Bureau for Asia and the Near East

19 February, 2003

Within 18 months of the end of hostilities, coalition assistance will help create the fundamental structures for democracy and economic growth to benefit the Iraqi people. The goal of coalition efforts is to preserve an Iraq familiar in sovereignty and territoriality, but governed by consent of the people.

Immediate reconstruction assistance will seek to ensure that most children, both boys and girls, are in school. Critical infrastructure will be operational, with most transport links, water, sanitation and electrical services functioning, especially in urban areas. Assistance will be available to enable Iraqis to reconstruct housing and community facilities. The post-conflict economy will not only be prospering, but it will be market-driven, open to personal initiative, and able to compete globally. A diversified private sector will be emerging, along with a more productive agricultural sector and vibrant rural markets.

The greatest change, however, will be in governance. USAID-managed assistance, together with military civil affairs and other agency programs, will create stable and democratic institutions that enable people's participation while not allowing a return to dictatorship. The national government will be limited to essential national functions, such as defense and security, monetary and fiscal matters, justice, foreign affairs and strategic interests such as oil and gas. The state will act as a regulatory agency for the common good, for example, enabling financial markets to develop under central bank regulations. Other national institutions of the old, repressive regime will be dismantled, breaking the authoritarian chain of command by which so few have exercised so much control over so many.

Authority and funding for most other functions and services will be devolved to sub-national levels of government. Local governments will be responsible for meeting the needs of citizens, and will be required to operate in an open, transparent and accountable manner. Citizens will be able to participate in planning the future of their communities, and will be able, through elected local assemblies, to democratically control the civil administrations at the village, district, provincial and national levels.

Coalition assistance will help Iraq to build democracy from the ground up, so that all citizens from all groups participate in governance and share equally the benefits of democracy.

Summary

Reconstruction activities will start simultaneously with emergency humanitarian relief work, as soon as areas are secure enough to permit workers to enter. Delivery of assistance will emphasize rapidly demonstrated improvement in the quality of life for Iraqis. It aims to quickly show that Iraq will move towards democracy and economic growth, and is the framework for communicating a vision that can gain both internal and international support. Reconstruction activities will take place during the 18 months after the conflict.

Immediate priority goes to highly tangible sectors that are critically needed to ensure at least a minimally functioning society. Reconstruction activities will support the immediate relief effort and take the program hand off as lifesaving and emergency relief has been delivered. Immediate priorities are:

Water and sanitation

Public health

Humanitarian seaport and airports

Re-establish food distribution

Emergency electricity

As Iraq stabilizes after the conflict, USAID will help build a new framework for economic and governance institutions. Reconstruction will aim to bring Iraqi facilities back to a modestly improved pre-conflict level. Complete reconstruction of the economic and institutional capacity of 1980 (conditions prior to the Iran-Iraq war) will require years of public investment. The USAID emphasis will be on:

Access to education by all children;

Creating democratic governance based on the rule of law;

Restructuring economy and agriculture to enable private, competitive productivity and renewal of the rural agricultural economy;

Infrastructure repair in roads, irrigation, hospitals, schools, markets, etc;

Stable electrical supply for oil, industry and private citizens.

Water and Sanitation

Goal Potable water and sanitation services re-established to prevent disease outbreaks and protect health of Iraqi population.

Problem Overall, 260 water treatment plants service about 12.5 million people, or half the population. These plants function poorly, increasing the risk of waterborne illness in children and the aged. In southern Iraq, many people purchase bottled drinking water imported from Jordan, and some depend on water deliveries by tank truck. Only a quarter of urban residents have piped sewage, although the treatment plants are often inoperable.

The USAID response In addition to meeting immediate post-conflict needs for clean water and waste treatment to forestall the spread of illnesses, there will be a need to repair and rehabilitate water and waste water facilities in many cities. Rapid assessments of water and sanitation needs will be initiated immediately, area by area, as security permits. A contractor will provide immediate assistance and commodities required; grants are being prepared for the Red Cross and UNICEF; a reconstruction contractor will be engaged to the make the longer-term repairs. The Ministry of Public Works will be restructured, and further assistance will make a transition to being the responsibility of the ministry and local governments.

