Saturday, January 06, 2007

Economic Surge?

In addition to the much talked about "troop surge," President Bush's "New way forward in Iraq" also includes an economic component (WSJ sub req):

Administration officials say they are still putting the finishing touches on the economic aspects of the new Iraq strategy, but say the broad contours have largely been decided upon. One official involved in devising the new Iraq strategy said the administration hopes that the expanded job-creation and economic-development programs would make it harder for militias and insurgent groups in Iraq to recruit jobless young men.

The State Department section of the administration's fiscal year 2008 budget will ask lawmakers to appropriate $1.46 billion in aid for the Iraqi government, according to people familiar with the matter. These people said the request includes $335 million in security-related aid, $373 million in funding designed to help spur economic growth and $239 million for education and job creation. The largest share of the new money, $486 million, would go toward Iraqi political parties, human-rights groups and other players in the country's nascent democratic system.

The administration will request additional Iraq-related money in a supplemental spending bill that will be presented to lawmakers along with the standard budget.

The supplemental spending bill will ask for a "significant increase" in the money allocated to the so-called Commander's Emergency Response Program, which gives military officers in Iraq money they can use on small-scale reconstruction and job-creation projects that they hope will help stabilize the areas they patrol, according to a senior Pentagon official.

A second senior official said the increase could double the current size of the program from $720 million this past year to more than $1 billion in 2007.

All sound like sound proposals, especially the increase in the CERP funding. There has been story after story about local commanders in Iraq not having enough money for rebuilding projects.

Dan Senor and Roman Martinez also had a piece in yesterday's WSJ suggesting dynamic ideas for Iraq. In addition to a significant increase in troops for an extended period of time and a change in military leadership on the ground (which already has come to pass with Lt. Gen. Petraeus replacing Gen. Casey), they also call for changes in our economic approach:

Economic aid must be matched by dramatic distribution reform. The administration is considering proposals by the Joint Chiefs of Staff and field commanders to pair a troop increase with a funding surge for new Iraq jobs programs. But this only makes sense if there are vast changes in how the new programs are managed by the U.S. and Iraqi bureaucracies.

The funds appropriated by our government barely affect the lives of average Iraqis. This is because large-scale U.S. reconstruction programs continue to be subject to Federal Acquisition Regulations applicable in peacetime. This means that major government contracts for Iraq are subjected, in advance, to the slow and cumbersome "Request For Proposal" process. An even larger cause of the bottleneck is that the Iraqi government lacks the manpower, infrastructure and decisiveness in its ministries to disperse funds effectively. So of those funds appropriated to the Iraqi government, only a small percentage ever moves from the government to the Iraqi people.

To make a "New Deal"-style jobs program work in Iraq, the president should propose that Congress streamline the acquisition process to allow for rapid project approval, following the model of the enormously successful Commander's Emergency Response Program. He should also appoint a respected retired military leader or business executive with expertise in logistics management to oversee distribution of aid on the ground. Anything related to funding and contracting for Iraq is understandably a sensitive issue, especially given the new Democratic majority's focus on oversight. So the president should ask the Democratic congressional leadership to propose a candidate for this position of "counterinsurgency economic czar."

More excellent suggestions. My only concern is why such ideas were not implemented three years ago. Let's hope there still is time for them to bear fruit in Iraq.

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