PRESS BRIEFING WITH U.S. AMBASSADOR TO IRAQ ZALMAY KHALILZAD SUBJECT: IRAQ RECONSTRUCTION

Multi-National Force-Iraq

Thursday, 23 March 2006

Briefer: U.S. Ambassador to Iraq Zalmay Khalilzad

PRESS BRIEFING WITH U.S. AMBASSADOR TO IRAQ ZALMAY KHALILZAD SUBJECT: IRAQ RECONSTRUCTION LOCATION: COMBINED PRESS INFORMATION CENTER , BAGHDAD , IRAQ DATE: FRIDAY, MARCH 24, 2006

AMB. KHALILZAD: Well, hello, good. It's a pleasure to be with you here today. I wanted to take some time to talk to you about reconstruction. I thought it's an interesting time, as we approach the three-year anniversary of our reconstruction efforts here in Iraq , to take stock of some of the significant achievements that have been accomplished, as well as look to some of the remaining challenges.

I think when we start it's useful to remember where we were in the 2003 with liberation. Iraq 's per capita income had fallen from around $4,200 per person in 1980, which at that time was higher than Spain , to at the time we liberated Iraq $500 per person. Today that has doubled in the last couple of years to $1,200 -- significant advancement in a very short time. In 2003, Iraq had the highest debt per capita in the world -- or, excuse me, highest debt as a share of GDP in the world. And today about two thirds of that debt has been written off as a result of the support by the international community. The literacy rate had dropped by 2003 to 40 percent, compared to 1960 when Iraq had one of the highest literacy rates in the region at 80 to 90 percent of people over 15.

Also would like to highlight obviously where we were right before -- at liberation in 2003. The country was a one-man dictatorship, a completely controlled society, no free press, no access to outside information, no voice for the people in their government or their future. Today we've had two national elections, with the last national election having participation by 75 percent of the population, and broad participation across sectarian and ethnic lines. We have a constitution, one of the most modern in the region, protecting human rights and democratic principles and institutions. We have a robust press, as evidenced by today and all of the articles and news reports you see in the media inside the Iraqi press. We have over 2,000 Internet cafes, that basically didn't exist except for the elites in Saddam's time, and over 5 million cell phone users from virtually no cell phones in 2003. So Iraq is connected inside and with the outside world in ways that it never was before, providing freedom and opportunities for Iraqi citizens.

With respect to the infrastructure, in 2003 it was on the verge of collapse. It had been cannibalized, stealing parts and pieces from all over the country to keep things running. There had been no significant investment for nearly 20 years, and the regime was focusing on building palaces rather than investing in its infrastructure for the benefit of its people. Baghdad, a good example, had three sewage plants that had been closed for six years that accounted to nearly three quarters of the entire sewage capacity in the country, and had not been operating, allowing sewage to fill the streets and be dumped into the river. Power, while it was available in Baghdad, it was really only available to the Baghdad citizens -- it was focused on the elites and most of the rest of the country only got four to six hours of power a day. That left us with the World Bank in 2003 estimating there was a need for $60 billion in investments in the infrastructure just to bring Iraq back to where it needed to be. And that's the context in which the U.S. government provided $21 billion in appropriations to support relief and reconstruction in Iraq .

A top priority of course was initially large-scale infrastructure projects to restore Iraqi oil production and bring back on line electricity and some of the other essential services. Oil was particularly important at the end of the war. They were producing only about a half a million barrels a day, and oil of course is the engine that drives the revenues that allow the Iraqi government to fund the budget and the programs that are needed to support its citizens. The idea of this program was to kickstart the economy and to lay a foundation upon which Iraq could build with its own capital investments, private sector investment and international community support. I would highlight that the kick-starting process has occurred in the sense that not only has the per capita income doubled, but there are -- more than 30,000 businesses have been registered in over the last year. If you look out into the streets and the economy, you'll see a very vibrant economy with a number of cars having increased many-fold, people buying consumer and durable goods -- refrigerators, air conditioners,televisions and so forth, that what you will see is actually a fairly robust economy out there. Of course that leads us to electricity, with the demand for electricity having really doubled since the liberation, it's presenting a significant challenge for the country. But that's a sign again of the growing economy and the robustness of the economic activity taking place and the freedoms that people are enjoying which they didn't enjoy in the past to access those goods.

