere amount of money was embezzled and subsequently smuggled issued against Provincial Council candidates for that was embezzled out of Iraq, ending up in banks in Jordan and forging their educational certificates. Of those and subsequently smuggled out of Iraq. Lebanon. Activities to follow up with officials in accused, 17 were sentenced to various terms of those nations continue as the COI attempts to imprisonment. recoverthosefundsandreturnthemtotheIraqi • Article 136(b). The Ministry of Municipalities national treasury. and Public Works used 24 waivers under Article

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Table 4.4 Corruption Verdicts Rendered in 2009, by Offense Number of Type of Crime Persons Convicted Examples of Actions Resulting in Convictions

Forging and/or Using Official Document 90 Forging a diploma or official certificate Stealing weapons, contract fraud, or failure to follow Embezzlement 65 proper contracting procedures Sabotage of Public Monies 39 Paying salaries to suspended employees Aggravated Mistake 22 Professional negligence Bribery 8 Accepting bribes Overstepping Bounds of Authority 8 Transferring land via use of a forged deed Making False Statements 5 Receiving two salaries Failure to Appear in Court 4 Failure to appear before a judge Other 17 Disobeying orders or impersonating an official

Note: This table summarizes information provided by the COI on 256 persons convicted in 2009. Information on others convicted in 2009 was not available. Verdicts resulting in convictions for more than one crime are included under each offense category. In some instances, individuals committing the same underlying offense are charged under different provisions of the Iraqi Penal Code. For purposes of this table, SIGIR has treatedthemashavingcommittedthesametypeofcrime.

Source: GOI, COI, AnnualReportfor2009, www.nazaha.iq/pdf_up/189/p05-1.pdf,accessed9/15/2010.

136(b)—more than any other ministry. Overall Figure 4.10 ministers stopped legal proceedings against Corruption Sentences, 2009

54 GOI employees in 2009 by invoking Article Total Number of Persons Sentenced: 296 136(b) or taking other actions. • Inspectors general. TheCOIreviewed37IG Fined, but Not Imprisoned The Ministries of candidates in 2009; 26 were deemed unquali- Justice, Municipalities fied, and 10 were ultimately appointed to IG <3 Years and Public Works, positions within their ministries. (COI author- Interior, and Oil had ityforreviewingIGcandidatesoriginatesfrom 3–5 Years the most arrest CPA Order 55, but reviews have been sporadic warrants issued since 2003). >5 Years against their • Oversight of ministries. The Ministries of employees in 2009. Life in Prison Justice, Municipalities and Public Works, 0 30 60 90 120 150 Interior, and Oil had the most arrest warrants Source: GOI, COI, Annual Report for 2009, issued against their employees in 2009. But the www.nazaha.iq/pdf_up/189/p05.pdf, accessed 9/22/2010. Ministry of Defense had more warrants issued againsthigh-rankingofficials(41)thanany Iraq’s Inspectors General: Two Proﬁles other ministry. Iraq’s IGs are appointed by the prime minister and serve renewable five-year terms. However, turnover TheGOI’santicorruptioneffortscontinueto hasbeenfrequent,andwhilesomeIGsarenearing confront significant challenges. The COI’s report the end of their full term in office, others are new revealed that most cases are still based on docu- to the position and only just becoming acclimated ments (for example, diploma fraud), suggesting to the office. For example, the MOI IG has oc- thattheCOI’sabilitytoconductproactiveinvesti- cupiedhispostfornearlyfiveyears,buttheIGfor gations remains limited. Figure 4.10 presents COI theMinistryofElectricity(MOE)hasonlybeenon criminal conviction data for 2009.375 thejobforaboutfourmonths.Thisquarter,SIGIR

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met with both of these men, whose experiences accordingtoDoS,theCOICommissionerwas illustrate the challenges confronting the broader IG appointed in late 2007 by a means not supported community as a whole: under current law. DoS maintains that these factors • The MOI’s IG has oversight of approximately leave the anticorruption institutions politically vul- 700,000 MOI employees. The IG had main- nerable and their independence compromised.378 tainedofficesinthe15provincesoutsideofthe KurdistanRegion,butrecentlyworkedwith Anticorruption Efforts KurdishofficialstoestablishanIGofficethere. in the Kurdistan Region The MOI is the only ministry to have an IG The KRG maintains anticorruption institutions with at least nominal oversight over activities in distinct from those found in the rest of Iraq, all18provinces.In2009,theIG’sauditingarm includingthePublicRightsBoardandtheKurd- uncoveredmorethan250billionIraqidinar istan Parliament Integrity Committee.379 Until that was improperly used, up from 3 billion 2007–2008, the KRG also had two BSA offices, but Iraqi dinar in 2007.376 the Kurdistan Parliament passed a law merging the • The MOE’s IG reported having only 71 of the 2BSAsintooneentitythatischargedwithaudit- 250 personnel he believes are needed to ad- ingpublicfundsandreportingitsfindingstothe equately conduct audits, inspections, and inves- Kurdistan Parliament.380 tigations, although he plans to hire 100 more in In late September, SIGIR officials traveled to thenearfuture.TheIGcontendedthat,although the Kurdistan Region to confer with Judge Amin he lacks essential equipment, the largest problem Rizgar of the KRG’s Judicial Council. The inves- his office faces is obtaining the information tigative judges of the Judicial Council focus on necessary to properly assess the MOE’s perfor- enforcing anticorruption laws. Judge Rizgar cited For the last several manceanduncoverwaste,fraud,andabuse. the KRG’s hiring of unqualified civil servants and years, neither a single AccordingtotheIG,mostcorruptionisfound the opacity of many governmental processes as two IG nor the heads of in procurement contracts, whether between the of the main aggravating factors driving corrup- the COI and BSA MOEandlocalcontractorsorbetweentheMOE tionintheKurdistanRegion.Toamelioratethese have been submitted and international firms.377 problems, he advocated:381 to the CoR for conﬁrmation. • increasing anticorruption education for public- Status of GOI Anticorruption Leaders sector employees DoSreportedthat,forthelastseveralyears,neither • enhancing prosecutorial independence asingleIGnortheheadsoftheCOIandBSA • amending laws and regulations governing the have been submitted to the CoR for confirma- expenditures of public funds tion,meaningtheyareactingofficialsserving • re-evaluatingallKRGemployeestoensurethey atthepleasureofthePrimeMinister.Moreover, arequalifiedforthepositionstheyhold◆

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ECONOMY

Legal and regulatory reforms intended to pro- ofIraq(CBI)beganusingdatafromIraq Socio- moteIraq’seconomicdevelopmentremainon Economic Survey—published by the GOI’s Central hold as negotiations to form a government con- Organization for Statistics and Information tinue.382 Nevertheless, there are tangible signs of Technology (COSIT)—to calculate inflation rates economic progress this quarter. Iraq’s hydrocar- inJanuary2010,thecoreandoverallinflationrates bon potential has led international oil companies have tracked very closely with each other. Since the to enter into a series of agreements (generally beginning of this year, core inflation has ranged favoring Iraq) to develop oil and gas fields, as well between 1.8% and 3.8%, and overall inflation has as related infrastructure.383 Some progress to cre- ranged between 0.6% and 3.4%. For details, see ateopportunitiesinthenon-hydrocarbonsector Figure 4.11.388 is also apparent, and a comprehensive Iraqi plan The CBI has pegged the exchange rate at 1,170 has been advanced to address the restructuring Iraqi dinar per U.S. dollar since January 2009,389 of State-owned Enterprises (SOEs). and has held its policy rate at 6% since April 2010.390

Employment Key Economic Trends The structural challenge to Iraq’s sustainable eco- and Developments nomicdevelopmentisthatbasiccivil,commercial, andhumancapitalinfrastructurehasyettorecover The Iraqi economy and government remain largely fromtheeffectsofdecadesofsanctionsandcon- dependentontheoilsector,astheywillforthe flict. Iraqi wages are largely dependent on the GOI foreseeable future. This quarter, the GOI received budget,whichfundsmorethan60%offull-time $11.26billioninoilexportsreceipts,$771million employment, and the GOI remains a key driver of (6%) less than last quarter. Assuming that oil export the country’s economic development.391 According receiptsforthefinalthreemonthsofthecalendar toaUNlaborforceanalysisofJanuary2009,the yearareequaltotheaveragemonthlyreceipts Iraqieconomyisunabletogenerateemployment for the first nine months of 2010, the GOI would opportunitiesfor28%oftheactivelaborforce.This receive$47.47billionintotalannualoilreceiptsfor includesanestimated18%unemployedandan the year.384 Those projected oil receipts represent additional 10% who are part-time workers seeking Oil represents more 66%oftheGOI’s2010budgetand56%ofIraq’spro- full-time employment.392 Moreover, almost a quar- than half of GDP but jected gross domestic product (GDP).385 For details ter of a million young Iraqis enter into the job mar- less than 2% of all onthecloserelationshipbetweenoilprice,GOIoil keteachyear,andthecountry’sprincipalsourceof employment. receipts, and Iraqi GDP, see Figure 4.11. revenue (oil exports) provides a disproportionately small number of employment opportunities.393 Inﬂation AsshowninFigure4.12,oilrepresentsmorethan Inflationagainremainedsteadythisquarter.Asof half of GDP but less than 2% of all employment. August2010,thelatestmonthforwhichinflation All other economic sectors, including agriculture, data is available, the core inflation rate was 1.7% manufacturing, and services, contribute less than and the overall inflation rate was 1.9%386—both half of GDP, “but nearly all jobs, and by exten- considerably less than the estimated 2010 Middle sion,thewelfareoftheverylargepopulationthat East average of 6.6%.387 SincetheCentralBank is directly dependent on those jobs.”394 As stated in

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Figure 4.11 The Iraqi Economy, 2004–2010

Oil Price, Iraqi Oil Receipts, and GDP 2004 2005 2006 2007 2008 2009 2010 $8 $160 Global Recession

$7 $7.01 $140 $6 $120 Estimated Monthly GDP barrel) per ($ Price Oil $5 $100 $78.17 $4 $80 Weekly Oil Price $3.61

($ Billions) $3 $60

$2 $40 Oil Receipts and Estimated GDP $1 Monthly Oil Receipts $20

$0 $0

($ Billions) GDP $33.39 $35.99 $45.08 $56.98 $86.53 $65.84 $84.14 GOI Budget $25.77 $31.38 $32.10 $41.05 $72.18 $58.61 $72.36 Oil Receipts $16.52 $21.86 $28.13 $35.88 $58.79 $37.02 $47.47

Inflation in Iraq and the Middle East % Change from Period End (Iraq Monthly Data) or Annual Average (Middle East Average) 80%

70% Iraq Inflation 60% (Year-on-Year, Monthly)

50%

40%

30%

20% Middle East Inflation (Annual Average) Iraq Core Inflation 10% (Year-on-Year, Monthly) 6.56% 1.9% 0% 1.7% -10% 1/2010—CBI begins using data from COSIT’s Iraq's Trade Balance Iraq Household Socio- Economic Survey $ Billions to calculate inflation rates $70 $60 $50 $40 $30 $20 $10 $0 -$10 Imports Exports Current -$20 Account Balance -$30 2004 2005 2006 2007 2008 2009 2010

Note: Data not audited. Numbers affected by rounding. Daily oil price represented by Weekly Iraq Kirkuk netback price at U.S. Gulf. All dollar values are in current prices. GDP figures from 2009–2010 are estimates. The IMF updated historical GDP figures in its October 2010 report.