Immediate post-conflict: Rubber water bladders and purification equipment for up to 1 million displaced persons. Generators will be provided to power water system pumps as required.

60 days: Repairs will begin on up to 10 urban water systems, assuming secure access to them.

6 months: Dependable minimum water supply will have been re-established in 15 cities.

12 months: Water systems will begin to be returned to local control. Revenue generation will be an issue at that point.

18 months: Dependable minimum water supply will have been re-established in all cities greater than 25,000 persons. Primary sewage treatment will have been restored in 10 urban centers.

Next steps Reactivation of commercial water importation; reactivation of water delivery by tank truck.

Public Health

Goal Basic health care needs of all Iraqis are met. Basic health care services include immunizations, maternal health, treatment of major childhood illnesses, emergency and primary response to illness and trauma and referral of more serious cases.

Problem Health care in Iraq functions poorly, reaching only parts of the population, and is particularly weak in respect of maternal and child care and health information systems. There are 270 general hospitals and 1,000 civilian primary health care centers. There are only 9,400 physicians for a population of 25 million and even fewer nurses and medical technicians. Recently, Saddam has been spending only $20 million annually on health care, compared with $500 million a year in the 1980s.

The USAID response In addition to the emergency measures that will be instituted to care for wounded civilians and to control outbreaks of disease, a complete assessment of the health system will begin immediately. USAID will fund a contractor for both the immediate and the longer-term health activities, and is preparing grants to the Red Cross, UNICEF and WHO [World Health Organisation]. As security permits, activities will start to meet as much as feasible of the basic health care need and maternal and child health services. Activities will draw extensively on medical professionals from surrounding countries. Health information and education will be extended to the entire population. At least one referral hospital in each secure major city will be staffed and equipped to be able to respond to critical advanced medical and surgical needs. The Ministry of Health will be reformed and prepared to take over operation of the health care system.

Immediate post-conflict: Delivery of medicines and consumable surgical supplies to treat injured civilians and operate medical facilities.

60 days: Basic health services will be available to a targeted 25 per cent of the population, and maternal/child health to 50 per cent of the population, in secure areas.

6 months: Basic health services will be available to a targeted 50 per cent of the population, and maternal/child health services to 100 per cent of the population, in secure areas.

12 months: The reformed Ministry of Health will begin operating the health care system. Referral hospitals will be functioning in 21 urban locations.

18 months: Basic health services available to the entire population. Advanced surgical services available.

Next steps Co-ordination of water deliveries to hospitals and clinics.

Transportation

Goal Ports and roads open promptly for humanitarian use, and all economically important roads and bridges re-opened.

Problem The road network consists of 45,500 kilometers of roadway, of which 38,000 kilometers are paved. The 2,300-kilometer rail network radiates from Baghdad and is especially important for the transport of bulk grain and fuel. There are over 100 airports, but only three receive scheduled air traffic. Post-conflict, ports and airports will be temporarily under military management, passing to civilian staff as quickly as possible to keep humanitarian imports flowing.

The USAID response A contract will be negotiated to provide assistance and commodities required, beginning with a humanitarian seaport and airport to be designated. Priority will be given to ensuring that critical ports function and that repair and reconstruction of the most economically essential roads and bridges start immediately as areas become secure. Rapid assessments of transportation infrastructure will be undertaken. It is assumed that road surfaces may be extensively damaged by tracked vehicles, slowing traffic, but that the need for roadbed reconstruction will be small. Port of entry administration personnel will be moved into land, seas and airports as they become secure.

Immediate post-conflict: Damage assessments will be reviewed to prioritize reconstruction efforts. Repairs to Umm Qasr port and Basra International Airport proceed.

60 days: Port of Umm Qasr and Basra International Airport reopened for humanitarian traffic. Flour mills connected to seaport.

6 months: A targeted 50 per cent, or about 2,200 kilometers, of economically important roads and bridges are open to high-speed traffic. Ports of entry for highways are appropriately controlled.

12 months: Reconstruction of roads, rail, and barge landings completed to minimal level.

18 months: The Ministry of Public Works will be restructured, and further transportation assistance will make a transition to being the responsibility of the Ministry and local governments.

Next steps Revenue generation, as ports will supplement US government contributions.

Electricity

Goal Electrical service restored to a targeted 75 per cent of population (the pre-conflict level).

