May 15, 2003	Thursday	Rabi-ul-Awwal 12, 1424

LONDON: In a matter of days both the US and Britain have lost senior aid figures. It is not a coincidence. To different degrees they are both victims of the bungled approach to rebuilding Iraq. Former UK minister Clare Short put her career and reputation on the line by staying in office to see through a sound reconstruction programme. In the US Barbara Bodine was directly responsible as US coordinator for rebuilding central Iraq. Both have been crushed by an impossible contradiction: the US seems to want to have its country and eat it. Publicly committed to nation rebuilding but also trapped in a network of domestic corporate obligations, they are unable to do the right thing.

As troops in Iraq wonder why they are still being shot at, the rest of us wonder if the US and Britain can prevent a great and inexorable unravelling in the country. The answer could be straightforward — a simple matter of economics and enlightened self-interest.

The world has had lots of practice at rebuilding after conflicts and disasters and several clear lessons have emerged. The most important is that failing to ensure local livelihoods is the best way to create the conditions for ongoing conflict and civil strife. The unseemly hovering of engineering and service companies from the pro and anti-war states over fat US aid and reconstruction budgets missed the point. Used wisely this money could genuinely be used to glue a broken nation back together and fulfil the portentous rhetoric of the conflict’s protagonists to the well-being of Iraq’s population.

Work for the Red Cross’s world disasters report has shown that in post-conflict situations, creating a variety of income-earning opportunities is essential to demobilising a population. It can also help prevent new patterns of suppressed ethnic tension emerging. But this means that rather than handing out huge contracts to Bechtel or Halliburton, the benefits of reconstruction need conscious steering towards indigenous enterprise — and preferably towards micro, small- and medium- sized enterprises that maximize job creation.

Iraq’s massive and now mostly redundant army will need something to do. In Uganda, access to land was crucial to the successful reintegration of former combatants into the population.

But more than access to basic assets, the full dynamics of successful local economies need to be taken into account. In 2000, a major obstacle to peace and reconciliation in East Timor, according to the International Labour Organization, was the 70 per cent unemployment rate. Millions in aid poured into East Timor through UN operations and from bilateral donors. How come it did so little to boost the local economy?

The answer there, or in Afghanistan or Iraq today, is tediously repetitive. Post-conflict or post-disaster economies are like leaky buckets. At precisely the moment that a large amount of aid is made available for reconstruction, the cash is most likely to leak straight out of the local economy, back to civil engineering firms in the country of origin. It doesn’t just happen, as in Iraq, under the aegis of “to the victor the spoils”. In East Timor even the cash in the pockets of UN peacekeepers and aid workers leaked out as they stayed in accommodation owned by foreign entrepreneurs and ate in foreign-owned restaurants. A tax on building materials — exempted for aid organizations — dissuaded private local repairs as people waited for foreign organizations to do it for them. An estimated $10m a month spending money from the aid community went to Singapore and Australia, according to one aid worker.

As it stands, the controversial US firms Bechtel and Halliburton are winners in the reconstruction auction. Yet, these could be pyrrhic victories for the close ties between the US administration and its leading corporations.

It is almost always both cheaper and better for long-term development to maximize local procurement.

A deliberate policy, following the US-British rhetoric, that Iraq will be run by Iraqis, should be that Iraq will also be rebuilt by Iraqis. This will have the double benefit of saving money and leaving a local population more concerned with the challenge of reconstruction than growing resentment at their military occupiers.

Following a peace agreement in Djibouti a bombed district was to be rebuilt by a French sub-contractor importing most building materials from abroad. In that case the positive local economic impact, according to the ILO, “would be absolutely zero”.

After a natural disaster in Vietnam, the Vietnamese government rejected expensive Dutch proposals for flood control measures. They managed to do repair work at half the cost, at the same time developing their local capacity to control future disasters.

Debt relief, for so long a politically contentious issue, was suddenly discovered as a moral cause by the US in the context of Iraq after their victory. Any serious commitment to rebuilding the country and preventing a downward spiral of further conflict and an endless low-level war of attrition, means that Iraq needs to be set to work to rebuild itself. It has the capacity and expertize. Frustration is already building that reconstruction must wait until the foreign contractors are ready. If we don’t get it right, it will be more than a few political careers that are lost.—Dawn/The Guardian News Service.



(The writer is policy director of the New Economics Foundation in London and a co-author of the World Disasters Report)