Where we are in electricity -- and I think it's important to note, because I've seen a lot of articles that I think are a little bit inaccurate in reflecting this -- that we are almost at pre-war levels. Over the last week Iraq was producing 4,100 megawatts. Pre- war it was about 4,300 megawatts, so you're almost to the pre-war level. At the end of the war Iraq was only at 2,500 megawatts. So it gives you a sense of having almost doubled from where we were at the end of the war. Significant projects in Kirkuk , Baiji, (Durah ?) and Baghdad south have been responsible for adding 2,000 megawatts to the grid as a result of U.S. projects. Countrywide the average for electricity is about is about 16 hours of power a day over the last week. The challenge again remains Baghdad . I know many of you watch Baghdad very closely, and the challenge in Baghdad is a result of by and large interdictions in transmission lines to the city and some challenges on the fuel and operation and maintenance of plants around the city. This is something that is being addressed by the government and with the support of our programs.

On water and sewage, I'd like to highlight that we've built or repaired 19 water treatment plants -- that's to serve 2.7 million Iraqis. And I would highlight here that one of the recent polls, the Oxford Research Poll, showed that roughly a third of Iraqis say that they have cleaner water than they did before and better access than they did before the war. That didn't come just accidentally; that's a result of the programs that we put in place to support Iraq .

On sewage, they rebuilt or repaired 8 centralized sewage treatment plants to serve about 5 million Iraqis.

Education of course was important. I talked about the literacy rate before, and also the curriculums under Saddam Hussein's time were not modern curriculums for open educational opportunities. We have over 3,000 rehabilitation projects in the schools area and have distributed with the U.N. about 9 million textbooks; 36,000 teachers have been trained through programs supporting Iraqi teachers.

On the health side, a nationwide vaccination program has immunized nearly 100 percent of Iraqi children, so once again a significant achievement. I'd like to highlight that we have also learned things as we've gone in working with Iraq as a partner, and we have adjusted our program, learning from that experience. We have focused more in recent times on empowering the national government and the provincial governments in designing the programs and implementing the programs for our reconstruction projects. There's been significantly more direct contracting. We shifted from in the past about two-thirds our program being design, build large multinational kinds of programs, to now where we are about 75 percent direct contracting. So a significant change.

We moved to more immediate smaller projects with higher visible impact, so you see us moving up to the provinces and working on the smaller projects as a way to get quicker results. And we focused on sustainment, to make sure that the programs and projects we put into place can be sustained and continue with the Iraqi government ownership and support.

In the last few months -- I can just give you a couple of quick examples -- we have had 100 small potable water projects under direct contracts that have benefited 200,000 Iraqis. And we have programmed millions of dollars through the provincial reconstruction development committees, which are part of the provincial council process where your elected leaders in the provinces work together with ministry officials to design small programs that will benefit provincial areas and the citizens of Iraq . And on the energy side we work very closely with the Iraqi government, putting together a plan for this summer that will try to address some of the challenges you face on electricity for Baghdad, focusing on making sure you have the right fuels, that you have spare parts and the repairs are made, the transmission lines are made more resilient to attacks, and that security is in place to help resist the interdictions.

With that I do need to obviously note that significant challenges remain. This is meant only to be our support as the foundation upon which Iraq can build. As I mentioned earlier, the World Bank highlighted the significant investment that's needed in this country. I think the key is for the new government, when it's stood up, to take a very strong stance in putting into place the policies and programs and reforms to strengthen your market economy. You need to be able to attract the private sector capital and investment to spur job creations and economic development. But in that context I want to highlight that the U.S. government remains committed to Iraq 's future and that we remain committed to continuing our reconstruction efforts and programs and to continue to help Iraqi people during this period of transition. Thank you.

