For three years, the USAID (U.S. Agency for International Development, an independent agency) thought it had a sweet deal going in Iraq, dispensing millions of dollars a month to carry out local essential services (garbage removal, repairing roads and government buildings). This improved living conditions, and created much needed jobs. But when audits were conducted, it was found that the local employees had built an elaborate and convincing scam, that was stealing much of the money. So USAID recently halted the entire, $644 million project until a way could be found to keep the crooks a bay. That may not be possible in this part of the world.
It wasn't just USAID that ran into the sticky finger syndrome. Early on, the U.S. Army got a crash course in dealing with massive corruption. By the end of 2003, it was clear that bribery, and corruption in general, were going to be the biggest threat to stability and the introduction of democracy in Iraq. Massive dishonesty is a problem throughout the region, which is major reason why democracy, or good government in general, has never been able to take hold.
Captured Iraqi oil ministry documents revealed a pattern of international bribery, from the 1991 Gulf War until the 2003 invasion, involving millions of barrels of Iraqi oil (worth over $100 million). This was paid, in return for support for Saddam Hussein, to 46 organizations and individuals. The recipients included prominent Arab families, religious organizations, politicians and political parties in Egypt, Jordan, Syria, the United Arab Emirates, Turkey, Sudan, China, Austria, France and several other countries. Some of the organizations named, included the Russian Orthodox Church, the Russian Communist Party, India's Congress Party and the Palestinian Liberation Organization. Buying kind words is nothing new, but in a democracy, you're expected to be open about it. In the United States, lobbyists have to register with the government, and payments from foreign governments reported. In the Middle East, you give, or take, the money, do the job, and keep quiet about it.
Within Iraq, American civil affairs troops, and soldiers in general, constantly come up against Iraqis who offered to bribe them for special treatment. It's unnerving for Americans to encounter such a pervasively corrupt atmosphere. The Iraqis take it for granted that the rules are for fools and that you buy your way to success, and screw those who can't. This attitude, it was feared, would extend to elections and dealings with elected officials. Since 2003, the elections have been largely fair, but the officials elected have been as corrupt as ever.
There were also problems with corruption among Kuwaiti government officials, who apparently demanded, and got, kickbacks from the American firms doing reconstruction work in Iraq. The corruption was not only pervasive, but often a major obstruction to getting anything done. This was especially true in Kuwait, which was a U.S. ally, and not under the control of the American military, as was the case in Iraq. Thus Kuwaiti suppliers could sometimes threaten to hold up vital military operations unless a bribe was paid, The only choice was to pay, or delay (and have the State Department or senior U.S. military officials go through the Kuwaiti government to apply pressure to the obstructive supplier.)
There was a body of knowledge in military contracting that U.S. Army officials could use to get around a lot of these problem. But the army didn't have it. So, following the example of the U.S. Air Force, the U.S. Army established a "Contracting Command" and staffed it with contracting professionals, to handle the larger volumes of contract personnel and organizations hired for the war on terror. Iraq, in particular, was a struggle. There were nearly 200,000 contractor personnel in Iraq (including Kuwait) and Afghanistan, during peak operations. This was an unprecedented contracting situation for the American military.
Iraq was what broke the army's existing contracting capability. Before the 2003 invasion of Iraq, the army had one base in Kuwait (through which most army troops pass, on their way to Iraq), and contracting officers there handled $150 million worth of business a year. By 2007, there were eight bases in Kuwait, and a billion dollars a year in contracts to deal with. Since 2003, over 800,000 U.S. Army troops have passed through Kuwait, on their way to Iraq, where tens of billions in contracts have been issued, and often not administered well.
The army got help from the air force, which sent many of its contracting officers to help out. In the air force, contracting is a career path, and the air force people really knew their stuff. The army could see that after a few years, when they measured rate of problems with contracts handled by air force personnel, and found it was much lower than that for army contracting officers.
After little more than a year in business, the new Army Contracting Command has a strength of over 4,000 personnel, including 400 military and 1,100 civilian personnel specializing in contracting. The rest are existing acquisition people, who will benefit from having their own command and career path. The command is led by a Major (two stars) General, and will take 5-10 years to come near the level of effectiveness the air force already enjoys in this area.
The problem is that, operations like USAID don't have access to the kind of administrative backup the army, or the military in general, has. While the army has now made wariness of corrupt locals part of the organizational DNA, USAID employees are still expected to reinvent the wheel. The Department of Defense is trying to get the other major agencies to cooperate more in these peacekeeping operations, and not just in dealing with pervasive corruption. But getting that kind of cooperation is often more difficult than dealing with things like corruption in Afghanistan and Iraq.