Problem Iraq has 15 major power generation plants, but lacks adequate generating capacity (only 5,500 MW), as evidenced by periodic blackouts. Conflict damage to transmission lines and perhaps substations may be significant, while damage to generating capacity is hoped to be minimal. There will be immediate needs for electricity in secure areas to operate water pumping facilities, hospitals and clinics. Moreover, reactivation of oil production depends on electric pumps.

The USAID response Using contractors, USAID will preposition emergency generator sets and fuel to assist with the most critical post-conflict needs. Emergency power will be provided as the secure area grows. Rehabilitation of dilapidated generation and transmission equipment will target power supplies for the oil fields. In urban areas, repairs will be carried out to ensure that minimum electrical requirements are met to support social services and a renaissance of the private economy.

Immediate post-conflict: Install emergency generators at hospitals, pumping stations, other priority sites.

60 days: A targeted 550 diesel-driven emergency generators will be installed. Rapid assessments conducted as security permits, and a power restoration plan prepared.

6 months: Fifteen per cent of the high-voltage (132 kV and 33 kV) distribution net repaired, including rehabilitation of a targeted 50 substations and five generation plants in key urban areas. Forty per cent of the previously served population has electricity.

12 months: Generation of 6,750 MW achieved.

18 months: An additional 60 substations and another five generation plants operational. Total electric supply a targeted 75 per cent of the pre-1991 level, with electricity reaching most, if not all, of the urban population.

Next Steps Available generators appear too few for expected needs; fuel supply for electrical generation is not yet assured,

Local Development

Goal The functions of local government are restored to ensure stability, meet citizens' needs and transition to democracy.

Problem The civil court system is based on the Napoleonic Code, and the country has a secular constitution. However, the highly centralized administration during Saddam's dictatorship permeates provincial, district, and sub-district governments. Iraq has little experience with participatory, democratic government. Rather, it has a long legacy of authoritarianism, and the past three decades have been years of repressive dictatorship. The systems and institutions of repression must be dismantled, and new systems and institutions built that create the foundation for an Iraq governed by consent.

The USAID Response As security permits, a contractor will field teams of staff to contact and consult with local leadership. Initially, discussions will focus on immediate needs, although programs will be offered to strengthen local governments as the principal providers of most services that people need. Priority for local government capacity building will be put on developing the skills and mechanisms that enable community participation in planning and budgeting and produce transparent and accountable administration.

Immediate post-conflict: Prevent destruction of land records, ration lists, public documents.

60 days: Identify key local leaders and councils; connect them to opportunities for relief and reconstruction assistance, using small grants for immediate assistance as appropriate. Radio stations operating in secure areas.

6 months: Reconstruction offices established in all 18 provinces to co-ordinate projects and facilitate service provision. Interim local assemblies have clear roles and responsibilities.

12 months: Local governments counterbalance recentralization tendencies; interim democratic institutions demonstrate representative and transparent local governance.

18 months: Local administrations have responsibility for revenue generation for local services.

Next Steps Details of civil-military co-ordination in the field.

Economic Governance

Goal Macroeconomic collapse prevented, currency replaced, an independent Central Bank and a Finance Ministry re-established and confidence in banking system restored. Foundation for broad-based growth established.

Problem Iraq's economy is dominated by the state and has been isolated by sanctions, constraining economic viability and deterring economic integration and growth. Reform of economic governance and institutions is needed to position the economy to grow and to engage productively in the global economy. Conflict is likely to disrupt government budget expenditures and salaries. The State Oil Marketing Office is the main source of foreign exchange and government revenues. All heavy and many light industries and services are government-owned.

The USAID Response USAID will participate under the policy guidance of Treasury and State in the provision of technical assistance to the Central Bank, the Finance Ministry, the private banking sector, potential privatizations and small business lending. A contractor will provide technical expertise to advise the new Iraqi financial leadership on the reactivation of major financial institutions and reform of the regulatory framework.

Immediate post-conflict: Technical assistance teams will begin work outside Iraq to prepare for the needs of the Finance Ministry and the banks. In Iraq, troops prevent looting of bank vaults and government documents.

60 days: Technical teams ready to move into Iraq to assist a vetted Iraqi financial leadership team. Small business lending facility prepared to open.