Q (Through interpreter.) Firahdin (ph) from Radio Sawa. I would like to ask you about many projects which have been carried out in Iraq . But press reports talk much about much corruption when carrying out these contracts. Maybe 70 percent of the funds for these projects have gone to the pockets of those who are corrupted who are carrying out these projects so the Iraqi people don't get much benefit from these projects in the level of water, electricity and hospitals. The Iraqi hospitals lack normally medical materials because of this corruption. My question: Did you carry out any investigation in this connection? We have an information on this issue, those who carried out these -- those who said they were going to carry out these projects and they didn't honor their commitments.

AMB. KHALILZAD: That issue is I think -- I'm sorry, he's asking about the issue of corruption and is concerned that a significant portion of the funds for reconstruction of Iraq went into the pockets of individuals who benefit from that, and he wanted to know whether I have any information on that and provide additional insight.

You use the figure of 70 percent perhaps going into the pockets of individuals. What I would say in the programs we have been involved in -- that is by no means anywhere near the kind of problem that we've seen in relationship to this -- I think that probably comes from there can be isolated incidents where auditors or inspector generals have gone in and found problems where money was supposed to be spent on something and it wasn't. So that clearly -- on individual projects you can have a problem like that, but that is nowhere in any way reflective of the entire program. I think by and large the amount of corruption in the IRF program, the amount of money that we've worked on, the $21 billion, has been very small. The issue of corruption is a real one for the government though, and it's something that the new government is going to have to face square on. The programs and projects I think in your government's hands have to be seen as being fair in terms of the way they do competition for the project contractors and the accountability for those programs have to be strong. What we have done in our program as I mentioned is try to move to programs where your government has better transparency with us as to what we're doing. So we've been focusing both with the national government and especially with the provinces on working with the provincial councils, so they see what exactly it is we are going to spend our money on; they see the contracting process we're going through in terms of who the bidders are, and how we made decisions on who got those contracts. And then your provincial government can help follow up, including the elected officials on the provincial council in watching that progress to see whether it's really happening. My suggestion is this is the same kind of thing you're going to need at the national level for your own programs and projects of capital investment. You need more transparency in the Iraqi government system so citizens, civil society, reporters and others can go out and see where that money has been going, how it's being spent and follow and track it.

Q I wanted to ask you about the $60 billion World Bank figure. That estimate was made a few years ago, and obviously as you know security costs have gone up substantially. The special inspector general for Iraq reconstruction has pointed out that millions and millions of dollars have had to be diverted from the very infrastructure programs you're talking about to pay for the security. What's a realistic cost estimate now for Iraqi reconstruction, and what's a realistic amount that the United States will have to pay?

AMB. KHALILZAD: Well, I don't have a magic figure for you, because it's a very enormous task. I think some of the latest figures I've seen it's between $70 and $100 billion as a reasonable estimate for reconstruction. On electricity alone the estimates are needed for building a system that can provide 24 hours of power for Iraq is $20 billion. The U.S. has spent roughly $4.5 billion so far on electricity. So it gives you a sense of what's required there. That being said, some of that investment can come from obviously not just the United States, but should come from the Iraqis' own capital investment budget, and they are in the process now in 2006 -- they have put significant capital investments into their budget, and as their oil revenues increase they should be in a position to continue to do that.

Second, the international community needs to step up and help provide some of that support. The World Bank has begun to do lending in Iraq . The Japanese government has made a major commitment of several billion dollars as well to the infrastructure in this country through soft loans, and they're just beginning the process of programming that money. And we are encouraging other bilateral donors who have made pledges in the past to move forward quickly in programming and disbursing that, and in particular I would think that the Gulf States would want to do more in the way of infrastructure development in this country.

Q (Through interpreter.) Harafa Mahdi (ph) from Al Hurra (sp). During our visits to some areas we have noted that there had some reconstruction in the north of Iraq because of the stability in the north. But on the other hand there are some cities in the south of Iraq which has this stability. So why is this delay in carrying out the projects in the south of Iraq ?

