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OCTOBER 31, 2011

U.S. Agency Says Iraq Will Need Oversight

By NATHAN HODGE

WASHINGTON--The U.S. mission in Iraq will still require continuing and "robust" oversight after American military involvement in Iraq draws to an end, the watchdog agency that oversees reconstruction work there said.

The Obama administration earlier this month announced plans to bring all U.S. forces home from Iraq by the end of the year. But that will leave the State Department in charge of a sizable diplomatic mission and thousands of private security contractors to protect U.S. government employees. Meanwhile, a small cadre of U.S. military personnel and contractors will help oversee arms sales and training for the Iraqi military.

There are fewer than 40,000 U.S. troops still in Iraq, occupying 18 bases throughout the country. At the height of the war in 2007, 171,000 U.S. troops were stationed there.

In a quarterly report sent to Congress on Sunday, the oversight agency, called the Special Inspector General for Iraq Reconstruction, said training and reconstruction projects would require continued monitoring.

Since the 2003 invasion that toppled the regime of Saddam Hussein, the U.S. government has committed more than $61 billion to reconstruction projects in Iraq, including about $8 billion to train and equip Iraq's new police forces.

In its report Sunday, the agency sounded warnings about one key U.S.-run police-advisory mission overseen by the State Department, saying it is "vaguely defined" and that Iraqi officials have raised questions about its benefits.

At issue is the State Department's police-development program, which is supposed to help provide mentors to Iraq's fledgling police forces. A recent audit by the special inspector general found that 88% of the funding for the program--projected to cost between $500 million and $900 million in fiscal 2012--would go toward overhead, such as security, housing and other costs of supporting the advisers.

"What tangible benefit will Iraqis see from this police-training program?" the new report quotes Iraqi Senior Deputy Minister of Interior Adnan al-Asadi as saying in a recent official meeting. "With most of the money spent on lodging, security, support, all the [Ministry of Interior] gets is a little expertise, and that is if the program materializes. It has yet to start."

In a response attached to the audit, the State Department disputed some of the findings, saying the police program had started on Oct. 1 with an initial contingent of 90 advisers, about half the planned total. The letter added that it was "looking at reducing our [overhead] over the next few years."

The presence of private security contractors has been a sore point in U.S.-Iraqi relations. In recent congressional testimony, Amb. Patrick Kennedy, the State Department's top management official, said the department had "refined and expanded its plan for oversight and operational control" of its private guard force.

In a separate audit released on Sunday, the watchdog agency issued a gloomy assessment of a major U.S. development project: a wastewater treatment facility in the city of Fallujah, a project that began in 2004 in the midst of a violent insurgency. Originally projected to cost around $35 million, the project cost more than $100 million and took seven years to complete.

The system serves around 38,400 residents, far short of the 100,000 people who were originally supposed to be served.

"Coupled with the fact that the outcome achieved was a wastewater-treatment system operating at levels far below what was anticipated, it is difficult to conclude that the project was worth the $100 million investment and the many lives lost," the audit states.

What is more, the report concludes that the Iraqi government may have to spend tens of millions more to complete the entire system.

Stuart Bowen, the head of the watchdog agency, said the wastewater-treatment project--which was ambitious, difficult to sustain and failed to take into account the capacity of the local government--was emblematic of U.S. reconstruction efforts in Iraq.

The audit, he said, "captures the entire Iraq reconstruction experience in one story."

In a response to the audit, Deputy Assistant Secretary of State for Iraq Barbara Leaf said the wastewater-treatment project had shown some success, despite the initial setbacks.

"We invested far too much in taxpayer funds and in lives to walk away from this project--and leave an abandoned, $100 million project of no use to anyone," she wrote in an Oct. 27 memorandum attached to the audit. "Instead, I would respectfully suggest that the Fallujah wastewater-treatment plant is a model of how to turn around a project on the verge of failure."

Write to Nathan Hodge at nathan.hodge@wsj.com