Iraq Reconstruction -- Mix of Progress, Problems and Uncertainty

Baghdad, Iraq, May 1, 2006 — -- Three years into the $21 billion dollar U.S.-led reconstruction effort here, a report by an independent auditor finds substantial progress, although the gains are laden with setbacks, problems and uncertainty.

The good news?

In most parts of the country now, Iraqis have more electricity than before the war, but here in Baghdad people have power for just eight hours a day. Those who can afford the price still rely on generators to keep the lights on and the air conditioning working.

Today's report from the special inspector general for Iraq reconstruction finds that for every step forward the country is still held back by glaring gaps in security.

"It's not going well. That's really the simple answer," said Michael O'Hanlon, of the Brookings Institute. "It's very hard to see how progress can be made in the economic realm without progress first in the security realm."

For instance, repairs are nearly complete on Iraq's 107 railway stations, but because of security fears, only 4 percent of the trains are actually running.

Even the oil industry, the economic sector that is most crucial to Iraq's economy, has been riddled with failure due to corruption and insurgent attacks.

Even though $1.7 billion in U.S. funds has been pumped into the oil industry, production is still below prewar levels at 2.2 million barrels a day. Before the war, Iraq produced 2.6 million barrels a day.

American involvement in reconstruction will soon end. With more than 60 percent of the funds already spent, the report says many projects will likely never be finished.