BAGHDAD, Iraq — It will be the biggest American attempt to change the face of Iraq since the invasion: $18.6 billion from U.S. taxpayers for rebuilding. Yet a U.S. bureaucratic squabble is holding up the money.
The aid package approved by Congress last month amounts to nearly two-thirds of Iraq’s annual economic output in 2002, estimated by the World Bank at $28 billion. By summer, the pipeline of dollars is expected to turn Iraq into one of the world’s largest construction sites.
But the contract proposals, which were to be released for bids on Dec. 3, are being held up by an apparent turf battle between the U.S. departments of Defense and State.
The dispute, described by U.S. officials on condition of anonymity, centers on the State Department and its co-agency, the U.S. Agency for International Development, vying for some of the contracting authority from the Pentagon-led occupation administration of Iraq, known as the Coalition Provisional Authority.
The State Department believes it can better oversee contracts because it will take the chief U.S. diplomatic role in Iraq on July 1, when power transfers to Iraqis. Then the Coalition Provisional Authority will be absorbed by the new U.S. Embassy in Baghdad.
Defense officials said contract proposals would be delayed until administration officials settle the dispute, probably by early January, with bids due several weeks later and contracts awarded in March or April. The Coalition Provisional Authority’s original schedule called for contracts to be awarded on Feb. 2.
When the contracts are awarded — only firms from the United States and its occupation partners are eligible — U.S. officials estimate winning bidders will hire hundreds of thousands of Iraqis to toil on the 2,311 planned construction projects that need to be completed in two years.
The main spending includes $5 billion for new electricity generation and transmission; $4 billion each for water projects and security; $1 billion for oil sector repairs; and $500,000 for telecommunications.
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