The disappearing dollars

Al Rahim is not happy about the accusations tossed at Iraq's government for not putting reconstruction money to good use. He calls these allegations "inaccurate" stating emphatically, "the Iraq government did not have any control of the money". US$18.2bn of US money remained strictly under the control of the US through the CPA.

"The Iraqi government had no say in how that money was spent. That was allocated for the reconstruction of Iraq and the CPA was given authority to spend it. And they had very high-sounding programmes," he says, adding that the contracts were largely allocated "by negotiation to a handful of mainly American companies." The result, money was spent "with not much to show for it".

In order to find out where Iraq's reconstruction money has gone, Al Rahim suggests visiting the US government's general accounting officer in Washington. He believes "it's their job to say how they spent the money".

As a private company, MerchantBridge has no reliance on government contracts and invests its own money to secure contracts. Operating in the war-torn country is anything close to an easy task. Like many, Al Rahim says the first risk is security, which unsurprisingly resulted in draining a huge portion of reconstruction money.

"What we do know and what we are seeing is that maybe up to 40% of the funds actually went to foreign security firms. Just one very small and silly example of the prices these firms charge: to deliver an employee or an American company from the airport to the green zone, from one protective enclave to another, they will charge US$7000 for a 15-minute drop," he claims.

He adds that most of these companies manage large amounts of their work overseas, therefore most of their revenue goes to foreign offices and "none to Iraq".

Al Rahim identifies huge discrepancies in the spending of reconstruction money, pointing out that from the US$1bn allocated to the healthcare sector, US$600m was spent on nothing to do with hospitals, medical equipment, or doctors. He proposes that from every US$100, only US$40 was allocated to the project.

"In addition to corruption and other unknowns, maybe from every dollar only about 20 cents ended up going to the actual project," he says. The result is that all reconstruction money has been spent and Iraq "has not received anywhere near the full impact of the money". Referring to the often quoted US$44bn estimated to have been spent on Iraq's reconstruction to date, Al Rahim is skeptical. "We certainly can't see US$44bn worth of projects. We can see a few billions, maybe three or four, and many of those projects were left uncompleted."

One of the reasons behind incomplete projects, is corruption among foreign contractors. Eventually they decide, "‘We've had enough of Iraq'" Al Rahim says, and continuing in the same vein, "‘we've milked this and all the rest is hard work,' while profits have all been taken upfront".