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Rebuilding Iraq: Iraqi & International Ownership of
Reconstruction
As
Iraq attempts to rebuild its national economy and
resource base it must also contend with a rapidly
deteriorating security situation and the legacy of
nearly three decades of mismanagement and human resource
degradation. In this article Murad H. EL-Anis analyses
the relationship between Iraqi and international
management of reconstruction projects in the country and
how particular models of reconstruction are of greater
value to the long-term rehabilitation of Iraq.
Murad H. EL-Anis
With no imminent end to civil strife and insurgency in
sight and an economy that simply cannot get back on its
feet in a climate of incredible instability, rebuilding
Iraq is becoming increasingly complicated. The failures
of the US, the international community and the fledgling
Iraqi democracy to rectify the major problems of Iraqi
rehabilitation, have led to the prolongation of Iraqi
suffering, a worrying rise in militant Islamism,
regional insecurity, and political fallout for the US
and its partners.
Economically, a recovery of GDP to US$29.2 billion by 2006
is a significant increase on the US$19.0 billion pre-war
level but is still less than 25 percent of the 1970
decade average of US$122.4 billion in current value.
With formal welfare safety nets covering less than 5
percent of the population and the vast majority thus
vulnerable to financial crises, and the threat of severe
health and food emergencies, the situation for the
average Iraqi citizen is worse now than it has ever
been. The UN World Food Programme provided a stark
example of the gravity of the situation in 2004 when it
announced that over a quarter of Iraqi children suffer
from chronic malnutrition. This level has fallen, but
only marginally, a limited development which is
susceptible to reversal as 25 percent of the entire
population are entirely dependent on insecure
international food aid.
The challenge of rebuilding Iraq into a prosperous, stable
and active state with a democratic political system and
a wealthy society is more urgent and pressing than ever.
One of the key challenges in the successful rehabilitation
of an occupied and devastated country is the progress in
transition of power and decision-making from the
occupying authority – the Coalition Provisional
Authority (CPA) in this case – to the emergent
government and state system of the occupied – the Iraqi
Interim Government (IIG). This allows for the withdrawal
of what is always going to be an unwelcome foreign
presence, the establishment of national
self-determination and the ultimate necessity of control
over one’s own governance. In Iraq, the US-led
occupation forces are as much a cause for insurgent
violence as the country’s diverse religious and ethnic
compositions are to the sectarian violence that is
eroding hopes for stability.
The re-establishment of strong public and private
institutions, a re-emergence of Iraq’s traditionally
capable civil service cadre and a sound legal system are
all seen as essential. But prior to the success of
implementing these systems, the economic and
infrastructural health of the country needs to be
achieved. It is here that a fine balance between Iraqi
ownership of reconstruction and the need for
international capital involvement is needed.
Iraqi Models of Reconstruction
The main engine for reconstruction in Iraq is driven by oil
wealth, which still accounts for almost 70 percent of
GDP and 98 percent of exports. The Bush Administration,
which earmarked US$18.4 billion for US reconstruction
projects, has spent the largest part of this on security
and defence projects (30 percent), with Direct
Services/Investments and Remaining Contracts Funds
accounting for only 27 percent. Salaries & Insurance
were assigned 12 percent in October 2003 when the fund
was approved by Congress, while Profits were assigned 6
percent and an Overhead of 10 percent was incorporated.
It is believed that 15 percent of the funds spent so far
have been lost to corruption, fraud and
mismanagement.[2] This focus on delivering security is
prevalent in the majority of international and
government investments in Iraq, where direct capital
injection is markedly lower than expenditures on the
security and insurance sectors.
Following the transition of governance from the CPA to the
IIG in 2004, the latter took several steps to strengthen
ownership of reconstruction, define policy-setting
processes and address institutional fragmentation. It
created Inter-ministerial Committees to tackle economic
reform, oil policy, reconstruction, privatisation and
reorganisation of the Iraqi Stock Exchange.[3] It also
drafted a medium-term National Development Strategy (NDS)
that trained its sights on strong social safety nets,
economic reform and liberalisation and economic
diversification. Capacity building, sustainable
development, minimised unemployment, an effective
reconstruction programme, and a stable security
environment were targets at the heart of the NDS.[4]
Financial and governance transparency as well as
comprehensive planning and professional management were
also seen as fundamental to the successful
implementation of the NDS.