AMB. KHALILZAD: I think probably you just -- sorry, the question again was she's said that they've seen a fair amount of reconstruction happening in the north because of the stability, but in the south she hasn't noticed as much reconstruction and was wondering why -- that difference. I guess what I would like to do is perhaps provide you with some detailed information about projects and programs. We have not had more reconstruction in the north than in the south or in central Iraq . In fact, our projects are distributed fairly evenly across the country. I think some of the challenges that you see in central Iraq have to do with the insurgency, and some of the projects that we've done are actually successful in terms of the projects but they have trouble in delivering that service to the individuals because oftentimes interdictions or disruptions in the transmission, whether it's interdiction in the water getting to the homes or transmission lines being knocked down or whatever. There are some fairly simple ways to keep those benefits from happening. So people don't see them often as rapidly as they would, but they are there and they will see them in the future. In the south we've had significant projects in all of the provinces, and I'd be happy at another time with more detail to go through them.

Q I was just wondering if you could give some figures for what the economic growth rate is right now in Iraq and what it's projected to be. And, related to that, I believe that the projections are based on oil production and oil exports. So could you give estimates of where oil production and oil exports are at today and why they are not as high as you would like them to be right now?

AMB. KHALILZAD: Sure. I believe in 2005 GDP growth was at 2.6 percent.

It's projected to be in the range of 10 percent in the coming year. On the oil side production has been roughly over the last year 2.1 million barrels a day in 2005, and we would like to see that grow this year. Exports have been in the roughly 1.4 million barrels a day range in 2005. Most recently, for instance, that's been growing to 1.6 million barrels a day. We hope that that's something sustainable here in this coming year. Roughly to support the government of Iraq 's budget you need about 1.65 million barrels a day in exports. Our projection though is for that -- we'd like to see that grow over the next year, to see production at roughly 2.8 million barrels per day perhaps by this time next year. We would like to see the exports to grow above 2 million barrels a day.

The challenges I think you highlighted. The major challenges have been twofold here. Over the winter there's been some problems in the south with high seas. We've had some trouble loading ships there, and that has caused a dip in the exports. And that dip in exports has actually caused a dip in production, because they don't have enough storage to continue producing if they can't export it. And in the north they have lost about 250,- to 300,000 barrels a day in exports because of interdictions, and that has also constrained production, because they don't have the pipeline capacity to move it when the pipelines are interdicted.

Our efforts are twofold obviously. One, in the south we have major projects underway to improve well workovers to increase production, and we have a project to improve terminal offloading, and we have a program for an offshore oil platform. And in the north we are working very hard on oil pipelines and the infrastructure security issue to try to strengthen the possibility of oil exports in the north.

Q Rod Nordland from Newsweek. Ambassador, the president spoke quite a lot on Monday about Tall Afar and our successes there. Could you elaborate any on reconstruction projects underway there and what sort of reconstruction efforts are actually happening in Tall Afar?

AMB. KHALILZAD: Okay, I don't have a detailed break-out for you right here, but we can get that for you. But the key there is focused again on all those essential services, rehabilitating schools to get the schools back up and working, getting the water supply functioning again, getting electricity back on, getting the health clinics back open and reconstructing some of the damage to buildings and homes in there, as well as some compensation is being provided b the government to some of the families there. So in all of those areas you'll have seen progress. I think the president was talking about that that's the major areas.

Q Ambassador, I just wanted to ask you can you give us a breakdown of which contracts or what percentage of the contracts are awarded to American companies, and what percentage are awarded to Iraqi companies?

AMB. KHALILZAD: I don't have that with me now. But what I can tell you is that it's shifted dramatically in terms of the number of Iraqi companies getting direct contracts at this point in time, and that's largely due to our experience. We've learned which Iraqi companies are reliable and effective in their programming.

But I would say even at the beginning of this program it was almost entirely Iraqis who were doing the reconstruction work. So the major companies that came in hired Iraqi subcontractors or regional subcontractors which hired Iraqi workers. So the involvement of Iraqis from the very beginning has been the majority in terms of who's actually doing the projects. The challenge has been from the beginning to where we are now we would hear frustration from people in the provinces or in the areas where the projects are going on that they know that the people we hired weren't the right people. They weren't reliable or they weren't as productive as they should have been, and they knew better people for this particular purpose. So over the last couple of years we've been able to benefit from that, and now I think have a pretty good group of Iraqi contractors which are providing the services. And my sense is as well that the Iraqis have learned a lot from this process in terms of how being -- achieving sort of international standards in contracting and programming and construction.

