Global Policy Forum

By Ariana Eunjung Cha

With nearly 40 years of civil engineering service under his belt, Sabah Al-Ani is among Iraq's top experts in water treatment. He kept the country's systems up and running through countless floods and droughts, years of economic sanctions and three wars.

After bombings and looting sprees left the water network in worse shape than ever, Al-Ani prepared to help out once again. But a directive from the U.S.-led occupation authority locked him out of the reconstruction process.

Al-Ani is an employee of the General Co. for Water Projects, one of 200-odd ventures in Iraq that are owned wholly or in part by the state and have been told they are ineligible for contracts being issued by the occupation. The company's 187 workers still collect their government salaries but they now spend their days on floors two and three of a downtown building here playing video games, reading books and chitchatting to pass the time.

"When someone asks me my achievements for the last months, I cannot say anything. It is a shame," said Al-Ani, a 60-year-old who holds a PhD from Baghdad University, Iraq's Harvard.

Fixing the country's water systems is among the occupation authority's highest priorities. Congress, in its $18.6 billion allocation for reconstruction this year, approved $4.3 billion for water resources and sanitation -- $1 billion more than designated for security and law enforcement and $2 billion more than earmarked for oil infrastructure.

One reason is the connection between good water and good health. Khudair Fadhil Abbas, Iraq's minister of health, blames contaminated water for many children's health problems, including a recent outbreak of typhoid fever that affected more than 1,000 Iraqis who live around the capital. Some 40 percent of hospital visits by children are due to gastrointestinal problems from the water, he said.

The decision to ban state-owned companies from reconstruction contracts funded by U.S. taxpayers was made for both legal and philosophical reasons. The Coalition Provisional Authority (CPA) was unclear how U.S. regulations apply to a company that was owned by a rogue state that no longer exists. And it was hoping to redistribute wealth and power in a country that for decades was dominated by Saddam Hussein and his Baath Party loyalists.

The problem is that practically every company of significance -- including those responsible for essential public works such as the electrical grid and telephone system -- was owned by the government. The Iraqi ministries have shifted some of the roughly 400,000 workers involved to other government jobs, but the others remain sidelined. This is forcing the occupation to pay a premium for foreign workers and to import materials that could be made within the country.

"We have many good, viable government factories and it would benefit everyone if they were part of rebuilding the country," said Sami Al-Araji, director general of planning for the Ministry of Industry and Minerals, which owns 45 companies.

For example, the CPA put Bechtel National Inc. in charge of managing the reconstruction of Iraq's water supply system, including a project the General Co. used to run, the expansion of the Sharkh Dijlah, or East Tigris River, Water Treatment Plant.

Bechtel, which estimates the project will cost $16 million, spent four months studying the General Co. plans, concluded they were adequate, modified them slightly, city officials said, reissued orders for parts from the same supplier, and basically did what was being done before.

The American company began construction in October, according to city engineers, and has stationed two foreign engineers at the plant, who visit when the security situation allows, in two white SUVs filled with four armed guards. The rest of the work is being done by Iraqi subcontractors. So far, the Bechtel workers have driven in some concrete pillars for a foundation in what was once an empty field, but additional work has been held up by delays in the shipment of parts.

According to its prewar plans, the General Co. had hoped to finish the expansion by summer 2003; Bechtel said it's still on schedule to begin operating the new water treatment facilities in June.

Under the initial postwar plan, the state ventures were to have a major role in the reconstruction. They were to be privatized, modernized and made profitable by foreign investors and wealthy Iraqis. But after some Iraqi leaders objected, saying they were uneasy about the idea of selling off state assets without the backing of a democratically elected government, the plan was delayed. The question of what to do with these companies has been in limbo ever since.

In recent weeks, the Defense Department decided to allow state-owned entities to compete for the new infusion of $18.6 billion that Congress appropriated, but some other government contracting entities are still studying the issue, said retired Navy Rear Adm. David J. Nash of the CPA.

