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Bush expresses optimism about Iraq's economy

WASHINGTON—President Bush offered a mildly upbeat assessment of Iraq's economic reconstruction Wednesday, saying the country is making slow progress against a host of big problems.

Speaking with new candor about the difficulties in Iraq, Bush tempered his optimism with acknowledgement of past mistakes and a description of the remaining hurdles to economic development. He said Iraqis were beginning to see the benefits of freedom despite uneven progress in the rebuilding effort.

"Iraqis who were disillusioned with their situation are beginning to see a hopeful future," he said in a speech at the Council on Foreign Relations. "It doesn't always make the headlines in the evening news. But it's real, and it's important, and it is unmistakable to those who see it up close."

Haider al-Fraijie, an economics professor at Baghdad's Mustansiriya University, offered a mixed assessment of Iraq's economy.

"It is not the rosy picture being painted by Bush," he said. "We are facing administrative and financial corruption and we are beset by a huge amount of embezzlement and bribery."

On the bright side, Fraijie said, "Our national budget is growing, our government's expenditures are up, there is an increase in personal income and our currency is relatively stable."

The president's progress report on Iraq's economy was the second in a series of speeches on his strategy for victory. Last week, he focused on security issues. Next week, he'll talk about the transition to democracy in advance of the Dec. 15 elections for a new Iraqi government.

Perhaps the most remarkable thing about Wednesday's speech was the president's willingness to point out problems, as well as progress, in Iraq. For the first time, Bush implicitly agreed with critics who've said war planners failed to anticipate post-invasion security problems and other issues.

"Over the course of this war, we have learned that winning the battle for Iraqi cities is only the first step," he said, acknowledging that Iraqi security forces have been unable to hold territory that Americans have captured. "We found that after we left, the terrorists would re-enter the city, intimidate local leaders and police, and eventually retake control."

After citing recent successes in Najaf and Mosul, two cities that have been retaken from insurgents and turned over to Iraqi security forces, the president anticipated his critics by listing some of the lingering problems.

"Like most of Iraq, the reconstruction in Najaf has proceeded with fits and starts since liberation. It's been uneven. Sustaining electric power remains a major challenge," he said. "There are still kidnappings, and militias and armed gangs are exerting more influence than they should in a free society."

Bush said Mosul also had problems, despite relative calm that had helped efforts to rebuild schools, roads, bridges, hospitals and the city's water and sewer system.

"Terrorist intimidation is still a concern. This past week, people hanging election posters were attacked and killed," the president said. "Yet freedom is taking hold."

For Iraqis who are living in troubled areas, however, security problems often are the defining aspect of daily life.

Abdul Salam, who owns a jewelry shop in Baghdad, said the surge in consumer spending, one of the bright spots in Iraq's economy, was subject to wild swings when calm neighborhoods were shaken by car bombings and assassinations.

"When there is a crisis, everybody closes their shops for weeks or sometimes months, and the economy suffers," he said.

Democrats dismissed Bush's assessment as wishful thinking.

Senate Democratic leader Harry Reid of Nevada charged that Bush "cherry-picked isolated examples" of progress to give "an inaccurate and incomplete picture of the situation on the ground for most Iraqis."

An analysis released Wednesday by the Senate Foreign Relations Committee found problems in Iraq that included a high level of poverty. Citing estimates from U.S. officials in Iraq, the committee reported that about 25 percent of Iraqis live below the poverty level of $1 a day.

The Senate report cited a host of problems in Iraq's economic infrastructure. Workers are paid in cash, credit is unavailable, and most Iraqi assets are held by two state-owned banks that have a negative net worth.

"Reconstruction has not always gone as well as we had hoped. ... Rebuilding a nation devastated by a dictator is a large undertaking," Bush said. "The terrorists and the Saddamists have been able to slow progress but they haven't been able to stop it."


(Hutcheson reported from Washington, Lasseter from Baghdad, Iraq.)


(c) 2005, Knight Ridder/Tribune Information Services.

PHOTOS (from KRT Photo Service, 202-383-6099): BUSH


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