a total of about $34 billion to
support the reconstruction of Iraq, of which about $21 billion has
been appropriated for the "Iraq Relief and Reconstruction Fund."
Nearly $16 billion has been spent, and almost all the funds have been
committed. The administration requested $1.6 billion for
reconstruction in FY 2006, and received $1.485 billion. The
administration requested $750 million for FY 2007. The trend line for
economic assistance in FY 2008 also appears downward.

Congress has little appetite for appropriating more funds for
reconstruction. There is a substantial need for continued
reconstruction in Iraq, but serious questions remain about the
capacity of the U.S. and Iraqi governments.

The coordination of assistance programs by the Defense Department,
State Department, United States Agency for International Development,
and other agencies has been ineffective. There are no clear lines
establishing who is in charge of reconstruction.

As resources decline, the U.S. reconstruction effort is changing its
focus, shifting from infrastructure, education, and health to
smaller-scale ventures that are chosen and to some degree managed by
local communities. A major attempt is also being made to improve the
capacity of government bureaucracies at the national, regional, and
provincial levels to provide services to the population as well as to
select and manage infrastructure projects.

The United States has people embedded in several Iraqi ministries, but
it confronts problems with access and sustainability. Moqtada al-Sadr
objects to the U.S. presence in Iraq, and therefore the ministries he
controls--Health, Agriculture, and Transportation--will not work with
Americans. It is not clear that Iraqis can or will maintain and
operate reconstruction projects launched by the United States.

Several senior military officers commented to us that the Commander's
Emergency Response Program, which funds quick-impact projects such as
the clearing of sewage and the restoration of basic services, is
vital. The U.S. Agency for International Development, in contrast, is
focused on long-term economic development and capacity building, but
funds have not been committed to support these efforts into the
future. The State Department leads seven Provincial Reconstruction
Teams operating around the country. These teams can have a positive
effect in secure areas, but not in areas where their work is hampered
by significant security co