While I was thinking about Iraq, I ran across this Washington Post story headlined Power Grid In Iraq Far From Fixed and with the front-page lead-in “After two years and $1.2 billion, U.S. effort to resuscitate electrical system is wide of its mark”.
Given the $1.2 billion figure, there’s no need to read the rest of the article. The electricity grid here in South-East Queensland (pop 2.5 million as against Iraq’s 20 million) experienced some blackouts last year, and the distributor, Energex is planning to spend over $A3 billion (about US$2.4 billion) over the next five years to fix the problems[1]. That’s to upgrade a network which has suffered from some underinvestment, but nothing remotely comparable to the two wars and decade of sanctions Iraq has had to deal with. Put simply, $1.2 billion is chickenfeed, and could not be expected to do more than prevent further deterioration.
And electricity grids need generation as well as distribution. $US 1.2 billion spent here in Australia would buy one decent sized power station, say 1500 Megawatts generating capacity. That’s not even enough to replace the capacity that was wrecked, neglected to the point of collapse or comprehensively looted for parts during the war and its aftermath. And of course, construction in a war zone is many times dearer than in Australia.
In this piece, written shortly after the war, I concluded
If there is to be a reasonable chance of establishing a stable democratic government, it will be necessary to spend at least $US25 billion and probably $US50 billion. Australia’s share would probably be at least $A1 billion. This is a large sum of money, but Bush, Blair and Howard had no trouble finding the same amount to fight the war. Regardless of whether individual Australians supported or opposed the war, we are stuck with the obligations we have collectively assumed.
In fact, as far as I can tell, the amount of money that has actually been spent on reconstruction so far is around $5 billion, and the amount left over from the US appropriation of $18 billion, after overheads and diversions to security is between $5 billion and $10 billion. The World Bak Trust Fund, set up in 2003 with pledges of around $10 billion, mostly from Japan, Saudi Arabia and Kuwait, currently contains about $300 million.
fn1. Disclosure and disclaimer: I’m on the board of the Queensland Competition Authority which regulates Energex. I’m not expressing any opinions about Energex, apart from the generally accepted point that there was underinvestment in the past. I’m just using it as an example with which I’m familiar.
Read More »