The U.S. Financial Crisis — in Iraq

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Ali Yussef / AFP / Getty

Members of the Awakening group, also know as Concerned Local Citizens (CLC), man a checkpoint in Baghdad's Sunni Muslim Al-Adhamiyah district, January 8, 2008.

The U.S. military in Iraq has been extolling the achievements of its cooperation with civilians in the fight against extremists and insurgents. The mechanism of that cooperation, however, is greased by cash — and the budgetary spigot for it has been tightening in recent months.

That does not sit well for officers like Captain Joel Brown, in charge of Eagle company for the 2-2 Styker Cavalry Regiment. For him, money spent bankrolling the Sunni al-Sahwa ("Awakening") movement is money well spent. Al-Sahwa patrols neighborhoods in his area and effectively works as a local muscle, beating back insurgents and keeping the peace where local law enforcement has long since abandoned. When Brown's company arrived in southern Baghdad in August they found 50 roadside bombs in one day; they would sometime engage in two or three firefights daily. Now he pays nine Sunni contractors to manage 10 checkpoints with about 300 guards, in the process protecting schools, clinics and key intersections 24 hours a day. Soon there will be a total of 1,000 guards.

When these so-called "Concerned Citizens' League" (CLC) programs began, attacks against his men started decreasing. For Brown, the calculus is clear: "Every time we loose one of our guys it costs us $400,000 [in life insurance paid to family members]. Each Hellfire missile is $60,000 and we've used a ton of those. What's the price of peace? It's probably not as costly as the price of unrest. Money is my non-lethal ammunition. I'd rather give somebody a job than have to fight them."

That sentiment is echoed by captain David Dehart, a military intelligence officer working with Brown and other commanders in an area of southern Baghdad that used to be a no-go zone for U.S. troops. "A lot of these guys are $50 away from either putting in an IED [roadside bomb] or standing on a checkpoint with an AK" guarding the neighborhood for us, says Dehart.

Commanders on the ground draw their money from CERP (Commander's Emergency Response Program) funds. CERP funds are meant to cover everything from condolence payments to water and electricity infrastructure improvements. They also can give out micro-grants to neighborhood patrol and checkpoint contracts. The CERP budget for fiscal year 2007 was $750 million and while no cutbacks are expected for 2008 the money hasn't been authorized yet by Congress, which means the army's top brass is playing it safe and tightening its belt. According to Lt. Col. Gerry Messmer, A U.S. civil military operations officer in Baghdad, there is no problem with funding. "We are reviewing all requests for funds and asking the important question of how can we help [Iraqis] help themselves."

But the military bureaucracy can itself be a threat to the funds. A recent turnover of generals in Baghdad has led to a routine review of guidelines, regulations and spending. But what the incoming generals might view as cutting the fat off programs, lower-ranking officers see as a threat to the very goodwill and positive rapport they've worked months to established between themselves and community leaders. Brown says that higher-ups are going to cut the money each contractor receives — Sunni leaders who stick their necks out and who have been increasingly targeted by insurgents in the past few months. About 75% of the contract goes toward the salaries of the guards hired by the contractors. The remaining 25% — or about $11,000 — goes toward so-called administrative costs, which, apart from the minimal amount used to pay for uniforms, goes straight to the contractor himself.

Brown says that initially the plan was to reduce the contractor's take from 25% to a 4%-8% range, upon renewal of each contract. However, he says that officers spoke out and now the reduction is going to be more gradual, from 25% to 20%, and then to 10%. There will be cuts for the salary of checkpoint supervisors as well. "You are asking them to risk their lives and then cutting their salary down. It's not fair," says Brown, who regularly stops by his contractors' homes in the evening to sip small cups of sweet, hot Iraqi tea and learn about the neighborhood.

For captain Douglas Willig, who is in charge of an area adjacent to Brown's, the new CLC contracts will mean that 30% of all his workers will take a 30% pay cut next month. "My CLCs are going to change pretty drastically," says Willig. Previously Willig thought he could at least rely upon funds for micro-grants project to spark economic activity by helping Iraqis who wouldn't transition from the CLCs to the army or police to segue into small business. "The feeling was [micro-grants] was the best thing going," says Willig. He has received application packets for $150,000 in grants, but the colonel overseeing his command has only $200,000 in grant money for an area that is more than four times as large as Willig's. The colonel told Willig he will receive $25,000 in grant money, a fifth what he was expecting.

Another line of CERP funding is supposed to provide Willig with $10,000 from which to draw up to $1,000 at a time to pay Iraqis whose property has been damaged during operations. Two families seeking damages — one for $400 and one for $450 for windows blown out and walls broken down during different operations have been waiting for months because Willig's funding has run dry. "I've been telling them to come back later — I haven't had [this line of CERP funding] since October. There's bureaucracy involved and reviews and allocation at different levels. Two months ago I would have said come back tomorrow [to pick up the payment]", says Willig. "Today I've got no idea."

And without funds to encourage cooperation, the fragile peace of the last few months may come undone.