Sources: U.S. Treasury, responses to SIGIR data calls, 6/8/2010, 7/13/2010, and 10/13/2010; IMF, World Economic and Financial Surveys: World Economic Outlook Database, 10/2010, www.imf.org/external/pubs/ft/weo/2010/02/weodata/index.aspx, accessed 10/12/2010, and Regional Economic Outlook: Middle East and Central Asia, 10/2009, pp. 55–57, and 5/2010, pp. 59–61; EIA, “Weekly Iraq Kirkuk Netback Price at U.S. Gulf,” www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WEPCKIRK&f=W, accessed 10/12/2010; GOI, CBI, “Key Financial Indicators,” 10/6/2010, www.cbi.iq/documents/key_financial.xls, accessed 10/12/2010.

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Figure 4.12 completed—including budget and purchasing mod- Share of Iraqi Employment and Share of GDP, ulesthatwouldhavesolvedmanyofthedifficulties by Sector in executing Iraq’s budgets.398 TheIMFreportedinitslatestreviewofthe Petroleum Stand-By Arrangement (SBA) for Iraq that the GOI has committed to assess the functionality of the Agriculture IFMIS and make the changes required to ensure that the system is operational in 2011.399 AWorld

Manufacturing Bank study also released this quarter expressed the hope that the IFMIS would be implemented,400 and theMOFDirectorGeneralofFinancehasindi- Services cated that the GOI has been in discussions with 0 10203040506070thesystem’ssoftwarevendortoseeifsomeofthe 401 % Employment benefitsoftheIFMIScouldbesalvaged. % GDP An IMF staff report reviewing the SBA makes clear that GOI spending units “will be required Source: GOI, MoPDC, response to SIGIR data call, 10/17/2010. to submit comprehensive spending reports to en- the UN Development Assistance Framework for Iraq able the MOF to better track implementation and 2011–2014 (UNDAF),“Iraqfacesacriticalperiod strengthen cash management.”402 In practice, how- during which economic diversification and develop- ever,USAIDOIGfoundthattheGOIcontinuesto mentoftheprivatesectormustbeundertaken.”395 usealegacysystembecauseIFMISdoesnotallow foruserstoperformcriticalaccountingfunctions (see Table 4.5).403 Lack of an Adequate Financial Management System Table 4.5 Functions That GOI Reportedly CannotPerformUsingtheU.S.-funded International donors have long viewed implementa- IFMIS System The GOI continues tion of a transparent financial management system to operate without as important to their support of the GOI. Given Enterinvoiceswithuniqueinvoicenumbers. the benefit of Provide information needed to perform bank the level of donor participation sought under the reconciliations. the U.S.-funded newIraqiNDP,thestakesareevenhigher,butthe Provide for more than one bank account. Iraq Financial GOIcontinuestooperatewithoutthebenefitofthe Management Provideautomaticopeningbalancesthatwerebasedon U.S.-funded Iraq Financial Management Informa- closingbalancesfromthepreviousaccountingperiod. Information System. tion System (IFMIS). SIGIR reviewed the IFMIS Provideawork-aroundforofflinedataentry. program early in its development and identified Produce useful reports for individual ministries and offices. fundamental challenges to its implementation.396 A Produce accurate and complete trial balances. report released by USAID’s Office of Inspector Gen- Addasupplementalbudgetformid-yearincreasestothebudget. eral (USAID OIG) this quarter revealed that many Add new accounts to the chart of accounts. of those deficiencies remain, and the U.S. invest- Automatically save entered transaction data. 397 mentof$37.4millionmaybeatriskforwaste. Inform users when budget ceilings are exceeded. AlthoughU.S.-fundedworkontheIFMISproject Transmit information quickly through the system.

hasended,theGOI’sMinistryofFinance(MOF) Source: USAID OIG Audit E-267-10-002-P, “Audit of USAID/Iraq’s Implementation of The Iraq Financial Management Information informedUSAIDOIGthattheIFMISwasnotfully System,” 7/19/ 2010, p. 6. delivered and significant components were not

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Oil and Gas oil companies, as well as agreements that currently are being negotiated or proposed. On October 4, Iraq’s Minister of Oil announced that the ministry had raised its estimate of the Crude Oil Production The revised estimate country’sprovedreservesofcrudeoilby24%— and Field Development would move Iraq from115billionbarrelsto143.1billionbarrels.404 Overthepastyear,Iraq’scrudeoilproductioneach ahead of Iran The most significant revisions reportedly were for quarterwaseitheraboutthesameasorslightly on most lists of theWestQurnafield(increasingfrom21.4billion below what it was the preceding quarter. This countries’ proved reserves. to 43.3 billion barrels) and the Zubair field (increas- quarter’s production averaged 2.33 MBPD, a 2% ingfrom4billionto7.8billionbarrels).405 The decrease from last quarter and a 7% drop from the revised estimate would move Iraq ahead of Iran on post-invasionrecordof2.49MBPDachievedduring most lists of countries’ proved reserves, leaving it theJuly–Octoberquarterof2009.407 These figures behind only Saudi Arabia and, perhaps, Canada.406 do not include crude oil production in the Kurdis- Although hydrocarbon resources dominate tan Region, which currently averages about 40,000 Iraq’s economy, their potential to generate govern- barrels per day (BPD).408 ment revenue—as well as to meet domestic energy About71%ofIraq’sprovedreservesofcrudeoil needs—has been limited by conflict, sanctions, and72%ofcurrentproductionareintheoilfields and the consequent underinvestment in those of southern Iraq,409 where most new development resources. As shown in Figure 4.13, production activity is taking place or being planned. In Sep- of crude oil has remained relatively flat since the tember, the Ministry of Oil’s South Oil Company beginning of 2008, rarely exceeding 2.5 mil- and its international partners set quarterly produc- lion barrels per day (MBPD). Furthermore, vast tion targets that aim to increase southern produc- amountsofnaturalgascontinuetobeflared tion from this quarter’s average of 1.68 MBPD to because of the lack of infrastructure to deliver it to 2.285MBPDbyDecember31,2011.410 The Ministry where it can be productively used. But these condi- ofOil’sgoalistoeventuallyexpandthecoun- tionscouldstarttochangeinthecomingyearsas try’s overall production to more than 12 MBPD, a result of the contracts signed with international andthewinnersoflastyear’sbiddingroundsfor

Figure 4.13 Crude Oil Production and Exports, by Month, 10/2003–9/2010 Million Barrels per Day 3.0 Production 2.5

2.0

1.5

1.0 Exports

0.5

0.0 2003 2004 2005 2006 2007 2008 2009 2010

Sources: NEA-I, responses to SIGIR data calls, 6/4/2010, 7/6/2010, and 10/4/2010.

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field-developmentcontractsareatvariousstagesof MinistryofInteriorwouldstartissuingvisasto planning, deployment, and field work.411 companyemployeesatairportsandthattheGOI Although ExxonMobil and Occidental Petro- wasalsoworkingtoopennewbordercrossings leumweretheonlyU.S.firmsonconsortiathat foroilequipmenttocompensateforthecurrent won contracts in last year’s bidding rounds, other shortage of dock space at Umm Qasr. The minister U.S.-based companies are establishing a presence also acknowledged that every type of transporta- inIraqtoprovideoilfieldservices.Forexample, tion infrastructure—including roads, airports, and Halliburton reported it has completed construc- pipelines—wouldneedtobeimprovedorexpand- tion on the first phase of its 400-person base in ed to handle the expected development activity.418 The minister also al-Burjsiyah in Basrah province.412 Baker Hughes, ExxonMobil apparently was confronted with an acknowledged Schlumberger, and Weatherford also have set up additional challenge as it started work at the West that every type basecampsinBasrah.413 Industry developments Qurna-1 field: to obtain adequate water supplies, it of transportation this quarter included the following: had to build water infrastructure.419 infrastructure would • Halliburton announced that Shell had awarded need to be improved italetterofintentforthedevelopmentofthe Crude Oil Exports and or expanded to Majnoon field and that Eni had awarded it a Capacity Expansion handle the expected contract to provide a range of energy services to Crudeoilexportsaveraged1.85MBPD,aboutthe development activity. support the redevelopment of the Zubair field. same as last quarter’s level and 7% below what Work on the Eni contract has already started, but they were a year ago—roughly coinciding with the the contract with Shell must be approved by the trend in production. Of this quarter’s total exports, GOIbeforeworkcanbeginontheMajnoonfield. about 1.47 MBPD was shipped from the southern Halliburton will serve as project manager for the port facilities in Basrah, about 0.37 MBPD was Majnoon development work, in affiliation with transported via pipeline north through Turkey Nabors Drilling and Iraq Drilling Company.414 totheportofCeyhan,andasmallamountwas • Baker Hughes signed a three-year strategic trucked to Jordan.420 alliance to supply wireline technologies to the As crude oil production increases in the coming SouthOilCompanyandotherIraqioilandgas years,moreoilwillbeavailableforexport.Iraq’s producersaswellastohelpdeveloplocalIraqi NDPestimatesthatcrudeoilexportscouldreach wireline logging capabilities.415 Wireline log- 3.1MBPDin2014(seeTable4.6).Howmuchisac- ging helps determine where oil and gas is likely tually exported, however, could be constrained by to be found.416 thecapacityofIraq’spipelinesandexportfacilities. • Lukoilbeganthetenderprocessforconstruc- The Ministry of Oil has been working on several tion of key facilities on the West Qurna-2 field, fronts to increase export capacity: and China National Petroleum Corporation • Southern Exports. On September 28, the Coun- announcedaseriesoftendersrelatedtodevelop- cilofMinisters(CoM)approveda$733million ment of the Halfaya field.417 agreement with Leighton Offshore to build a 1.8 MBPD floating oil terminal in Basrah, as To help coordinate the expansion efforts, the well as pipelines that connect oil fields to the new ministryinvitedthewinningconsortiaandlocal terminal. The GOI’s 2010 budget reportedly al- government officials to a symposium in Bagh- ready includes $175 million for the project.421 The dadonJuly18and19.Industryrepresentatives MinistryofOil’spreviouslyannouncedplanscall reportedly voiced concerns about obstacles slowing forbuildingthreenewoffshorepipelinesinBas- the movement of personnel and equipment into rah with a combined capacity of 4.5 MBPD, and Iraq. In response, the Minister of Oil said that the it announced in September that it expects those