Q I'd like to ask about the latest U.S. aid that is forthcoming and being discussed in the Congress right now. As I understand it, it's $1.6 billion in the supplemental. Would you describe to us in as much detail as you can in just a couple of minutes what that consists of, what it will be put toward, including for example the amount devoted to prison building? And, secondly, is there any prospect for additional U.S. money this year for reconstruction, including for example from any contingency funds that might be available at the embassy and that might be brought forward for the new government once it's in place?

AMB. KHALILZAD: In terms of what's in front of Congress right now, in fact there are two pieces. One is the FY '06 supplemental request. That's money for this -- immediate in terms of when they actually act upon it. And then there's an FY, fiscal year '07 budget request which would start next fall. In the supplemental request the key elements of that are focused on what I would call counterinsurgency efforts related to focused stabilization, trying to build in economic activity as a way of undercutting the ability of insurgents to discourage support for their provincial and national government. And so this answers your question, and that very much is focused on the new government and the importance of helping to support them. It's centered around our PRT concept, which is the provincial reconstruction team concept, which we are trying to put into all 18 provinces. And the idea here is that of this money we've requested approximately $325 million for provincial reconstruction development committees. These are these programs in the field where the provincial councils actually program money to support the projects. The idea again is if you get the local government responding to the needs of citizens working on issues such as improving roads, health clinics, education, water and some local electricity kinds of projects, you can also help start isolating the effect of the insurgents in trying to build or reduce confidence in their government.

There's also a national capacity development component of the supplemental, and the idea here is that with the new government they are going to need significant support in improving the capability of the ministries and the central government in delivering services. And so there's about $125 million for that. There's about roughly $3 million for infrastructure security, and I've talked about this a little bit earlier, the importance of protecting the infrastructure from attacks would in fact improve both the electricity for Baghdad as well as the oil export issue. And so that's an important element. And there is over $300 million for sustainment of our programs and projects, which would primarily be in the water and electricity area, but also in some other essential areas, service areas as well. And this idea is to make sure that the spare parts, the maintenance programs and others are there to continue to support the continued effectiveness of our programs and projects that we put into place.

I can give you a more detailed break-out at another opportunity if you want to do that individually, I just don't have the spreadsheet in front of me.

Prisons. There's $100 million in there for prison construction, and that's meant to provide hopefully another 10,000 beds to reduce overcrowding within the existing prison system.

Q How much is in the '07 request?

AMB. KHALILZAD: In the '07 request I believe it's $770 million. That's focused primarily on capacity development, again ministerial capacity and programs of training for the new government as well as for sustainment of our programs in Iraq .

Q Mr. Ambassador, there are --

AMB. KHALILZAD: Just one second -- Q Your office has continually expressed surprise at how the infrastructure was since you got here. So how can you be surprised by this since there were years of sanction designed to -- (inaudible) -- destruction?

AMB. KHALILZAD: Well, I think we didn't have a good concept of how much they had cannibalized the system to keep things running. So what we could see from the outside is what was actually being produced perhaps in terms of electricity or what oil was being exported and so forth. So we didn't have a good sense of how fragile that system was and how weak it was from those years of neglect.

You talk about sanctions, but with sanctions the Saddam regime still had the ability somehow to build hundreds of palaces even during the last decade of its life. So if you look around and they still had the ability to serve the elite in some pretty spectacular and splendid ways, so I think it was really laying at the doorstep of Saddam and his regime in terms of what happened to the infrastructure.

Q I wanted to ask if there's going to be enough money to do all the projects that had originally been envisioned with the first reconstruction fund. The inspector general talked about this reconstruction gap, and noticed for example that only 36 percent of the water projects originally planned were going to be done and so on. And given all the money that's been diverted to the security, is the United States going to complete all the projects that it originally envisioned in the original reconstruction fund? And, if not, who's going to do them? And has there been any source of funding identified for the additional money the World Bank estimates?

