Investment in post-invasion Iraq refers to efforts to rebuild the infrastructure of Iraq since the US invasion of Iraq in 2003. The responsibility of the reconstruction of the country immediately after the invasion fell on the US-led occupation authorities. The US effort to rebuild the country during the occupation was considered a failure. Since the end of the occupation it has been the responsibility of the government of Iraq to rebuild the country which, as of 2026, has experienced significant development.
During the occupation of Iraq, along with the economic reform of Iraq, international projects were implemented to repair and upgrade Iraqi water and sewage treatment plants, electricity production, hospitals, schools, housing, and transportation systems. Much of the work during the occupation of the country was supposed to be funded by the Iraq Relief and Reconstruction Fund, and the Coalition Provisional Authority.
A significant event for aid or investment in post-2003 Iraq was the Madrid Conference on Reconstruction on 23 October 2003, which was attended by representatives from over 25 nations. The administration of funds assembled at this conference and from other sources fell on the United Nations and the World Bank under the umbrella of the International Reconstruction Fund Facility for Iraq.
While reconstruction efforts during the US occupation produced some successes, problems arose with the implementation of internationally funded Iraq reconstruction efforts. These included poor administration on the part of the US occupation authorities, inadequate security, pervasive corruption, insufficient funding and poor coordination among international agencies and local communities. Many suggested that the efforts were hampered by a poor understanding of Iraq on the part of the international community assisting with the reconstruction.
After the occupation of Iraq, the Iraqi government has been independently rebuilding the country through economic initiatives and large-scale reconstruction efforts, such as the Grand Faw Port.
Pre-2003 status of Iraq infrastructure
During the 1970s Iraq made extensive investment in the water sector and other infrastructure using the proceeds of oil revenue. This investment slowed during the Iran-Iraq War of 1980 to 1988, but left Iraq in 1990 with a relatively modern electrical, water supply and sewerage system. During the Gulf War of 1991 aerial bombardment caused severe damage to the electric grid that operated the pumping stations and other facilities for potable water delivery and sewage treatment. The sanctions imposed by the UN at the conclusion of the Gulf War exacerbated these problems by banning the importation of spare parts for equipment and chemicals, such as chlorine, needed for disinfection. As a result of the war and sanctions, delivery of water dropped precipitously. For example, UNICEF estimates that before 1991, 95% of urban dwellers and 75% of rural dwellers were served by modern water supply systems that delivered treated water to homes and businesses. By 1999, urban coverage had dropped to 92% and rural coverage to 46%. Individual water availability showed greater changes. Between 1990 and 2000, the daily per capita share of potable water went from 330 litres to 150 litres in Baghdad, 270 to 110 in other urban areas, and 180 to 65 in rural areas.http://www.unicef.org/infobycountry/files/Sitan2003revised.pdf UNICEF Report, 2003
The March 2003 invasion of Iraq produced further degradation of Iraq's water supply, sewerage and electrical supply systems. Treatment plants, pumping stations and generating stations were stripped of their equipment, supplies and electrical wiring by looters. The once-capable cadre of engineers and operating technicians were scattered or left the country. Reconstruction efforts faced a nation with a severely degraded infrastructure.
Assessing reconstruction needs In preparation for the October 2003 Madrid Donor Conference, the joint United Nations/World Bank team conducted an assessment of funding needs for reconstruction in Iraq during the period 2004-2007. The resulting report UN/World Bank Joint Iraq Needs Assessment October 2003 identified 14 sectors and associated funding needs as shown in the Table below. In addition to this US$36 billion, the Coalition Provisional Authority estimated an additional US$20 billion in need including US$5 billion for security and police and US$8 billion for oil industry infrastructure.
Sector Needs (US$billion) Government Institutions 0.39 Education 4.81 Health 1.60 Employment creation0.79 Transport and telecommunications 3.41 Water, sanitation, solid waste 6.84 Electricity 12.12 Urban Management 0.41 Housing and Land Management 1.42 Agriculture and Water Resources 3.03 State-Owned Enterprises 0.36 Financial Sector 0.081 Investment Climate 0.34 Mine Action 0.23 Total 35.82
In 2007 the Government of Iraq and the United Nations created the International Compact with Iraq a visioning and planning entity which identified reconstruction as an essential element for meeting human needs and economic development.
US administration of Iraq reconstruction During the US occupation of Iraq, reconstruction efforts were plagued by poor management, mishandling of reconstruction funds, inadequate coordination with Iraqis and widespread attacks on construction sites and contractors as documented by the Office of the Special Inspector General for Iraq Reconstruction (SIGIR).
Funds for Iraq reconstruction were disbursed to Iraqi ministries, non-Iraqi government agencies and various non-governmental groups. These entities then supervised the acquisition of materials and reconstruction work which is conducted by both foreign and Iraqi contractors.
Funds held by the United Nations Development Group were disbursed through United Nations agencies such as the World Health Organization, UNICEF and the UN Development Program. These UN agencies directly contracted with equipment suppliers and construction companies. Disbursement of funds by the UN began in June 2004. Funds held by the World Bank are disbursed directly to Iraqi government agencies including the Municipality of Baghdad and national ministries. Granting of funds to Iraqi agencies began in December 2004.