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Table 4.6 by7%,andLPGby4%.AsshowninFigure4.14, NDP Estimate of Oil Exports, 2010–2014 Iraqproducedmoreofthesefuelsthanitimported. Price/ While its imports of kerosene and diesel fuel were Exports Barrel Potential Revenue negligible, Iraq imported 13% of this quarter’s LPG Gasoline consumption Year (MBPD) ($US) ($US Billions) supply and 31% of the gasoline supply.427 reached record-high 2010 2.15 60 47.09 AccordingtotheMinistryofOil,gasoline levels in the May–July 2011 2.30 63 52.89 consumption reached record-high levels in the period. 2012 2.50 68 62.05 May–July period as use of private household and 2013 2.80 68 69.50 neighborhood generators increased to help offset 2014 3.10 68 76.94 electricity shortages on the national grid. Demand Note: Numbers affected by rounding. forgasolinereportedlywas18%higherthanitwas Source: GOI, MoPDC, National Development Plan (2010–2014), 12/2009, p. 24. duringthesametimeperiodin2009.InBaghdad, upto7millionlitersofgasolinewereconsumed pipelinestobereadybytheendof2011.422 U.S. each day.428 officials, however, have told SIGIR that they do TheministryplanstoexpandtheexistingDoura notexpecttheoffshorepipelinecapacitytoreach and Basrah refineries and to build four new refiner- 4.5MBPDuntiltheendof2013attheearliest.423 ies with a combined capacity to refine 740,000 BPD • Northern Exports. On September 19, the Min- of crude oil. In August, KBR announced it had ister of Oil signed an agreement with Turkey to beenawardedtwocontractstoprovidelicensing ensure continuation of exports through the Iraq- andbasicengineeringservicesfortheconstruc- Turkey pipeline for another 15 years. The deal tionofafluidcatalyticcrackingunitandasolvent allowsfora1MBPDincreaseinflowthrough deasphaltingunitatoneofthosenewfacilities—a the pipeline.424 Therealsoarereportsthatthe 150,000 BPD refinery in Missan province.429 ministry is considering additional pipeline capacity for exports to Turkey.425 Natural Gas • Western Exports. Iraq and Syria signed a AccordingtotheMinistryofOil,productionofas- memorandum of understanding this quarter to sociatednaturalgasaveraged1,385millioncubicfeet buildtwotransnationaloilpipelinesandonegas (MCF) per day during the first eight months of 2010, pipeline. The pipelines would have the capacity andhalfofthatamountwasflared.430 There were no to transport more than 2 MBPD of oil and an reported developments this quarter on the proposed unspecified amount of gas from Iraq’s northern deal with Shell and Mitsubishi to form a joint fields to Syrian ports. The Ministry of Oil has venturewiththeministry’sSouthGasCompanyto determined that constructing new pipelines capture and distribute associated gas in Basrah. would be more cost-effective than attempting to After having been rescheduled twice, the bid- rehabilitate Iraq’s existing, but no longer used, ding round for the development of three non- pipelinetoSyria.426 associated gas fields was finally held on October 20.TheauctionwasfortheAkkasgasfieldin Reﬁneries and Petroleum Products Anbarprovince,theMansouriyafieldinDiyala, Compared with the same quarter in 2009, domes- and the Siba field in Basrah. As was the case in the tic production of gasoline, diesel fuel, kerosene, December 2009 auction for oil service contracts, andliquefiedpetroleumgas(LPG),aswellasthe company representatives placed their sealed bids totalsupplyofeachofthosepetroleumproducts, foreachfieldintoaclearboxdesignedtosymbolize wasup.Refineryoutputofdieselfuelincreasedby the transparency of the process. They did so after 39% over that period, gasoline by 27%, kerosene theministryputasealedenvelopeintothebox

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Figure 4.14 Refined Fuel Production and Imports, by Month, 2004−2010 LPG Kerosene Metric Tons per Day Million Liters per Day 6,000 12 5,000 10 Total Supply Total Supply 4,000 8 Imports 3,000 6 Imports 2,000 4 1,000 Domestic 2 Domestic DomesticProduction Production Production 0 0 2004 2005 20062007 2008 2009 2010 2004 2005 20062007 2008 2009 2010

Diesel Fuel Gasoline Million Liters per Day Million Liters per Day 25 25 Total Supply 20 Total Supply 20

15 15 Imports Imports 10 10 Imports 5 5 Domestic DomesticDomestic Production Production Production 0 0 2004 2005 20062007 2008 2009 2010 2004 2005 20062007 2008 2009 2010

Sources: NEA-I, responses to SIGIR data calls, 6/4/2010, 7/6/2010, and 10/4/2010.

Table 4.7 Results of Gas Bidding Round Fee Bid Production Estimated ($/Barrel of Oil- Plateau Target Field Winning Consortium Reserves (TCF) equivalent) (MCF/Day) Akkas Kogas (50%), KazMunaiGaz (50%) 5.6 5.50 400 Mansouriya TPAO (50%), KEC (30%), Kogas (20% 4.5 7.00 320 Siba KEC(60%),TPAO(40%) 1.5 7.50 100 Total 11.6 820

Source: U.S.Embassy-Baghdad,responsetoSIGIRdatacall,10/22/2010.

containing the maximum acceptable remuneration thenewcontractscouldpotentiallyraisegaspro- fee for the field. As shown in Table 4.7, a consor- ductionby820MCFperday.431 tium of Korea Gas Corporation (Kogas) and Ka- IntheKurdistanRegion,DanaGasandCres- zakhstan’s KazMunaiGaz was the successful bidder cent Petroleum reported that they have invested for the Akkas field; Turkey’s TPAO, Kuwait Energy more than $850 million since 2007 to develop the Company(KEC),andKogaswonthebiddingfor region’s natural gas resources. In their October 5 the Mansouriya field; and KEC and TPAO submit- announcement, the two companies say they have ted the winning bid for the Siba field. A Ministry of reached an overall production and processing Oil company will have a 25% share in each project. capacityof200MCFperdayandarecurrently TheCoMmustapprovethedealsbeforetheyare supplyingupto180MCFperdaytotheregion’s final. If the production plateau targets are achieved, two privately operated power plants in Erbil and

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Sulaymaniyah. They expect daily production Figure 4.15 capacity to reach 300 MCF by 2012.432 Route of Proposed Nabucco Gas Pipeline

GOI-KRG Tensions over Baumgarten Oil and Gas Exports Vienna TheKRG’sandGOI’sdifferingviewpointson Budapest the development and marketing of hydrocarbon resources in the Kurdistan Region publicly Bucharest Georgia Sofia Feeder Pipeline resurfaced this quarter after the KRG signed an from Georgia agreement with German company RWE for the Istanbul Erzurum design and development of gas-transportation Ankara Feeder Pipeline infrastructure within the region. Under the agree- from Iraq Turkey ment reached in August, RWE would help design Iran

notonlyadomesticdistributionnetworkthat Syria would pipe gas to households and businesses in Iraq theregion,butalsotheinfrastructurethatcould Kurdistan Region

potentially enable gas produced in the region to be Source: Nabucco Gas Pipeline International, “Route,” exported via the proposed Nabucco pipeline. In an- www.nabucco-pipeline.com/portal/page/portal/en/pipeline/route, accessed 9/23/2010. nouncing the deal, the KRG’s Minister of Natural statement added that “the KRG has no such au- Resourcessaidthattransportingthisgasthrough thoritytoexportcrudeoilorgasortheirproducts. The Ministry of Oil theNabuccopipelineis“apriorityforus,andwill And any other commitments made other than by released a statement also serve to cement our already good relations theMinistryofOiltoexportgasviatheNabucco saying that SOMO with Europe and Turkey.”433 pipeline are invalid.” The KRG issued a counter- is the only entity Firstconceivedin2002butstillintheplan- statement asserting that it would continue on its authorized to sign contracts for the ningstage,theNabuccopipelinewouldconnect owntomakedealstoprovideenergyservicesina export of Iraq’s crude the Eastern border of Turkey to a distribution timely manner for the people in the Kurdistan Re- oil or natural gas. hub in Baumgarten, Austria, thereby providing a gion,435 but Turkey’s Minister of Energy reportedly waytotransportgasfromtheCaspianregionand pledgedthatgasfromtheKurdistanRegionwould the Middle East to Europe. Figure 4.15 shows the not be allowed to pass through Turkey without routeoftheproposedpipeline,aswellasthean- permissionfromtheGOI.436 ticipatedfeederlinefromtheKurdistanRegion. Earlier in the quarter, the GOI-KRG disagree- On September 6, the international consortium mentmanifesteditselfinadifferentformafterthe spearheading the Nabucco project said that it had NewYorkTimespublished an article about oil smug- signed an agreement with the European Invest- glingontheKurdistanRegion’sborderwithIran. ment Bank, European Bank for Reconstruction The KRG responded by saying that, other than the and Development, and International Finance crudeoilitexportedtoTurkeyforabriefperiodin Corporation that would initiate an appraisal 2009, “no crude oil travels across the internal or ex- The KRG told SIGIR process that eventually could result in a financing ternalboundariesoftheKurdistanRegion.”437 The that the amount of package worth more than $5 billion.434 KRG subsequently told SIGIR that the amount of crude oil that will be SoonaftertheKRG-RWEdealwasannounced, crudeoilthatwillbeexportedinthefuturewillbe exported in the future the GOI Ministry of Oil released a statement saying determined by the KRG’s Council of Oil and Gas.438 will be determined by the KRG’s Council of that the State Oil Marketing Organization (SOMO) With regard to petroleum products from the Oil and Gas. is the only entity authorized to sign contracts for three refineries in the Kurdistan Region, the KRG theexportofIraq’scrudeoilornaturalgas.The said that most are used within the region; when