By drawing upon international financial assistance and
knowledge transfer the NDS has sought to focus upon the
establishment and expansion of competent Iraqi
institutions in rebuilding Iraq. Many international
donors such as the World Bank and the Arab Development
Bank have cooperated closely with this policy,
attempting to enhance the ability of Iraqi institutions
to absorb and manage the large aid funds desperately
required to reach the Iraqi economy quickly.
The problematic security situation and evolving legal and
institutional environment have posed significant
obstacles to the conduct of this relationship. Early and
selective engagement by Iraqi institutions with
international donors, close monitoring and evaluation
have been combined with a spotlight on recipient
execution and coordination of project implementation to
attempt to overcome these issues. This strategy has had
mixed results, in which some projects – be they
infrastructural or social, such as educational and
skills training of labour force sectors – have enjoyed
rapid implementation with few problems, whereas others
have been impeded by mismanagement, a lack of
transparency and physical or human loss as a result of
violence.
As the initial stages of reconstruction – involving the
attempted upgrading of the oil industry and its
infrastructure, and an exertion of control over the
security situation – have for the most part failed, the
Iraqi Ministry of Planning and Development Cooperation (MPDC)
has turned to more complex multilateral institutional
development. This move has been inspired by the need to
implement comprehensive Iraqi strategies to counter the
issues interfering with reconstruction while undertaking
broader, more effective projects by combining the
judicious mix of existing structures and institutions
with new procedures, temporary institutions and external
support.
Sustainability and ownership of development is widely
understood to be strengthened by the direct link of
international assistance and recipient institutions
rather than through independent temporary international
structures that do not distribute resources within the
recipient economy. Although this linkage can become
confused when complex multilateral recipient
institutions and public distribution systems are
adopted, there are a number of potential advantages.
Costs can be lowered by removing the need for an
independent recipient institution building parallel
structures, and a harmonisation of processes is possible
between a broad range of donors and the plethora of
recipient demands.
This strategy is closely aligned with the UN Development
Programme (UNDP), the Organisation for Economic
Cooperation and Development (OECD), and the World Bank’s
own assistance approaches as well as other major players
in the development community operating in Iraq, making
it a promising approach. The Monterrey Conference on
Financing and Development of March 2002 [5] and the 2003
Rome Declaration on Harmonisation [6] both advocate the
plurality of relationships designed by the NDS, and
there are examples of failed reconstruction programmes
where fragmented strategies have been implemented – such
as Ethiopia in the 1980s-1990s.
On 2nd March 2005, the Paris Declaration on Aid
Effectiveness, ratified by 91 countries and 25
international organisations, identified three key
commitments for the successful delivery of international
aid and domestic ownership of reconstruction: (i)
development strategies should be designed and led by
recipients, (ii) donors should harmonise their work and
base their approaches on recipient strategies and
institutions, (iii) donors and recipients should
collaborate on capacity building and ensuring aid
effectiveness. The NDS had therefore been popular with
both recipient institutions and international donors.
While this strategy is not ground-breaking and has
already been implemented in other recipient countries,
it has helped the development of good practices and
cemented agreements on its prioritisation.
How Much Reliance on Domestic Institutions?
With a broad consensus on the need to rely on Iraqi
institutions and strategies in the reconstruction
process, the question of how much reliance has been
raised. International donors, after all, are not willing
to forward resources to recipients based entirely on the
latter’s suggestions. The recipient institutions must
design the delivery and public distribution of the
resources granted in accordance with recognisable
standards. This has commanded regular assessments and
examinations of international donor practices and
interests.
Likewise, international donors also conduct regular
assessments that, like recipient institutions in Iraq,
explore implementation practices, achievements, capacity
and management of the relationship. For instance, Iraqi
recipients have worked extensively to coordinate
projects with the interests of the Development
Assistance Committee (DAC) of the OECD being taken into
consideration, while the DAC has closely reviewed the
practices of the Supreme Audit Board in Iraq.
