The $87 Billion Money Pit

A British Christian aid group last week accused the CPA of not accounting for $4 billion of the $5 billion it has spent, most of which came from Iraqi oil proceeds. The lack of transparency is not surprising: the CPA and United Nations took six months to agree on an international monitoring board called for under U.N. Resolution 1483. "There's certainly the suspicion that what the Iraqi oil is being used for right now is not to the benefit of the Iraqi people but to the benefit of American corporations," says one of the aid group's spokesmen, John Davison. "This is quite controversial, considering that many people around the world have been saying that 'it's all about the oil.' So you would have thought that this would be treated with a great deal of care."

Meanwhile a turf fight between USAID and the CPA has led Bremer to insist that the CPA take over the dispensing of some rebuilding contracts (though Natsios says he's been reassured that the new CPA office "is not meant to replace USAID"). That may not solve anything: contractors in Iraq complain that the CPA's staff consists largely of political appointees who don't understand the process. "CPA is run by a bunch of political hacks and incompetents who have no idea what they're doing," said a project manager for a firm working on a major USAID contract. "Every time we turn around there's a new order coming from CPA, 'Do it this way--no, do it that way instead.' It's just unbelievable." Privately, some CPA officials admit the staff is less than the best the United States has to offer. Right now, "we're not talking A-team, even B-team. We're talking C-team," says one official with the CPA. The Bush administration denies that any major changes are afoot, but all these problems have prompted a new reckoning back in Washington: Douglas Feith, Rumsfeld's policy chief and a key official involved in postwar planning, is no longer sitting in on reconstruction meetings, NEWSWEEK has learned, and the White House has wrested oversight from the Pentagon.

Reconstructing Under Fire

What's life like for an American businessman or contractor in Iraq? If you're from Halliburton's Kellogg Brown & Root, you're installed in the prized Green Zone, Baghdad's Beverly Hills. That's the four-square-mile patch of downtown where the CPA is headquartered under heavy U.S. military guard. Bechtel is there as well, holed up in Uday Hussein's former villa on the Tigris. But smaller companies or those that arrived too late to scoop up prime real estate--that's wherever the U.S. military is--are dug into one of the many hotels around town under heavy guard. You'll know you're approaching one when you see tall concrete barriers, known as blast walls, and chicanes, which are obstacle courses designed to create traffic jams.

If you're berthed in either the Palestine or the Sheraton hotels, the only ones guarded by American troops 24/7, you'll have to make a two-mile detour through extremely heavy traffic to get around the blocked-off streets to the lone access point. First your car will pass through a series of concrete barriers guaranteed to make sure you crawl at five miles an hour. Then you'll see the now closed riverside boulevard, Abu Nawass Street, and you'll be staring down the cannon of an M1A1 Abrams tank leveled at chest height. From there, no matter how important you are, you'll walk with your bags to the first American checkpoint. It's next to the sidewalk, where there's a double row of concrete blast walls and huge wire-meshed sandbags; they form a sort of tunnel without a roof, 100 yards long, with machine guns covering it. There you'll be searched under the supervision of American soldiers, who are so tired of the drill they often deputize street kids to pat you down, while an Iraqi policeman looks in your bag. Your mobile phones will be disassembled, other electronics taken apart, bags opened on the ground. At the end of this process you'll find yourself in one of these two former government-run hotels, with grim and dirty rooms, and dangerously bad food, and few amenities other than the tanks outside.

After checking in, your first stop should be the U.S. Consulate at the Iraqi Convention Center, just inside the Green Zone. To enter, you have to walk down a narrow pathway for about 100 yards between two double rolls of concertina wire, so close together you have to be careful not to snag your safari shirt. This is designed to keep Iraqis in a straight line, and possibly also to prevent a frontal assault on the first American Army position. Then you'll pass through three Army posts and be searched twice. If you're meeting with anyone important inside, you'll be searched yet again and have your belongings sniffed by dogs.