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therearesurplusproducts,theKRGsaidit“con- Development Group’s UNDAF, and the IMF SBA ductsopenandcompetitivetendering”fortheir allidentifyanattractiveinvestmentclimate;a export. The statement added that fuel oil produced dynamic labor market; and improved performance intheGOI’slargerefineriesissoldtothelocal andproductivityofsectorssuchasagriculture, privatesectoratasignificantdiscount.“TheKRG transportation, religious tourism, industry, con- is aware of the fact that profiteers in fuel oil refined struction and housing, and other non-oil sectors as outside Kurdistan have exploited Kurdistan’s in- areas for development.442 Many of these goals were ternational borders,” the statement said. “The KRG included in the GOI-led (now defunct) Internation- is committed to working with the Federal Govern- al Compact with Iraq (ICI). In its Interim Strategy ment to eliminate permanently all such profiteer- Note (2009–2011), the World Bank emphasized that inginfueloil,notonlyintheKRGbutalsoalong Iraq’s ability to achieve economic development goals theentiretyofIraq’sinternationalborders.”439 faces significant implementation risk as it relates to U.S.lawprovidesfortheimpositionofsanctions the“politicalandsecuritysituation”inIraqaswell onpersonswhoknowinglysellrefinedpetroleum as“fiduciaryrisks”relatedtotheGOI.443 (valuedat$1millionormore,orvaluedintheag- gregateatmorethan$5millionduringa12-month Support for Financial Sector period)toIran.440 Development The IMF and U.S. development agencies have said Attacks on Oil and Gas Infrastructure thatIraq’sfinancialsectoriskeytoachievingapro- There were three reported attacks this quarter on ductive private-investment environment. They cite oilandgasfacilities,comparedwithfourlastquar- several objectives for development and reform, inter. According to USF-I, none of this quarter’s at- cluding satisfying the demand for formal credit, at- tackscausedsignificantdamageorledtoprolonged tracting foreign capital, and providing mechanisms periodsofdisruptiontotheoilorgasnetworks, for entrepreneurs to expand their businesses and andnospecificgroupororganizationtookcredit generate long-term employment opportunities.444 fortheseattacks.ThefirstattackoccurredonJuly3, Support from the U.S. Treasury, USAID, and when an improvised explosive device caused minor World Bank have largely focused on macro changes. Iraq’s ﬁnancial sector damage to the Pipeline Exclusion Zone along the These top-down projects include work with the CBI, is key to achieving Iraq-Turkeypipeline,haltingtheflowofoilforone thecreationoftheIraqiCompanyforBankGuar- a productive day.OnJuly12,anoilpumpwasattackedinthe antees (a guarantor of loans to small and medium private-investment Rashidiya area of Baghdad, causing a small fire enterprises, or SMEs), a Non-Banking Financial environment. but no damage. The third attack, an explosion on a Institution, and the Iraqi Company for Financing liquefied petroleum gas line that supplies a bottling SMEs, as well as capacity development initiatives plant in Taji, also resulted in no damage.441 to strengthen the legal and regulatory environment for the financial sector and to improve access to credit. At the other end of the reform spectrum, Private-sector Development two USAID programs are designed to strengthen in Non-hydrocarbon Areas Iraq’s financial sector by providing broader access to credit and lending services.445 The creation of a strong private sector and diversification of industries beyond the oil and gas sector are Iraq Financial Sector Development Program theemphasisofdevelopmentplansandprograms InJuly,USAIDawardedanewfive-yearcontract adopted by the GOI and its international develop- to AECOM Technology Corporation to implement mentpartners.Iraq’sNDP,theUnitedNations the Iraq Financial Sector Development Program.

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Fundedby$53millionoftheESF,theprogramis Table 4.8 intended “to improve the soundness of the private Microfinance Outreach Across Iraq, as of 4/2010 financial sector through institution building and Number of Value of Average Amount Percentage of Outstanding of Outstanding targeted reforms, and improve the quality and Outstanding Value of all Province Loans Loans ($US) Loans ($US) Outstanding Loans availability of finance and business education.”446 Baghdad 8,298 10,709,240 1,290.58 12.68 Anticipated activities include strengthening Sulaymaniyah 6,960 10,176,616 1,462.16 12.05 private industry associations, which could serve as Basrah 4,054 6,434,922 1,587.30 7.62 private-sector advocates to the GOI on policy as Babylon 4,138 6,262,905 1,513.51 7.42 well as legal and regulatory reform. The stated goal Erbil 4,127 6,256,876 1,516.08 7.41 is to forge a strong, professional industry association Tameem 4,303 5,586,560 1,298.29 6.62 thatcaneffectivelyrepresenttheinterestsofthefi- Kerbala 4,053 5,550,048 1,369.37 6.57 nancial sector with the CBI, CoR, and other govern- Anbar 3,771 4,633,635 1,228.75 5.49 ment entities, as well as with the Iraqi citizens. The Najaf 2,992 4,517,886 1,509.99 5.35 programisexpectedtohelpdevelopcreditbureaus, Ninewa 3,099 4,242,529 1,369.00 5.02 a training institute, and bank training capacity.447 Wassit 4,204 3,975,850 945.73 4.71 Tijara Dahuk 1,942 3,446,369 1,774.65 4.08 As of September 30, 2010, USAID’s Provincial Diyala 2,527 3,368,911 1,333.17 3.99 Economic Growth Program (Tijara,Arabicfor Qadissiya 1,452 3,098,515 2,133.96 3.67 “trade”) had expended all but about $1 million of Thi-Qar 1,320 2,345,238 1,776.70 2.78 the $85 million allocated to support direct outreach Muthanna 1,239 1,830,981 1,477.79 2.17 programsanddonorfundingforMicrofinance Salah Al-Din 1,055 1,001,509 949.30 1.19 Institutions (MFIs)—an activity that has expanded Missan 1,925 991,920 515.28 1.17 rapidly since first introduced in 2003. Between Total 61,459 84,430,510 100.00 2007and2010,USAIDreportsthattheindustry Number of Provinces Served: 18 Number of Microfinance Institutions: 14 (2 International NGO-MFIs and 12 National NGO-MFIs) 448 hadacumulativegrowthrateof53%. Through Number of Active Clients: 62,901 the first quarter of 2010, Iraqi MFIs recorded an- PercentageofLoanstoWomen:15% Interest Rates: 12%–18% per year nualportfolioincreasesof32%and42%intheir Cumulative Results, 2004–4/2010 449 active client bases. As shown in Table 4.8, MFIs Number of Loans Disbursed: 197,335 arecurrentlypresentinall18ofIraq’sprovinces. TotalValueofLoansDisbursed:$453.3 million Iraq’s microfinance subsector is small com- Source: USAID, “State of Iraq’s Microfinance Industry,” 6/2010, www.imfi.org/?q=en/node/169,accessed 10/1/2010. pared to others in the Middle East. With a market penetrationoflessthan1%—includingunrealized and local industry best practices. USAID offered as markets among the approximately 7 million people anexampleofdevelopingboththegoalsofsmall- living and working in rural areas—the potential for enterprise development and MFI credit availability growth is great.450 the Small Business Development Center (SBDC) Ongoing Tijara MFIactivitiesincludeworkto Network. The 15 Tijara-funded SBDC’s in Iraq develop demand-driven lending streams (such as providearangeofservices,includingtrainingin value-chain financing) and cultivate the supply business planning and management, microfinance, of credit by securing donor assistance for lending. and business-to-business networking. SBDCs also Tijara also provides institutional support for matur- worktoconnectentrepreneurstoSMEfinancing ing MFIs, formalizing an MFI network, introducing opportunities through private lending.451 new technology applications for MFI providers and Despite progress, MFIs remain dependent on users,anddevelopinghumanresourcecapability donor assistance. As the microfinance subsector

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establishes itself as a mature credit source, USAID hassaidthatthetruetestofitssustainabilitywillbe access to market-sensitive financing vehicles.452 The Iraqi Youth Initiative, supported by $12 million from the ESF-funded Ambassador’s Targeted Development Program, has expanded to operate outofUSAID’sSBDCs.This18-monthprogram bringsMFIfinancingtogetherwiththefinancial services of the SBDCs to create new business enterprises for Iraq’s youth. USAID expects to engage more than 5,000 young Iraqis through the program and create more than 2,500 jobs with a recyclable MembersoftheMissanPRTevaluateabuildingaspartofa portfolioofmorethan$4.4millioninindividual project to reopen the Missan Plastics Factory, which had been a and group loans.453 major producer of PVC pipe before 2003. (DoD photo) restructuring) with a corresponding financial Transitioning Iraq’s separation that provides time for restructuring to State-owned Enterprises take place. Once the instruments for an SOE are in place,theGOIenvisionsatwo-tothree-yeartran- Road Map for Restructuring SOEs sition period (operational restructuring) to reach a TheGOITaskForceforEconomicReforms,with market-based, competitive performance model.459 assistance from the United Nations and World Implementation of the SOE reform and re- Bank,recentlyprepareditsRoadmap for Restruc- structuring process is likely to be disruptive in the turing State Owned Enterprises in Iraq,whichis short term. The GOI task force has agreed with the to be submitted to the Council of Ministers for UNDAF’sassertionthatthetransitionofSOEswill approval.454 Of the 177 SOEs, most operate under require mitigating investments to retrain workers four ministries: Ministry of Industry and Minerals and to help them find jobs in other, sustainable (67),Oil(16),Finance(13),andConstructionand economic sectors. Over the longer term, successful Housing (11).455 AccordingtotheGOI’staskforce, execution of the SOE reform strategy will likely theSOEscurrentlyemployabout633,000people, result in parallel changes that are seen as essential Implementation including long-time employees, “former political to transitioning SOEs to a new business model of the SOE reform dissidents and other special groups for whom pro- and attracting new commercial investors, includ- and restructuring vision of jobs has been…a way of achieving social ingreformofthebankingandfinancialservice process is likely peaceandstabilityoverthepastfewyears.”456 industries and modernization of commercial law.460 to be disruptive Reducing GOI budgetary support for SOEs is a Although all SOE conversions are not expected in the short term. large structural reform item, considering that such to be successful, GOI officials have indicated that payments comprise an estimated 5% of current someindustries,suchasconstructionandtextiles, andprojectedGOIexpendituresfor2010.457 Ad- areseenashavingastrongpossibilityofsuccess.461 ditionally,off-budgetarysupportforSOEsin2008 An indication of the commercial viability of some and 2009 may have added an additional 25% to SOEswasevidentintheprivatizationoftheGOI- annual outlays, with even larger amounts in 2005 owned Kerbala Cement Plant. On October 2, private and 2006.458 equity group MerchantBridge—identified as the TheGOItaskforcehasrecommendedatran- largest private equity investor in Iraq—announced sitionalprocessintwosteps.Thefirststepwould adealtooperateandmanagetheplantunder separate the SOEs from ministries (a corporate a 15-year lease. Together with its France-based