AMB. KHALILZAD: Right. Well, there's two things I think that's important to think about when we talk about this. First, in terms of when you're talking about originally planned projects, I think what the inspector general is looking at is sort of the initial stages we drew up some conceptual designs of what it is we would like to do, but we actually didn't know what could be afforded within the resources until projects had been scoped and definitized by project implementers. So what you found when you started doing that is, Well, we would have liked to do X, but you can only do Y because actually it costs this amount of money. So from the very beginning I think we need to be a little careful about statistics in using this.

At the same time, I do recognize his point, which was we did divert some funds from straight essential services reconstruction to other areas, including the elections -- because of the importance of supporting the democratic process -- as well as significant funds for security force training to accelerate the process for Iraqis to take responsibility for their own security in this country. I think those were wise decisions based on the environment and the importance of putting Iraqis out in front in providing their own security. That does leave additional projects that are not able to be done with that money obviously that would have been there. At the same time, there had always been a delta or a difference between what is needed in Iraq and what we were providing. This was never meant to cover all of those reconstruction costs. You asked, Where do you go from here? I think I mentioned earlier the key point is the Iraqi government needs to build up its capability to do its own capital budget investment, making its own decisions. It has substantial capabilities to do that, for instance in the oil sector it probably can invest several billion dollars a year in capital investments, which will have very high returns if it's invested wisely. And that in turn generates more capital for which it can reinvest in the social services and support for the country.

But that being said, they should also be looking to international financial institutions -- the World Bank, the IMF -- as well as to other investors, including the Gulf States , to support them. Most importantly will be private sector investment in this country. That takes some significant new policy adjustments by the government, starting with the petroleum law to ensure outside investors of how their investments will be handled in this country. And so that will be one of the major tasks that the new government is to work on, setting that framework that will attract the kind of investment it needs.

Q Brian Bennett from Time magazine. Could you describe in detail the legal framework that the new government should put into place to encourage foreign investment in the infrastructure, particularly in the oil things to ensure foreign private companies that their investments will be protected?

AMB. KHALILZAD: Well, I think for a starting place they need to deal with ownership issues and production sharing issues in the oil sector. And this is a very important issue for the Iraqi government and Iraqi people. They're very sensitive about the issue of oil. They're concerned over given their past that the wealth of the oil sector is shared by all of the people of Iraq . I think that's very important. One of the major issues they're going to have to put in place is how that sharing works out amongst all the people so that not just specific groups in Iraq benefit from that. The oil companies will be very interested in ensuring how they have the support in terms of the legal rights to returns for their investment, and if there are any disagreements in contractual arrangements, how those are handled in courts and how they are enforced. This is a big issue that goes beyond just writing the laws. It has to do with the judicial process in Iraq itself, which is ensuring that there is a robust system in place, that if you have an issue, a legal issue, that you take it to the courts, you have a sense of fairness in that process, and then also once you get a determination that that determination can be enforced appropriately. A lot of work needs to be done in Iraq on the issue of rule of law and putting these things into place. But the starting point is putting in a clear investment framework on the oil sector.

Q Hi, Nick Olivari, Reuters. Sir, at what price per barrel of oil will the Iraqi government be able to fund its own projects? AMB. KHALILZAD: Well, it depends on what you mean "fund its own projects," because you know you have to always live within constraints in terms of how much you can do in investment. What I can tell you, as I said a little bit earlier, is that at today's oil prices they need roughly 1.65 million barrels per day in exports to fund their budget. That budget includes substantial capital investments in many of its sectors.

Q What degree of capital investment would amount to --

AMB. KHALILZAD: I don't have that for you in terms of what the capital budget is. I would have to refer you to the Ministry of Finance for that.

Q Could you give us an idea of what proportion of the reconstruction budget is going on security now? And we've seen estimates as much as 30 percent of some contractors' budgets is being spent on security. Do you have a kind of estimate of what that would be?

