Iraq Rebuild More Cash than Marshall Plan?
Adam Rogers is right: "IEEE Spectrum this month has an awesome, awesome article on why we can’t get the electricity on in Iraq."
He pulls out some of the story's juicier tidibits. Stuff like:
* Shortage of power nationwide: 4000 megawatts.
* Amount of power you could generate from the natural gas that gets “flamed off†-- vented and burned — from working oil wells instead of captured: 4000 megawatts.
* Kind of fuel the Iraqis have easy access to: crude oil.
* Kind of fuel the persnickety GE dual-fuel combustion turbines we bought use: diesel or natural gas.
* Cost of bringing high quality diesel, by truck, from the nearest source (Turkey): $85 a barrel.
* Amount of diesel all the fancy new combustion turbines in the country would use if they were up and running, which they aren’t: one tanker-truckful every 45 minutes.
But to me, that most amazing statistic in this numbers-rich article is that "the final [reconstruction] tally might be as high as $100 billion."
As of fall 2005, the United States had spent or committed more than US $20 billion to the effort, other countries had pledged $13.6 billion, and Iraq itself had contributed about $24 billion, including seized assets of Saddam Hussein.... For comparison, in the first two years of their reconstruction after being devastated in wars, Germany, Japan, Haiti, Bosnia, Kosovo, and Afghanistan together received a total of $25.6 billion, in 2003 dollars, according to the United States Institute of Peace, a congressionally created organization devoted to conflict resolution. The first European Recovery Program, known as the Marshall Plan, which rebuilt much of Western Europe after World War II, spent the equivalent of about $90 billion in today's dollars between 1948 and 1951.
The article had the advantage of being written about a specific aspect of reconstruction by someone who actually knows quite a bit about that particular technical field. It does point to a few lessons for the future such as:
-the fact that ten years of sanctions created a human resource problem in addition to a hardware problem. The Iraqis lost a whole generation of technicians and engineering students and many of the previous generation left the country. I don't think any of the sanctioneers anticipated this although, like a lot of other things, it seems obvious in retrospect.
-the desire for quick-fixes, which were desperately needed from a political standpoint, jeopardized the long-term prospects for success. I haven't got much sympathy for this. They threw a hell of a lot of money at reconstruction and it seems to me they didn't get a quick-fix OR a long-term success.
-failing to understand the basics of market economics will invariably lead to failure. This is especially unforgiveable since the invaders assured everyone that they had a unique understanding of the importance of markets. Yet for all their assertions that they could do everything much better, they completely failed to reform the retail end of the electricity market, allowed political considerations to drive technical decisions, and created four competing bureaucracies to manage the rebuilding of the grid. I'm sure the engineers did the best they could under the circumstances, but the political leadership has to be held accountable for the circumstances.
What the article only touched on was the role of corruption. While it noted the petty corruption in the Ministry of Electricity and mentioned the disappearance of large sums from time to time, the middling corruption of contractor fraud and political payoffs in the form of contracts let surely played a role as well. Not surprising, really, since the journal was directed at people in the business, who don't like to be lectured to any more than anyone else, but it's hard not to wonder if domestic lobbying in the US had anything to do with GE selling all those useless turbines to the provisional government.
Posted by: James at February 28, 2006 2:18 AM