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partner LaFarge, the Kerbala Cement Plant is influence over industry modernization, production anticipated to increase annual production from increases, and improvements in farm incomes.466 300,000 tons to about 2 million tons.462 TheGOI’sAgriculturalInitiativeisfocusedonle- gal, natural resource allocation, as well as plant and Task Force for Business and Stability Operations husbandry planning; and it has identified irriga- DoD established the Task Force for Business and tion, seed inputs, storage, commercial farming, and Stability Operations (TFBSO) in 2006 to help revital- applied expertise in dairying, poultry, and organics ize and stabilize Iraq’s economy, including providing as areas of desired investment.467 assistance in the restart or expansion of production at Iraq’s SOEs. TFBSO’s budget from FY 2007 U.S.-funded Agriculture Programs through FY 2010 totaled $545.6 million, of which USAID’s Inma (Arabic for “growth”) Agribusi- $368.6 million has come from CENTCOM opera- ness Program is approaching the completion of its tions and maintenance funds, $174 million from the fundingcycle.Allofthe$144millionallocatedtoit Iraqi Freedom Fund (IFF), and $3 million from the fromtheESFhasbeenobligated,and$36.2million Emergency and Extraordinary Expense Fund.463 Of remainstobeexpended.468 Among Inma’s accom- the $100 million in FY 2007 and FY 2008 IFF fund- plishments this quarter, USAID noted that hatchery ing it received, TFBSO reported that it had obligated courses conducted by Inma successfully spawned $85.7 million and expended $52.6 million for its the 1,900 brood stock of Hungarian carp provided reindustrialization project as of September 30, 2010. to the private sector and GOI hatcheries—a first TFBSOalsoreportsthat41SOEshavebeenable step toward a sustainable aquaculture program.469 to reopen or substantially increase production as a To launch a new initiative that focuses on re- result of its IFF-funded investments and that it has formingIraq’sagriculturalpolicy,USAIDissueda helped dozens of other factories throughout Iraq re- solicitation this quarter to contractors for the Rural start or expand without use of these appropriations. and Agricultural Incomes with a Sustainable En- Although it reports remaining engaged in dozens vironment (RAISE PLUS) program. After receiv- of investor projects, TFBSO has said that security ing no bids for this indefinite-quantity contract, concerns, corporate confidentiality requirements, USAID decided to redesign the activity in consul- and the unavailability of data in Iraq prevent it from tation with the U.S. Department of Agriculture’s providing measurable results of its recent activi- Foreign Agricultural Service.470 ties.464 Although revitalizing SOEs has been part of TFBSO’s core mission, it is unclear what role, if any, Housing and Construction it had in the development of the new Roadmap for Iraq’sNDPidentifiesnewhousingconstructionas Restructuring State Owned Enterprises in Iraq. a“criticalneed.”471 High population growth rates, increasing urbanization, and returning refugees Agriculture andinternallydisplacedpersonscontributeto A distant second in its contribution to government increased demand. Current estimates indicate that revenues behind oil, agriculture is a small but histori- an additional two million units could be construct- callyimportantpartofIraq’seconomy.Onceagricul- ed by 2015.472 Housingcouldbeakeydriverofa turallyself-sustaining,Iraqnowimportsthevastma- sustainable construction sector (including related jority of basic foodstuffs consumed. Still, agriculture industries)—onewhichwouldprovideanoppor- Housing could be plays a critical role in providing employment.465 tunity for successful SOE restructurings as well as a key driver of The Ministry of Agriculture controls two-thirds private-sector growth.473 a sustainable of agricultural land, which is leased or granted Althougharecentsurveyof360seniorinterna- construction sector. to farmers, providing the GOI with significant tional business executives indicated that a majority

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(64%) still consider Iraq too dangerous for doing of trade policy reform needed for World Trade business, 43% viewed construction and real estate Organization (WTO) accession and to support as the most promising non-energy sector in the the drafting of laws and the procedures needed to Iraqi economy.474 SIGIR’s recent discussions with implement them. Since its application in 2004, Iraq Investment Commission officials in the KRG and hasworkedthroughaseriesofpreparatoryrequire- in Mosul indicated that sizable housing developments, including meeting with the WTO Accession mentprojectsinthoseareasareunderway.475 This Working Party in 2007480 and providing follow-up quarter, several large deals were announced: onaseriesofrelatedquestions.481 Throughout this • Iraq’sNationalInvestmentCommissionchose process, the WTO Accession team of USAID has 35 international firms to build one million provided technical, logistical, and administrative new housing units throughout Iraq, including support for the GOI.482 244,000 units in Baghdad, 100,000 in Mosul Thecontinuingscopeofactivitiesinsupportof and 80,000 in Basrah. Final contracts are ex- the WTO project, however, appears in question pectedtobesignednextquarter,withconstruc- after public comments by the Minister of Labor tionslatedforcompletionintwoyearsatacost andSocialAffairsinAugustraiseddoubtsabout of $50 billion.476 theGOI’sinterestinaccession.483 In response to • An Iraqi-Jordanian real estate company, Amwaj the minister’s public statements, USAID said that USAID said that International, plans to construct 3,500 apart- itwillawaittheappointmentofanewCouncilof it will lobby the next ments, a hotel, an office tower, and a shopping Ministers and lobby the next appointed Minister appointed Minister mallaspartofthe“BaghdadGates”develop- of Trade to champion WTO accession efforts. of Trade to champion ment.The$238millionprojectisplannedtobe Meanwhile, USAID ministry advisors continue to WTO accession completed in 2014.477 attend meetings on the service offers and ready the efforts. • Iraq’s first “mini-city”—a village of businesses documentation that must be submitted, should the about 30 minutes from Baghdad—is slated to new Trade Minister re-engage with the WTO.484 includeoffices,restaurants,hotels,banks,stores, carrentals,andgovernmentbranches.Accord- U.S. Trade Missions ingtotheBaghdadInvestmentCommission,the $250 million mini-city is being built to attract U.S. Department of Commerce Trade Mission direct foreign investment, which has been dis- According to the Department of Commerce, “the couraged by fears over security and instability. U.S.-Iraq bilateral relationship is entering a new Theprojectisslatedtobecompleteinthreeto phase of commercial engagement” aimed at bring- five years.478 ing business expertise into Iraq at a critical time. • A UAE-based company agreed this quarter to This quarter, as a follow-on to the October 2009 build a residential compound in Kerbala prov- U.S.-Iraq Business and Investment Conference held incethatwillincludeacommercialmall,andhas in Washington, D.C., the department led its first also expressed interest in building tourist and trademissiontoIraq.HeldinBaghdadduringOc- hotel projects in the future.479 tober 4–6 and led by the Under Secretary of Com- merce for International Trade, the mission hosted 14 U.S. companies, representing industries from Trade Development aviation and telecommunications to engineering and construction.485 Participants received firsthand WTO Accession market information and access to government deci- Tijara’s International Trade and WTO Accession sionmakers,inadditiontoone-on-onemeetings Project is helping the GOI to identify all areas with potential agents, distributors, and partners.486

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U.S. Chamber of Commerce Mission TheU.S.ChamberofCommerce’sIraqBusiness Initiative(IBI)conductedaone-weekmission to Iraq in July–August 2010 to discuss ongoing andfuturerebuildingneeds.Themissionvisited Baghdad and Basrah provinces, where several high-level GOI leaders took part in meetings—including the governor of Basrah, the senior advisor for the Iraqi Ministry of Trade, and deputy direc- tors general from the Foreign Economic Rela- Under Secretary of Commerce for International Trade Francisco tions Department, Private Sector Development Sánchez (left) with Ambassador Jeffrey and Iraq’s Minister of Trade, Dr. Safa Al-Din Muhammad al-Saﬁ, in Baghdad. (U.S. Embassy- Department, Iraq Grain Board, State Company for Baghdad photo) Construction Materials, and State Company for InameetingwiththechairmanofIraq’sNa- Food Stuffs.488 tionalInvestmentCommissionwhileinBaghdad, Advisors from the Chamber of Commerce have theUnderSecretaryreiteratedthebenefitsofGOI emphasizedtheneedtobuildonthemomentum ratification of the Trade and Investment Frame- of gains in political stability and security. The work Agreement, Overseas Private Investment summer tour was a prelude to a series of Iraq- Corporation Investment Incentive Agreement, and relatedeventsthatIBIhadscheduledfor2010, Memorandum of Understanding for Coopera- including meetings held in Washington, D.C., in tion on Supporting Reform and Capacity Building September with U.S. and Iraqi trade officials, as intheAgriculturalSector.Signedin2005,these wellasathirdtrademissiontoIraqinNovember. agreements were meant to assist Iraq in expanding The upcoming mission will feature events in Bagh- regulatory reforms to promote investment.487 dad, Basrah, and Erbil.489◆

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PUBLIC SERVICES

Electricity

As of September 30, 2010, the United States had obligated$5.06billionandexpended$4.95billion to improve Iraq’s generation, transmission, and distributionofelectricity.490

