Admitting Powerlessness Over the Bungled

The Hidden Paul Krugman (22 Jan 06 Edition)

Professor Krugman believes the BushCo administration has lost the plot (and the war, for that matter) in Iraq but, like an addict, can't admit to its powerlessness over the situation (aka, defeat). His Monday column--Iraq's Power Vacuum (full column available to Times Select subscribers)--points to one example in particular: electricity.

Power shortages are a crucial issue for ordinary Iraqis, and for the credibility of their government. As Muhsin Shlash, Iraq's electricity minister, said last week, "When you lose electricity the country is destroyed, nothing works, all industry is down and terrorist activity is increased."

Mr. Shlash has reason to be strident. In today's Iraq, blackouts are the rule rather than the exception. According to Agence France-Presse, Baghdad and "much of the central regions" - in other words, the areas where the insurgency is most active and dangerous - currently get only between two and six hours of power a day.

Lack of electricity isn't just an inconvenience. It prevents businesses from operating, destroys jobs and generates a sense of demoralization and rage that feeds the insurgency.

So why is power scarcer than ever, almost three years after Saddam's fall? Sabotage by insurgents is one factor. But as an analysis of Iraq's electricity shortage in The Los Angeles Times last month showed, the blackouts are also the result of some incredible missteps by U.S. officials.

Most notably, during the period when Iraq was run by U.S. officials, they decided to base their electricity plan on natural gas: in order to boost electrical output, American companies were hired to install gas-fired generators in power plants across Iraq. But, as The Los Angeles Times explains, "pipelines needed to transport the gas" - that is, to supply gas to the new generators - "weren't built because Iraq's Oil Ministry, with U.S. encouragement, concentrated instead on boosting oil production." Whoops.

Meanwhile, in the early days of the occupation U.S. officials chose not to raise the prices of electricity and fuel, which had been kept artificially cheap under Saddam, for fear of creating unrest. But as a first step toward their dream of turning Iraq into a free-market utopia, they removed tariffs and other restrictions on the purchase of imported consumer goods.

The result was that wealthy and middle-class Iraqis rushed to buy imported refrigerators, heaters and other power-hungry products, and the demand for electricity surged - with no capacity available to meet that surge in demand. This caused even more blackouts.

In short, U.S. officials thoroughly botched their handling of Iraq's electricity sector. They did much the same in the oil sector. But the Bush administration is determined to achieve victory in Iraq, so it must have a plan to rectify its errors, right?

Um, no. Although there has been no formal declaration, all indications are that the Bush administration, which once made grand promises about a program to rebuild Iraq comparable to the Marshall Plan, doesn't plan to ask for any more money for Iraqi reconstruction.

Here's some more from the LATimes article that Krugman mentions:

[E]mbassy and reconstruction officials outlined a program of private investment and fiscal belt-tightening by the new Iraqi government as the long-term solution to the country's woes, even if that causes short-term suffering for Iraq's people.

"No pain, no gain," Andy Wylegala, whose job at the embassy is to help Americans do business in Iraq, said at the same briefing. "It's a very difficult procedure to pass through. But when I look from my side, I see it as a long-term, very favorable development."
[...]
Baghdad's roads are an obstacle course of barriers, potholes and debris. Many government and office buildings are either still gutted or strung with webs of electrical wire connecting to generators that run 12 hours on good days. A brown haze fouls the air and pools of sewage overflow dot the streets.

The U.S. Embassy credits the reconstruction effort with restoring sewage treatment to more than 7.7 million Iraqis, opening 21 berths at the Umm al Qasr port, building nearly 600 miles of freeways and primary roads, and developing three new international airports: at Basra in the south, and Irbil and Sulaymaniya in the north.

It says 124,000 Iraqis are employed under reconstruction and military contracts.
[...]
But without new reconstruction funds, the large projects to repair electrical, water and transportation systems would be dependent on a trickle of aid that has been coming from among the 40 other countries who made pledges at a 2003 donor conference in Madrid.

An internal State Department accounting obtained by The Times indicates that only about 30% of those pledges has been received. In a speech to a veterans group Monday, Bush pressed those nations to pay "as quickly as possible."

Japan, the largest donor, has paid less than half of the nearly $5 billion it pledged, according to the report.

Two of Iraq's neighbors, Saudi Arabia and Kuwait, have given less than 10% of their combined pledge of $1 billion, the report shows, and Spain, Britain, South Korea, the United Arab Emirates, Italy and Canada owe more than $100 million apiece.