Nothing in the rules expressly prohibits contracting with state-owned companies, although sometimes it requires waivers that compound paperwork. However, the regulations explicitly state that agencies and contractors should not acquire services or supplies from entities owned by the government of Iraq.

The country's water distribution system is in peril. Iraq's Tigris and Euphrates rivers are the lifeblood of the desert country, but years of neglect have left them dangerously polluted. The water that enters from the north is clean and clear but when it reaches the capital in the center of the country it's not uncommon for raw sewage to be funneled straight to the rivers.

By the time the water reaches the southern tip, it's so contaminated that humanitarian aid groups say it is responsible for daily outbreaks of disease, not to mention damage to the environment. Water engineers predict a crisis-level shortage in drinkable water in Baghdad and some other parts of the country if something isn't done soon.

"Probably 75 percent of the sewage in the country is going to the rivers," said Bechtel's John Kluesener, the manager for water, wastewater and irrigations systems for Iraq reconstruction.

The expansion of the Sharkh Dijlah plant is at the heart of a debate over who should decide what work is to be done in rebuilding Iraq and who should oversee that work.

The initial assessments of the water sector were done by Bechtel shortly after the war, a time when few of the government offices had been set up. So while their representatives had some input in the reports they did not have any authority to approve or veto the contents. Bechtel officials said the final decision for which tasks got done when was made by the U.S. Agency for International Development and the CPA. Bechtel added that the Baghdad Water Authority singled out expansion of the Sharkh Dijlah plant as its "highest priority project."

Bechtel's expansion will mean a 40 percent increase in water supply to the eastern part of the capital, helping 640,000 residents.

Jeffrey Smyly, a U.S. Army civil affairs lieutenant who oversaw the military assessment of water issues, said that while he agrees that the plant needs to be expanded, he questions why the CPA allowed Bechtel to work on the Sharkh Dijlah plant when the work was already being done by someone else. The resources could have better been used elsewhere, like fixing the distribution system, he added.

Dhia Mahamod, manager of design for the Baghdad Water Authority, said he agrees with the coalition's decision to allow Bechtel to take on the project. He said the company has a great reputation for quality and that he believes it will produce a superior product. Ventures like the General Co., formed under Hussein's regime, Mahamod charged, were inefficient because contracts were just handed to them and they didn't have to compete.

His boss, Sa'ad Bahnam, the general manager for the water authority, however, said that if he had had a choice in the matter, he would have rehired the General Co. because its workers had made a great deal of progress and most likely would be finished now if they had been allowed to restart work immediately after the war.

Bahnam said he is grateful for the American reconstruction funds but that he has been frustrated by the lack of Iraqi oversight. USAID and the CPA now supervise Bechtel's work but Bahnam said the Baghdad Water Authority is considering hiring someone, perhaps even the General Co., to check Bechtel's work.

Meanwhile, Al-Ani spends his days working in a cavernous room at the Baghdad Mayoralty complex with 15 other engineers and designers. Each day, like clockwork, they come in at 8 a.m., break for lunch from 11 a.m. to around noon, and are out the door by 1 p.m. Al-Ani, the team's manager, sits at the front of the room. His workers are lined up next to the walls on either side of him. Every desk is polished and completely empty except for a computer here and there. The engineers spend all day here; they are not allowed to visit the water work sites they set up around the city.

A few of the General Co.'s engineers have been able to fill their time by informally assisting Bechtel in getting up to speed on the designs for the expansion, said R.M. Hussein, the venture's director general, but the rest are not so lucky. Al-Ani is working on tweaking some old plans for a massive project to rework the water system in half of the city, a $3 billion endeavor that the company began two years ago. But since the money for the project isn't there anymore he considers what he's doing "busy work." He writes up reports but he's not sure anyone reads them anymore.

Another worker, Firas Abdul Hadi, a 29-year-old civil engineer from the city of Hilla, said these were his accomplishments over one recent week: playing a shoot-'em-up game, learning some functions in the AutoCad design computer program, discussing religion with his co-workers and trying to figure out what the latest rumor is about whether they would get work sometime soon.

"It is beyond boring," he said. "It is painful."