Supply and Demand This quarter, Iraq’s average supply of electricity, its estimated demand for electricity, and the gap between supply and demand all were higher thanever.Averaging6,540megawatts(MW),this Increasedsalesanduseofelectricalapplianceshavecontributedto the widening gap between electricity supply and demand. quarter’s supply (which includes imports) on Iraq’s nationalgridwasabout102MW,orlessthan2%, generatedinIranaccountedfor77%ofthisquar- abovethepreviousrecordhighsetduringthesame ter’s imports.493 The remainder was imported from quarterlastyear.Overthatsameone-yearperiod, TurkeyintoDahukintheKurdistanRegion.The average electricity demand increased by 2,378 MW, agreement for the Turkish imports is set to expire or 23%, to reach 12,604 MW. This quarter’s supply bytheendof2010,andadecisiontorenewitwill met 52% of estimated demand, compared with 63% likely be influenced by how soon the new, 500 MW during the same quarter last year.491 privately owned power plant under construction inDahukstartsoperating.TheKurdistanRegional Production and Imports Government currently expects that two of that Power plant production averaged 5,894 MW this plant’sfourunitswillbeonlinebytheendofthe quarter,up8%fromlastquarterand2%from yearandthattheothertwowillbeoperationalin thesamequarterlastyear.Increasedoutputfrom February 2011.494 hydroelectricplantswasthemostsignificantfactor. Hydroelectricproductionroseby244MW(56%) Growth in Demand The growth in overthepastyearandreacheditshighestlevelin The growth in electricity supply has not kept pace electricity supply has three years; and output from diesel plants increased with demand. Ever since 2003—when the United not kept pace with by134MW(85%),primarilybecausethe“power- Nations lifted economic sanctions on Iraq, the demand. ship” in Basrah came online. These increases were Coalition Provisional Authority raised expecta- partially offset by decreased output from combus- tionsthatIraqiswouldsoonhaveamplepower,and tion turbine and thermal power plants. Compared the United States and the international community with the same quarter last year, combustion beganworkingwithIraqtorebuilditsinfrastruc- turbine production decreased by 65 MW (2%), ture and economy—demand for electricity has whilethermaldroppedby188MW(9%),primarily steadily risen. Electrical appliances have flowed because of unplanned outages.492 intoIraqfromaroundtheworld,andIraqishave Electricity imports this quarter averaged 646 MW, been buying new televisions, refrigerators, heat- down 100 MW (13%) from last quarter and 23 MW ers, and air conditioners. Construction of new (3%)fromthesamequarterlastyear.Electricity water treatment plants, hospitals, schools, and

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commercial buildings has also added to the load Figure 4.16 onthenationalgrid.Andtheoilandgasindustry, Electricity Supply and Estimated Demand, by Quarter, 7/2009−9/2010 Iraq’s largest industrial consumer of electricity, MW maybeonthevergeofrapidgrowth.Moreover, not only is the price of electricity from the national 14,000 grid kept artificially low by government subsidies, Estimated Demand buttheMinistryofElectricity(MOE)lacksthe 12,000 needed systems including electric meters for billing customers. The record demand this quarter reflects 10,000 all these factors, exacerbated by the summer heat.495 8,000 AccordingtotheElectricityMasterPlanpre- Total Supply pared by Parsons Brinckerhoff in consultation with Imports 6,000 Diesel the MOE, demand will likely rise approximately Hydroelectric

10%annuallyforthenext5to10years,roughly 4,000 Thermal trackingestimatedgrowthinGDP.Theplanalso estimatesthattheopportunitycosttoIraqofunre- 2,000 Combustion alized economic growth due to electricity shortages Turbine 496 is approximately $42 billion per year. 0 Q3 Q4 Q1 Q2 Q3 For quarterly averages of domestic production 2009 2010

and imports, relative to estimated demand, since Sources: ITAO/ESD, Electric Daily Performance Reports, 7/1/2009–9/28/2010. July 2009, see Figure 4.16. For quarterly supply and demand since January 2004, see the Insert that ac- months as part of an extortion campaign to raise companies this Report. operatingfundsfortheorganization.497

Attacks on Electricity Infrastructure Efforts To Increase Supplies The number of reported attacks on the electricity USACEreportsthatithascompletedmorethan The number of infrastructure in 2010 has continued to rise—from 600 electricity projects in Iraq.498 When asked this reported attacks 2 in the first quarter, to 16 in the second, to at least quarter when Iraqis could expect to have electric on the electricity 32 in the third. According to USF-I, 13 of this power24hoursperday,thecommanderofUSACE’s infrastructure in 2010 quarter’s attacks caused some damage. One of Transatlantic Division estimated that Iraq would not has continued to rise. them, an August 12 attack on the Mosul Gas power have the infrastructure in place—including genera- plant, halted production at the plant for two days, tion,transmission,anddistributionfacilities—to disrupting supplies on the national grid: meet the 2010 level of demand until 2013 or 2014 at the earliest. Moreover, he acknowledged that Iraq’s 6,667 MW economic growth would continue to push demand 6,302 MW 8/31/2010 8/1/2010 above today’s level.499

4,797 MW 8/12/2010 Electricity Master Plan Most attacks this quarter appear to have targeted AccordingtoU.S.Embassy-Baghdad,theU.S.- transmission towers, and needed repairs were gen- sponsored Electricity Master Plan’s Generation erally completed within a few days. According to Report,releasedonAugust24,makesseveral USF-I, although no specific group or organizations recommendationstotheMOEforaddressing have taken credit for these attacks, al-Qaeda in Iraq the supply-demand gap. Among them, the report has attacked electricity towers over the past few calls for continued importation of electricity from

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foreign sources and for accelerated implementation Primarily as a result of U.S.-funded projects, of the MOE’s current engineering, procurement, combustion turbine plants now generate the largest andconstruction(EPC)contractingprocessforthe share of Iraq’s electricity. In terms of output, how- General Electric (GE) and Siemens turbines pur- ever,thelargestsinglepowerplantnowoperating The report calls chased under the “Mega Deal.” The report also rec- in Iraq is the al-Musayab thermal plant, which has for continued ommends that the MOE transition to natural gas 1,200MWofnameplatecapacityandproduced,on importation of asafuelforgeneratorsoncethenecessarytrans- average, 687 MW this quarter. In terms of name- electricity from portation infrastructure exists, but it estimates that platecapacity,thelargestplantistheBaijithermal foreign sources. the MOE will have to rely primarily on heavy fuel plant(1,320MWofcapacity,butonly309MWof oilforthreetofiveyears.Thereportsuggeststhat production).503 This quarter, there were at least two renewable energy offers little immediate potential announcements regarding plans to build new ther- because it is not economically competitive.500 malplantsthatcouldequalordwarfthecapacityof theal-MusayabandBaijiplants: New Generation Capacity • The acting Minister of Electricity signed a U.S. Embassy-Baghdad reports that there were no memorandum of understanding in July with notable new developments this quarter regarding French engineering company Alstom for three theMOE’s“FastTrackDeal”tobuildthreenew electricity infrastructure projects, including power plants using combustion turbines purchased development of a turnkey 1,200 MW oil-fired from GE. URUK Engineering Services, the contrac- thermal power plant in Basrah.504 torfortheTajisite,commencedworkinMay2010. • In September, the Council of Ministers (CoM) SNC-LavelinandIFC,thecontractorconsortium approved a request by the MOE to expand the for the Hilla and Kerbala sites, have started site capacity of a new thermal plant that Shanghai clearing but have not fully mobilized to the sites ElectrichasbeenbuildinginWassitprovince. pending resolution of a letter-of-credit issue.501 When construction began in 2008, the plant’s Thelettersofcreditforthe72combustion capacity was to be 1,320 MW. The additional turbines included in the Mega Deal with GE and generating units authorized by the CoM Siemens are fully funded. The MOE is currently wouldalmostdoubletheplannedcapacity.At engaged in an EPC contracting process for instal- 2,540MW,theWassitthermalplantwouldbe lation of 20 of the 125 MW GE turbines at three thelargestpowerplantinIraq.505 sites: al-Khairat, Qudas, and Ninewa. In August, the MOE accepted 32 technical bids for those sites, Recently Completed and Ongoing and it subsequently narrowed the list to four bidders U.S.-funded Projects persite.U.S.Embassy-Baghdadexpectsthatfinal USACEreportsthatitcompletedsixelectricity awards will be made in late October and that work projects, with a combined value of $15.3 million, willbeginatthesitesinearly2011andbecompleted this quarter. All were funded by the ESF. The larg- inabouttwoyears.Aftertheseturbinescomeon estwasa$5.8millionprojecttoconstructoverhead line,theywilladdatotalof2,500MWofnameplate and underground transmission lines between Ab- generationcapacitytotheIraqigrid.Accordingto basiya and Hurriya in Najaf province.506 theEmbassy,theMOE’splanstocontractadditional As of September 30, 2010, 19 USACE electricity EPC sites for GE and Siemens units in the future projects with a combined value of $122.4 million are unclear at this time. The MOE expects to issue a were ongoing. The two largest—construction of tender for bids on four independent power producer the Farabi and Jamila substations in Sadr City and projects with GE units from the Mega Deal in late construction of another in Ramadi—are USACE’s October. This process is behind schedule.502 last IRRF-funded electricity projects. Both projects

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wereinitiatedin2006,andtheyarenowexpected to be completed by January 2011 for a total cost of $83.9 million. The other ongoing projects, totaling $45million,arefundedbytheESF.507 AccordingtoUSF-I,29electricityprojects funded with FY 2010 appropriations to the Com- mander’s Emergency Response Program (CERP) were underway at the beginning of this quarter. Theseprojectshadacombinedvalueof$11.9mil- lionandrangedfrom$13,500to$745,484.Ofthe six ongoing projects valued at more than $500,000, four were for the design, installation, and testing of feeder lines in different areas of Diwaniyah; together,theywereexpectedtocostmorethan$2.5 million. The other two large CERP projects (one costing $667,000 and the other $600,000) were for substation maintenance in Wassit.508

Water and Sanitation WorkersinIraqdrilladrinking-waterwell.(USAIDphoto)

Water and sanitation service has improved for complained that some projects were executed with- many Iraqis since 2003, but a substantial portion out GOI supervision and that others were poorly ofthepopulationstilllacksadequateaccessto constructed or left unfinished.514 these essential public services. According to the ASIGIRevaluationoftwoIRRF-fundedwater Iraqi Ministry of Municipalities and Public Works, treatment plants released this quarter supported Iraq now has 251 functioning water treatment this mixed message: 515 Iraqi ofﬁcials plants and an additional 2,330 smaller compact- • Ontheonehand,SIGIRfoundthatthe$185mil- complained that water and reverse-osmosis units.509 Roughly lionIfrazWaterTreatmentPlantintheKurd- some projects were 80%ofIraqislivingoutsideofBaghdadandthe istanRegionfunctionedatnear100%capacity, executed without GOI KurdistanRegionhaveaccesstopotablewater, that88%ofthepeopleservicedbytheplantwere supervision and that others were poorly while the number has climbed to 89% in Bagh- satisfied with water availability, and that 85% constructed or left dad;andmorethan40%ofIraqisnowhaveaccess were satisfied with water quality. unﬁnished. to wastewater treatment.510 To help address unmet • On the other hand, SIGIR found that the demand, the GOI has called for $5.5 billion in $277 million Nassiriya Water Treatment Plant water and sewage projects.511 was producing water at only 61% of capacity As of September 30, 2010, the United States had (a number that fell to 20% whenever the plant obligated $2.65 billion and expended $2.56 billion relied on generators because of electricity short- to rehabilitate Iraq’s water and sanitation sectors.512 ages), that 23% of the people serviced by the AccordingtoU.S.Embassy-Baghdad,U.S.-funded plantweresatisfiedwithwateravailability,and water projects have provided potable water for 5% were satisfied with water quality. almost 9 million Iraqis.513 While Iraqi officials have told SIGIR that they are pleased with a number ForanoverviewofSIGIR’sevaluationofthese of “good” U.S.-funded water projects, they also twoplants,seeSection5.