AMB. KHALILZAD: Right. We're still -- we've looked at that again since I've seen some of those estimates, and we still see our programs being in the range of 16 to 22 percent of the costs of our reconstruction projects going for security for those projects, the workers, the contractors and the project site. So I feel pretty good about that still being the number that we're working with. Obviously people have come up with specific examples on individual projects, where you can have a much higher ratio for those individual projects based on where it is or particular problems that they've had. But that's the average that we're using.

Q Can you talk about what are possible -- (inaudible) -- to encourage private sector investment in the country, not foreign investors but -- (inaudible) -- ? How do you encourage the private sector? I know there's things like -- (inaudible) -- stocks, the stock exchange -- (off mike)?

AMB.KHALILZAD: I think the most significant piece that we see is supporting the banking system, and we've been putting a lot of our program support money into helping that, facilitating the development of that. The biggest challenge for investors today is moving money around the country, having an automated payments clearing system and having enough bank branches and access to banks that makes that possible. I think there's now only one ATM machine in the country, but that's changing quickly and I think you'll see some significant changes there. Two outside banks have begun investments and have started opening branches in Iraq . That's a very positive sign. I think that ability to move and to work with capital investments inside of Iraq is very much dependent on that banking system. So I would put that near the top for this country.

Q Where is that ATM machine? AMB. KHALILZAD: That ATM machine is at one of those banks, the Hong Kong Bank here that's in Baghdad .

Q (Off mike)?

AMB. KHALILZAD: No.

Q (Off mike)?

AMB. KHALILZAD: I don't have those names with me, I'm sorry.

We can get that for you.

This will be our last question.

Q Just simply, there have been problems in staffing the provincial reconstruction teams in the recent past. Can you tell us where that stands at the moment? How many of the provinces have full reconstruction teams?

AMB. KHALILZAD: Sure. We have established three, and expect to be opening another one this week. So hopefully end of -- actually next week, by the end of next week, you should see four provincial reconstruction teams established. I would like to see four open in April. In terms of staffing, we've identified virtually all the civilian staff needed to open all the PRTs in the country, and working now on issues of logistics and support for those PRTs. So the staffing I think we've pretty much resoled since that was raised as an issue in terms of identifying competent and capable individuals to support this program.

One more.

AMB. KHALILZAD: I would highlight, since we started as well, we've had two coalition partners who agreed to join this effort with the U.K. planning on leading the PRT in Basra, and the Italian having announced that they will lead a PRT in Dhi Qar, Nasiriyah.

Q Just one last. I don't know if you can answer this, but I wanted to ask you about the Baghdad airport. What needs to be done -- it's mostly local regional flights. What needs to be done to get international or intercontinental flights in? What's the status of getting the airport up to real international standards?

AMB. KHALILZAD: I think a significant amount has been done already in that area. We actually have a senior consultant on transportation that could answer a lot more on that area. I think the most important challenge is ensuring that it meets the security standards required by some of those other international carriers. We feel that they've made a huge amount of progress on that particular front already, and the government of Iraq is now working on a transition plan for that. In terms of the other systems that we put in place in the Baghdad airport, I think that they're fairly well advanced and it will depend on actually the interest of international carriers in servicing Baghdad . But I think I could point you to our transportation attache -- our attache for transportation matters would be able to provide you a lot more details on the technical aspects of the projects and programs that are ongoing there.

Do you want one last one? Okay, go ahead.

Q (Off mike)?

AMB. KHALILZAD: Well, I think it's really comparable to a year ago. It's pretty much the same. The first year there was some success in exporting reliably through the north, but I think over the last two years -- I do have an oil expert here. Captain Rose, do you have any of your tables here that you wanted to give? If you could just come up here for a second, he could probably answer it. In fact, I think what I will do is I will let you talk to Captain Rose after this. That might be easier -- unless others are very interested in the technical details of that. But essentially where we are, that challenge in the north is not just recent. That's a challenge that's been going on for some time and the insurgents have targeted northern export pipelines in part to keep those revenues from flowing.

Okay, thank you very much. I really appreciate you taking the time to come out today and listen, and I appreciate all the very smart questions that were produced. Thanks.

END.