6 months: Central Bank and Ministry of Finance operating. Central Bank and State Oil Marketing Office co-operate on oil sales and food imports. Permissive environment established for private banks. If a new currency is needed, ready for issuance. Programs promote competitiveness and global trade.

12 months: Ministry of Finance handles all government payrolls. Legal framework is hospitable to private business.

18 months: Privatization of state-owned businesses is occurring. Widespread access to private commercial banks.

Next Steps Management of assets presently held by UN Oil for Food Program, debt rescheduling.

Payroll Management Assistance

Goal Ensure continuity of provision of essential government services.

Problem As Iraq recovers from the effects of the conflict, government revenues from oil and taxes will be interrupted for a period of three to 12 months. Yet government workers will be essential to a rapid reconstruction of the economy.

The USAID Response USAID will participate under the policy guidance of Treasury in technical assistance to the Finance Ministry for the management of government payments, specifically payroll. A contractor will assist in the management of payrolls for local governments, utility and other independent national commissions and, eventually, the national government. This assistance will consist of defining the employees on the payroll, managing the cash needs of the various governmental and independent entities and, during the period when government revenues are unavailable, providing funds to meet legitimate payroll requirements. As Ministry of Finance functions are restored and revenue generation resumes, the assistance package will cease to provide funds for the payroll, and will become a technical assistance program aimed at efficiency in government payments.

Immediate post-conflict: Technical assistance teams will begin work outside Iraq to prepare for the needs of the Finance Ministry.

60 days: Payrolls are designated by the relevant technical assistance contractors. Service contractor liaises with Federal Reserve for currency, and is prepared to make payments as directed.

6 months: Payroll function ready to be turned over to the Ministry of Finance.

12 months: Government payment assistance team completes its work.

Next steps Currency to be used for payment.

Education

Goal Schools reopen promptly in secure areas after the conflict and on schedule throughout Iraq for the new school year.

Problem Half (12 million) of all Iraqis are under the age of 19 years, and 5 million of them are primary school students. Literacy among girls is at 45 per cent and four-fifths of the 30,000 primary schools are in poor condition. There are few textbooks, and teachers are viewed under the regime as dangerously thoughtful persons. The greatest challenges in education are related to improving the curriculum, materials and supplies and quality of teaching. It is essential to build a foundation for learning, one that can overcome the knowledge deficit that has resulted from two decades of tight control of information.

The USAID Response

Immediate post-conflict:

60 days: A targeted 2,500 schools in secure areas surveyed for delivery of student supplies, instructional kits and repairs. Preparation for teacher training begun.

6 months: student supplies and instructional kits delivered to a targeted 12,500 schools and 3,000 schools repaired or rehabilitated. Teacher training begun. US universities engaged in technology transfer programs.

12 months: Ministry of Education is operational, using a revised curriculum, and improving quality through teacher training.

18 months: Student supplies and instructional kits delivered to a targeted 30,000 schools and 6,000 schools repaired or rehabilitated.

Next Steps: Details of co-ordination between USAID and UNICEF.

Shelter

Goal Private financing for housing rehabilitation established and operational

Problem The extent of damage to housing is unpredictable but anticipated to be relatively small. Improving access to decent, affordable housing is one of the surest ways to demonstrate that the future will bring an improved quality of life. To achieve this, more than capital is required. It is necessary that housing finance become integrated into the financial system, and that supporting capacities be built to create a viable shelter delivery system capable of meeting future needs and the expected added pressure of the return of exiles and IDPs.

The USAID Response

Immediate post-conflict: Temporary shelter provided. Appraisal of housing stock.

60 days: Completion of formal shelter sector assessment to identify constraints in delivery system and design programs to build capacity.

6 months: Funds channelled to rehabilitate a targeted 5,000 houses and initiate slum upgrading in major urban areas to improve housing and services for a targeted 3,000 households. Create and strengthen private financial intermediaries and private construction sector.

12 months: Rehabilitation of about 20,000 houses nearing completion, and a targeted 7,000 houses and supporting services in urban slum areas upgraded. Funding for housing construction flowing through private financial institutions, and a targeted 50 per cent of local governments in major urban areas producing land use and housing development plans appropriate to meeting shelter needs. n