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Water Availability project, a $98 million effort to provide sewerage Increased rainfall has resulted in a rise in the Tigris- servicetoresidentsinAnbarprovince. Euphrates Watershed by 150%–300% through the •The$4.1millionESF-fundedWater and Sewage first half of this year, but Iraq still suffers from a Master Plan for Babylon province was com- lack of sufficient water for irrigation and drinking. pletedinSeptember. Reservoirlevelsfor2010areexpectedtobeequal to or higher than last year’s levels, but it will take At the end of the quarter, USACE had 30 ongo- timeforIraqtorecoverfromthelingeringeffectsof ing water and sanitation projects with a combined a prolonged drought. In March, Ministry of Water valueof$151.7million.519 The three largest were It will take time for Resources officials predicted that water availability funded by the IRRF, including: Iraq to recover from would be worse in 2010 than in previous years, • The Eastern Euphrates Drain. Originally slated the lingering effects of despite increased rainfall, because more than 70% forcompletioninJanuary2009,this$38.5mil- a prolonged drought. of Iraq’s water originates outside Iraq. Talks on lionprojectisnowexpectedtobefinishedby water-sharing with Iraq’s neighbors have not yet December 31, 2010. The project aims to boost yielded results. Iraqi officials reported that they Iraq’sirrigationcapabilitiesbyreclaimingmore cannot buy enough water to make up the shortfall. than 58,000 hectares of agricultural land and Adding to these problems, a low flow of water in the removing excess saline water from more than Shatt Al-Arab waterway in southern Iraq has caused 400,000 hectares of irrigated land. The project significant backflow of highly saline water from has been delayed by real estate issues and the the Persian Gulf; technical problems at the Mosul need for an additional crossing.520 Damhavereducedtheamountofwaterthatcanbe • The WS/Falluja Sewer System. The $31.7 million controlled and stored at the site; and some irrigation project is the “backbone” of the Falluja Waste systems waste water because of poor design.516 Water Treatment System. Started in 2006, construction of the system has been subject to Recently Completed and Ongoing multiple delays due to design complexity, a lack U.S.-funded Projects of available skilled labor, and what a USACE USACE reported that as of September 30, 2010, official called a “kinetic” security situation. it had completed 924 water-related projects Completion of this segment of the project— for $1.5 billion.517 Thisquarter,itcompletednine previously slated for April 2010 following the projects with a combined value of $28.9 million, announcement of scaled-down plans—is now including the following:518 expected in December 2010. Sewage connec- •The$10millionESF-fundedGarma Water tionsto9,300Iraqihomesaresettobecom- Reverse Feeding project in Basrah province pleted in March 2011.521 upgraded the existing compact-unit water treat- • Meshkab Water Supply Project. Completion ment system. ofthis$23.6millionprojecttobuildawater • The$4.7millionO&Mprogram—fundedby treatment plant in Najaf province is now set Provincial Reconstruction Development Coun- fortheendoftheyear.Thefacilityisdesigned cil (PRDC) monies—at the Dokan-Sulaymani- to provide clean drinking water to about yah Water Network increased the longevity of 200,000 residents.522 theinfrastructureandimprovedsustainability of the operational system. Among USACE’s other ongoing projects are •The$4.9millionIRRF-fundedFalluja Sewer construction of the al-Kibla Sewer and Storm System Pump Station F5 isasegmentofthe Network and the al-Abbas Sanitation Network, ongoing Falluja Waste Water Treatment System both in Basrah province. These two ESF-funded

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projects each cost slightly more than $11 million provide 10 steel navigation buoys at the port was andareexpectedtobecompletedinthespringor ongoing at the beginning of this quarter.527 summer of 2011.523 Meanwhile,theU.S.DepartmentofTransporta- As of the beginning of this quarter, there were tion (DoT) worked with Iraqi officials to improve 106ongoingwaterandsanitationprojectsfunded theshippingcapacityatUmmQasr,whichhasbeen There were 106 with FY 2010 CERP appropriations. They had a com- constrained by silting of the waterways and remaining ongoing water and binedvalueof$20.42million,andthreewerevalued war debris.528 With the completion of debris clearing sanitation projects at greater than $500,000. Two of them (one costing atQuay4,Iraq’sMinistryofTransportation(MOT) funded with FY 2010 $989,000 and the other $650,000) were for refurbish- reported that both the Umm Qasr port and the al- CERP appropriations. mentoftheDiwaniyah Water Treatment Facility Zubair channel are now clear.529 Port infrastructure— inQadissiyaprovince.Thethirdwasa$905,500 including cranes, rail lines, and road connections—has sewage treatment project in Anbar province.524 been rehabilitated, and the port authority has issued commercialcontractsforanumberofberths.530 With the way cleared for larger vessels, the MOT Transportation and announced the opening of new container loading Communications stations at Umm Qasr, as well as new contracts with firms from Germany, France, Kuwait, Great As of September 30, 2010, the United States had Britain, and the United Arab Emirates to recon- obligated$1.13billionandexpended$1.06billion struct more stations.531 to rehabilitate Iraq’s transportation and communications sectors.525 Roads and Bridges USACE reported it had completed 297 village roads Ports and expressways as of September 30, 2010, and an Work continued this quarter on construction of additional16projectswereongoingthisquarter. the$53million,GOI-fundedUmmQasrPierand GrantfundingforthreelargeprojectsinSalahAl- Seawall. USACE reported that construction of sup- Din province expired before they were complete. portingfacilitiesattheport—a$46millionpieceof The al-Sharqat Bridge, originally an $8 million the project that includes power distribution, water IRRF-fundedproject,was88%completewhen supply and distribution, refueling infrastructure, the grant expired. The other two projects, each road access, and lighting—was 98% finished and valued at $7.8 million, were for construction of duetobecompletedbyOctober17,2010.526 twosegmentsofa40-kilometerhighwaycalled Additionally, a $498,000 CERP-funded project to the Baghdad-Kirkuk Carriageway. The northern segment was three years behind schedule when

CargositsattheIraqiportofUmmQasrinBasrahprovince.(GOIphoto) Work on the southern segment of the Baghdad-Kirkuk Carriageway wasstoppedwhentheprojectwas89%complete.(USACEphoto)

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workwasstopped;thesouthernsegmentwas89% complete when work on it stopped.532

Railroads Efforts to expand Iraq’s railroad service contin- uedthisquarter.Followinganinauguraltripin February of this year, the Iraqi Republic Railway Company (IRR) began offering regular weekly service between Mosul and Turkey, and Iraqi officials continued intermittent negotiations to establishraillinkswithKuwait,Jordan,andSaudi Germany inaugurated its first Lufthansa flight to Erbil International Airport earlier this year. (KRG photo) ArabiainabidtocompleteacontinuousEuro- Gulf rail route.533 December 31, 2010. In addition to that change, the U.S.-funded O&M training also continued this ICAA continued this quarter toward its goal of quarterfortherailway’s$48.1millioncommu- meeting International Civil Aviation Organization nications-based train control system, known as (ICAO) standards by requesting a security audit theDigitalMicrowaveRadioCommunications programandasafetyoversightauditprogram, Network(DMRCN).Thefirstphaseoftraining, movesdescribedbyU.S.Embassy-Baghdadas an $826,000 project, ended this quarter, and the “positive steps” toward aviation independence. Ad- second phase, funded at $3.71 million, is scheduled ditionally, a U.S.-funded UNDP contractor has be- to end next year. Training covers on-site corrective guntrainingICAApersonnelinairtrafficservices, and preventative maintenance, system security and aviation security, and flight safety and standards. continuity, and other O&M skills. Segments of the To help enable the ICAA to rely less on expatriate International air travel trackwillusethecommunicationsnetworkasIRR workers, 27 Iraqis began training at the Pan Am to Iraq continued workers become familiar with the digital system.534 International Flight Academy in Miami, Florida, on to increase as several October 3, 2010.536 European and Arab Airports Meanwhile,internationalairtraveltoIraq carriers resumed Transfer of air traffic control to the Iraq Civil Avia- continued to increase as several European and commercial flights tionAuthority(ICAA)proceededonschedulethis Arab carriers resumed commercial flights to Iraq. to Iraq. quarter as the ICAA took control of airspace above Religious pilgrims, tourists, and business travelers 15,000 feet in the northern half of Iraq on Septem- nowhaveexpandedoptionsonbudgetandpre- ber1,2010.Thenextphaseoftransferisslatedfor mium carriers.537 The Erbil International Airport’s November 2010, when the ICAA is scheduled to new terminal and runway opened for business in take control of air traffic above 15,000 feet in the September, and commercial flights between Dubai southernhalfofthecountry.TheICAAhadprevi- and both Erbil and Sulaymaniyah began this quar- ously been in control of airspace only above 24,000 ter.Germany’sLufthansa,AustrianAirlines,and feet. Total control of airspace is slated to transition a subsidiary of Air France are in discussions with to Iraqi controllers at various times throughout the ICAA to begin commercial flights to Baghdad. 2011, depending on communication, navigation, Iraq’s MOT announced this quarter agreements and surveillance improvements.535 with Saudi Arabia and Yemen to resume commer- On August 1, 2010, the ICAA stopped relying cialflightsbetweenthetwocountriesforthefirst on DoS to oversee Iraq’s air traffic control services time since the first Gulf War.538 For an overview of contract, and instead has contracted with the air carriers operating commercial flights to Iraq, Washington Consulting Group for services through see Table 4.9.