Such assessments are coordinated by existing diagnostic
tools, such as the World Bank’s Country Procurement
Assessment Report (CPAR), which analyses a recipient
country’s procurement practices, collaboration with
international donors and public procurement policies.
Another system through which policy-guiding
assessments are conducted is Country Financial
Accountability Assessments, which diagnose financial
management and systems of accountability as well as
weaknesses in the recipient system – such as a severe
underperformance in the Iraqi Public Distribution
Service (PDS).[7] In order to assess a recipient
country’s financial position, Public Expenditure Reviews
(PERs) are conducted by donors, as are Environmental and
Social Screening Accounting Frameworks (ESSAFs), which
gauge a recipient’s ability to monitor any environmental
and social impacts of assistance and reconstruction
projects.
As a result of the frail security situation prevalent
throughout much of Iraq, many international donors have
not been able to conduct these types of diagnostic tests
to better direct the relationship between them and the
multilateral recipient institutions of the country.
Instead, they have had to rely more upon Iraqi and other
Arab assessments, often conducted by regional
organisations that have more secure and established
relationships with Iraqi institutions – such as the
Islamic Development Fund and various Amman-based
investment banks. Iraqi institutions, on the other hand,
have benefited from far greater access to the
international development community where they have been
able to express the findings of their own assessments as
well as to promote the Iraqi reconstruction
agenda.
Due to this apparent imbalance in educated inputs to the
reconstruction process, international donors have become
very much orientated towards the objective of relying on
Iraqi institutions, while promoting transparency and
accountability. This has given Iraqi reconstruction
projects the initiative and Iraqi development
institutions the opportunity to take control of the
rehabilitation of their country’s infrastructure and
economy. However, the downside to this arrangement is
the simple reluctance of international donors to inject
resources – in particular financial aid, which is widely
susceptible to corruption and fraud.
Summary
Fundamental to the long-term progress of the Iraqi economy,
knowledge transfer and human resource development have
become more readily available to Iraqi institutions.
Increasingly, funded secondments have been utilised to
train Iraqi civil service and private sector personnel
in specific project management skills needed to oversee
the transitional process of stabilising the country’s
recovery. Technology transfer has also been a source of
assistance widely available to infrastructural
development projects, as have pledges of foreign-based
facilities. However, the security situation has more
often than not impeded the actual application of these
resources to reconstruction projects.
Without a genuine involvement of Iraqi institutions at the
centre of projects the long-term capacity of sustainable
development will not be realised. By focusing the
relationship between international assistance and Iraqi
recipients upon the commitment to affect positively the
lives of Iraqi citizens within the framework of
collaborative Project Management Teams (PMT’s) and other
integrated Project Implementation Units (PIU’s), the way
forward has become clearer. Detailed planning, extensive
research and continual supervision, the setting of
realistic targets, sequencing of intervention and
transference of ownership, as well as effective donor
and sector coordination have all been vital ingredients
to the success of reconstruction projects and should be
areas built upon in the future.
Should this diligence and a firm commitment to the
inclusive nature of Iraqi regeneration continue, the
renovation and re-emergence of a prosperous Iraqi
economy might be a mid-term possibility, which, in turn,
might defuse the precariousness of the security
situation.
References
[1]
UN
Statistics Division, Iraq Country Profile, (UNSD,
2006)
[2] Centre for Strategic and International Studies,
(December 2004), Progress or Peril? Measuring Iraq’s
Reconstruction, The Post-Conflict Reconstruction
Project, (CSIS, 2004)
[3] Hadad-Zervous, F., The World Bank in Iraq: Iraqi
Ownership for Sustainability, Iraq Country Unit,
(World Bank, 2005)
[4] Iraqi Ministry of Planning and Development, National
Development Strategy: 2005-2007, Iraqi Strategic
Review Board, (IMPD, 2005)
[5]
Rome
Declaration on Harmonisation, Statement of the
High-Level Forum on Harmonisation, February 24-25,
(Rome, 2003)
[6]
UNESC,
The Monterrey Consensus, Monterrey Conference on
Financing and Development 18-22 March 2002, (Monterrey,
2002)
[7]
World
Bank [a], Considering the Future of the Iraqi Public
Distribution System, Economic and Social Development
Unit, Middle East Programme, (New York, 2006) |