A series of US agencies have managed funds held by the US-operated Iraq Relief and Reconstruction Fund. Beginning in May 2003, the Coalition Provisional Authority (CPA) began oversight of reconstruction efforts in Iraq. Within the CPA the Project Management Office (PMO) was created to manage reconstruction projects. Both the CPA and PMO were divisions of the US Department of Defense. On June 28, 2004, the CPA was dissolved and the Iraqi interim government took power. At this time, the management of reconstruction projects was transferred to the Iraq Reconstruction and Management Office (IRMO), a division of the US Department of State, and the Project and Contracting Office (PCO), a division of the Department of Defense, both under the oversight of the US State Department Mission to Baghdad. On December 4, 2005 the PCO was merged with the US Army Corps of Engineers, Gulf Region Division. Since October 2004, contracting support for Iraq reconstruction was also provided by the Joint Contracting Command-Iraq/Afghanistan. Other U.S. Government agencies, including the U.S. Agency for International Development (USAID) and the State Department, have also issued contracts funded by the Iraq Relief and Reconstruction Fund.
Funds from the US-operated IRRF are largely disbursed through contracts to private firms. Several US companies have been particularly prominent in receiving Iraq reconstruction funds. Bechtel of San Francisco, USA was awarded over $2.4 billion for infrastructure rehabilitation through USAID contracts. Flour AMEC, LLC, Greenville, South Carolina, USA was awarded nearly $1 billion for water, sewer of solid waste management systems. Parsons Corporation of Pasadena, California was awarded $1.3 billion for construction services. Washington Group International of Boise, Idaho, USA received awards of $580 million for water resource reconstruction projects. Kellogg, Brown and Root (KBR), a subsidiary of Halliburton of Houston, Texas received awards of $580 million. Another $1.2 billion has been distributed to Iraqi contractors. In 2005/2006 Symbion Power of the US were awarded $250 million of competitively bid new fixed price electrical infrastructure work throughout the country. Symbion Power is a privately owned engineering firm with an ownership structure that involves a security company Hart Security. The dollar figures provided here are that of July 2006.SIGIR Report to Congress July 30, 2006 Appendix H
Progress of Iraq reconstruction In October, 2004, the U.S. Congress created SIGIR which was charged with oversight of the use and potential misuse of the IRRF. The SIGIR conducts audits, investigations and inspections and issues quarterly reports to Congress. The SIGIR reports and U.S. Congressional testimony of Stuart Bowen, the Inspector General, were a primary source of information on U.S. funded Iraq reconstruction's overall status. The rate of disbursement of funds administered by the United Nations and World Bank was slow. Iraqi agencies and ministries were often unable to receive or process funds. Many United Nations agencies had great difficulty operating in Iraq due to the poor security situation.
Reprogramming reconstruction funds The original allocation of IRRF funds to the various sectors has undergone a series of reassignments. These allocation changes occurred in September and December, 2004 and March and December, 2005 and generally involved shifting money from water resources and sanitation and electricity sectors to meet security needs and to provide training and operating funds for facilities already rehabilitated under IRRF funding. The table below shows the changes that occurred in allocations (billions of $US) between September 2004 and December 2005. While the administrative expenses are listed as separate category, an additional $0.60 billion, spread across sectors, was spent on administrative costs in fiscal years 2004 and 2005.
Sector Allocation Prior to 30 September 2004 Allocation as of 31 December 2005 Electricity 5.46 4.22 Water Resources and Sanitation 4.25 2.13 Security and Law Enforcement 3.24 5.04 Justice, Public Safety Infrastructure and Civil Society 1.48 2.35 Private Sector Development 0.18 0.45 Iraq Debt Forgiveness 0.00 0.35 Oil Infrastructure 1.70 1.74 Health Care 0.79 0.74 Transportation and Telecommunication 0.50 0.47 Education, Refugees and Human Rights 0.26 0.41 Roads, Bridges and Construction 0.37 0.33 Administrative 0.21 0.21 Total 18.44 18.44
Reconstruction gap In October, 2005 the SIGIR introduced the concept of the "reconstruction gap" which was defined as the difference between the reconstruction planned and that which is actually delivered. In February 2006, the SIGIR reported that only 36% of water sector projects originally planned will be completed and only 70% of the originally-planned electricity sector projects will be completed. This shortfall was attributed to IRRF reprogramming of funds from these sectors to meet security needs, poor cost estimates in the original reconstruction plan, increased material costs and lack of administrative oversight. Estimates of the funds required to close the reconstruction gap were difficult to obtain because there was inadequate information on the cost-to-complete projects already in progress at the time. In addition to funds for reconstruction, SIGIR recommended that funds be allocated to sustain the reconstructed infrastructure. Without funding for supplies, technicians and fuel, the facilities that were completed may fall into disuse.SIGIR Report to Congress July 30, 2006 Appendix K
Security of international aid workers