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Telecommunications Table 4.9 The completion date for construction of the Foreign Airlines with Flights into Iraq, as of 10/2010 $18.3 million al-Mamoon Exchange and Telecom- Airports Outside of Airports in Kurdistan Region Kurdistan Region municationsCenterinBaghdadisnowestimatedto be June 2011. USACE reported that as of October 2, Airline Baghdad Basrah Najaf Erbil Sulaymaniyah 2010,theIRRF-fundedprojectwas53%complete. Air Berlin Construction of the tower previously had suffered Air Sweden

from lack of progress by the contractor, and the Atlas Jet 539 project was re-awarded in July 2009. Austrian Airlines ThetotalcellularlinesinIraqexceeded21mil- Cham Wings Airlines lioninMarch2010,andcell-phoneusecontinued to grow this quarter, as Zain, a Kuwaiti telecom Etihad Airways company with a 15-year license to operate in Flydubai Iraq, announced plans to launch operations in Gulf Air northernIraqinJanuary2011.Thecompanysaid Lufthansa

it expects to gain 2 million subscribers by the end Mahan Air of2011.ZainiscurrentlyIraq’sbiggesttelecom Middle East Airlines providerandcompetesprimarilywithAsiaCell Qatar Airways and Kurdish-run Korek for market share of Iraq’s mobile phone industry.540 Royal Jordanian Turkish Airlines

Viking Airlines Health Care Zozik Air

Note: List may be incomplete or may change.

U.S.-funded Construction Sources: The websites of each airport and airline. of Health Care Facilities USACE estimated that as of September 30, 2010, Missan Surgical Hospital its completed projects had enabled Iraqi hospi- The Missan Surgical Hospital project has suffered tals to treat approximately 6.6 million inpatients problems and delays since construction to build and4.6millionoutpatientseachyear.541 This the 80-bed hospital began in November 2007. quarter, USACE continued to oversee three ESF- U.S. Embassy-Baghdad reported that costs for both funded health care projects, the largest of which phases of construction were $13.8 million, but isconstructionoftheMissanSurgicalHospital, USACE reported that both phases were slated to described below. The others included construction cost $12.6 million.544 ofan$8millionsurgicalwingatBa’qubaGeneral U.S. Embassy-Baghdad reported that the Hospital in Diyala province and upgraded facilities project has been hampered by limited skilled attheIbnSenaCardiacCenterinMosul,Ninewa labor, interference in hiring by a local Iraqi leader, province,atacostof$4million.542 a high water table on site that required significant As of the beginning of this quarter, there were unexpected work, attacks on security personnel, 31 ongoing health care projects funded with FY 2010 andtheinabilityofalocalcontractortoincorpo- CERP appropriations. They had a combined value rate the high-tech designs originally planned for of$4.3million,andthelargestwasa$980,000 the hospital. The plans were modified so that Iraqis project to refurbish a wing of the Hammad Shehab wouldbeabletosustainhospitaloperationsafter Hospital in Baghdad province.543 the facility is transferred to their control. SIGIR’s

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October 4, the MOH transferred 40 patients from an area maternity and children’s hospital to the Basrah facility to receive inpatient treatment.548 Construction of the 94-bed hospital took sig- nificantlylongertobuildthanoriginallyplanned becauseofinadequatecontractorperformance, unrealistic schedules, security issues, and unreli- able GOI follow-through. It was also significantly more expensive than the original estimate of TheMissanSurgicalHospitalunderconstructioninMissan province. (USACE photo) $37million.Ultimately,theUnitedStatescon- tributed $103.9 million to build the hospital, ac- 2009 inspections of the facility revealed a work- cordingtoU.S.Embassy-Baghdaddataprovided force too small for the job, poor construction, and this quarter. Spain (through the UNDP Trust a lack of design drawings for water supply and Fund),theMOH,andProjectHOPEcontributed wastewater facilities. This quarter, USACE reported the remainder.549 thattheprojectschedulewastoberevisedbythe contractorandthatsomedesignswerestillnotup USAIDHealthCareProjects to acceptable standards for hospital construction. USAIDprojectshavefocusedonimmunizingchil- The completion date is now set for June 2011.545 drenagainstchildhooddiseases,renovatingand AccordingtoU.S.Embassy-Baghdad,the equipping hundreds of primary health care centers, Ministry of Health (MOH) has begun to identify training staff, and distributing iron supplements to potential staff sufficiently trained to operate the pregnant women.550 Iraqstillsuffersfromalackof hospital, but has opted not to order necessary doctors,andUSAIDhasbeenworkingtoalleviate equipmentorfurnitureuntiloutstandingcon- the physician shortage by encouraging hospitals struction issues are resolved.546 to rely on other health care professionals, such as nurse practitioners.551 Although the Basrah Children’s Hospital USAID’s $5 million Health Promotion hospital’s connection The$165millionBasrahChildren’sHospitalwas PrograminIraqaimstohelptheMOHdesign, to the electricity grid inauguratedinMay2010,nearlyfiveyearsbehind implement, and evaluate programs to improve is complete, frequent schedule, but did not open until September 20— public awareness of health issues, such as malnu- outages and voltage andthenonlyforoneday,duetoproblemswith trition and childhood obesity. As of September ﬂuctuations disrupt the electricity supply—according to U.S. Embassy- 30, 2010, $2.5 million had been expended, and operations. Baghdad. It re-opened for pediatric outpatient USAID is currently considering an extension of care on September 27. Although the hospital’s the program.552 connection to the electricity grid is complete, frequent outages and voltage fluctuations disrupt operations. The hospital has generators, but they Education do not provide the steady output required to run high-performance equipment.547 Iraq’sMinistryofEducationIGreportedsevere TheMOHhadplannedtoopenthehospital overcrowding in Iraqi schools, with classes con- incrementally, with the goal of having a fully ducted in shifts at many schools that would other- functioning pediatric oncology hospital operat- wise hold 80 to 100 students per classroom. Some ingwithintwoyears.Itwasunclearhowthelack schools are built of mud, classes are held in tents, of steady electricity might affect that schedule. On and many schools lack bathrooms, according to

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Figure 4.17 Classroom Density in Iraq’s Public Schools

High Schools Elementary Schools

Dahuk Average Number of Dahuk Students per Classroom 80+ Erbil Erbil

Ninewa 65–80 Ninewa Tameem Sulaymaniyah 50–65 Tameem Sulaymaniyah 35–50

Salah Al-Din Salah Al-Din

Baghdad Baghdad Diyala Diyala

Anbar Anbar

Kerbala Babylon Wassit Kerbala Babylon Wassit

Qadissiya Missan Qadissiya Missan Najaf Najaf

Thi-Qar Thi-Qar

Basrah Basrah Muthanna Muthanna

Note: Information is not available for the Kurdistan Region.

Source: GOI, Ministry of Education, response to SIGIR data call, 10/12/2010.

the official.553 Figure 4.17 shows the average num- increased staffing needs. Although thousands of ber of students per classroom in the 15 provinces Iraqi schools have computers, demand outpaces The ministry’s outside the Kurdistan Region. supply, and many cannot be operated because of IG reported that Theministryplanstobuild12,000additional electricity shortages.554 bureaucracy and schools in the next five years to address cur- To address some of these issues, the IG reported corruption contributed rentshortagesaswellasexpectedpopulation thathisofficeinspected432schoolsthisyear,held to poor budget execution last year. growth. However, according to the ministry’s 15 seminars on integrity and anticorruption, au- IG,theeducationsectordoesnotreceivesuf- dited95ministrycontracts,andevaluated10of40 ficientcapitalbudgetallocations,andtherehave departments and general directorates. Of 921 cases reportedly been problems obtaining land deeds received by the IG, 220 are under investigation.555 for planned sites. Notwithstanding the long-term needforlargerbudgetoutlaystoserveIraq’s UN Reports on Literacy school children, the ministry’s IG reported that This quarter, the UN Inter-Agency Information bureaucracy and corruption contributed to poor andAnalysisUnit(IAU)releasedareportclaiming budget execution last year. Moreover, many thatoneinfiveIraqisbetweentheagesof10and49 schools under construction remain unfinished cannot read or write. The IAU found that illiteracy because contractors are not equipped to fulfill wasmoreprevalentamongwomen(24%vs.11% building contracts. Teachers’ salaries remain formen)andIraqislivinginruralareas(25%vs. low,whichhasdiscouragedrecruitmenttomeet 14% for urbanites).556

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U.S.-funded Education Projects Response Fund grants for a wide range of activities, USACE reported that as of September 30, 2010, including educator training and projects to provide it had completed 1,159 construction projects in books,equipmentanddistance-learningtechnol- the education sector, including three ESF-funded ogy.560 DoSalsosupportsIraq’sFulbrightForeign 12-classroom schools costing more than $1 million Student program—the largest in the Middle East— that were finished this quarter in Qadissiya, Thi-Qar, through the Visiting Scholars Program. This sum- and Babylon provinces. In addition, it had 27 on- mer, 25 Iraqi professors, administrators, and deans going projects to build or rehabilitate schools.557 spent 10 weeks at U.S. universities.561 There were also two ongoing non-construction PRDC projects: a $245,000 ESF-funded segment of a $5.6 million nationwide project to provide one-on- Public Distribution System onementoringtoIraqiengineersanda$2.6million ESF-fundedsegmentofa$4.8millionprojecttotrain Iraq’sPublicDistributionSystemdeliversabasket The Iraqi Grain Board professionalengineers.USACEoverseesbothproj- ofgoodstoIraqis,providingasafetynetforap- announced that the ects, which are scheduled to end in March 2011.558 proximately2.8millionpeoplewhorelyonthe country will have AccordingtodataprovidedbyUSF-I,there rations for subsistence.562 This quarter, the head enough wheat were 133 CERP-funded education projects valued of the Iraqi Grain Board, under the Ministry reserves to distribute at nearly $16.1 million ongoing at the beginning of Trade, announced that the country will have to the public through of this quarter. The largest was a $498,000 project enoughwheatreservestodistributetothepublic the end of this to build a youth center in Thi-Qar province. There throughtheendofthiscalendaryear.Theboard, calendar year. wasalsoa$490,000projecttoprovidemedi- whichpurchasesandallocatesstaplecropsand calsuppliestotheBaghdadVeterinaryCollege. distributesthemthrougharationingprogram, Dozens of elementary and secondary schools were plans to solicit tenders to rice suppliers to ensure under construction, including at least 59 in Diyala that the staple crop meets Iraqi demand until next province,wheretheGOIhasfundedethnosectar- year.563 The board continued to import rice from ian reconciliation.559 Vietnam and elsewhere, and claimed that Iraq The DoS-run PRT program provides support for remainedunaffectedbyRussia’sAugustdecision the sector through more than $4 million in Quick to ban grain exports through December 2010.564◆

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