On the Heels of Disaster

A little-known Agency for International Development SWAT team was on the ground in Iraq even before U.S. troops entered Baghdad.

By all accounts, the Iraqi city of Fallujah was riding a crest of anti-U.S. sentiment when Steve Epstein and Vic Tanner arrived in town last Aug. 1. That morning, U.S. soldiers patrolling the outskirts of Fallujah were met with a torrent of rocket-propelled grenades, prompting a 90-minute firefight with Iraqi insurgents. But Epstein and Tanner, two civilians working with the Office of Transition Initiatives (OTI), a tiny operation in the Agency for International Development, got a very different reception. A small group of tribal leaders took them to a well-kept house and, over tea and heaping plates of chicken and mutton stew, cautiously expressed their desire to begin in Fallujah the kind of U.S.-funded development taking place in other Iraqi cities-school refurbishment and water purification, for example. After lunch, Tanner chatted up a few teen-age boys, who talked excitedly about starting a soccer league. "I felt we were finally making a good connection," says Tanner. "We came back excited, thinking there were things we could do, but very mindful of the challenges."

It's no accident that OTI was in Fallujah, one of the most difficult places in Iraq for Americans to work. Sometimes known as the "Marines of AID," OTI staffers often are the first development workers on the ground in countries that have just emerged from war or prolonged political conflict. In East Timor, after the Indonesian military leveled the capital city of Dili in the summer of 1999, OTI set up its office in a couple of shipping containers. OTI specializes in highly visible, explicitly political development-support for free media, grants to women's groups and the like-intended to nudge fledgling governments toward democracy and stability. Created in 1994, the office is the brainchild of former AID Administrator J. Brian Atwood, who believed the existing AID bureaucracy, with its focus on long-term development, was ill-equipped to help countries in the pivotal days after a conflict. Where AID missions can take two years to get started in a country, Atwood wanted OTI to begin operations almost overnight. He persuaded Congress to give it "notwithstanding authority," a powerful clause in the 1961 Foreign Assistance Act that allows the office to bypass normal rules for procurement and hiring.

OTI accomplishes its work through small grants to host-country groups. Many grants are worth $100,000 or less (the cap on an OTI grant is $250,000). OTI tries to select grantees the way a venture capitalist picks promising companies, but instead of fledgling firms, the office funds nascent organizations that show potential to support democracy. In the early stages of a program, grants generally are awarded without competition. Of the 436 grants OTI had issued through Nov. 24 in Iraq, none was competitively awarded.

OTI is small. It has 46 employees, all but seven of whom are personal services contractors. These people hold yearlong contracts with AID, but can be fired with two weeks' notice. OTI has just one civil servant working on its $70 million Iraq program, the biggest to date. OTI also is informal. When AID missions open an office in a country, they hire administrative staff, including drivers and secretaries. OTI, by contrast, comes with a no-frills, do-it-yourself mentality. OTI country representatives do everything from setting up computers to troubleshooting electrical problems. "You have nothing there to work with at first, so you have to set up the office, the grants database, and begin to make contacts in the community. It's anything and everything," says Thomas Stukel, who has worked in 14 countries for OTI. With its hands-on approach and lack of red tape, OTI inspires genuine loyalty. Former employees describe an esprit de corps rarely found outside the military. "We were pretty cool," recalls Johanna Mendelson-Foreman, a senior fellow with the United Nations Foundation who was one of OTI's original employees in 1994. "We had a team that was diverse and bright, none of us were bureaucrats, and all of us were eager to move out."

Former and current OTI employees brim with classic American optimism. Frederick Barton, OTI's energetic first director, now a senior fellow at the Center for Strategic and International Studies in Washington, believes the government should enlist OTI to counter negative portrayals of the United States by Arab media outlets. "If we cannot overwhelm Al Jazeera, if we cannot come up with ways to attract a bigger audience than they're attracting, we're not the United States of America," he says. "OTI is the kind of organization that can do that." At OTI's Washington headquarters, the can-do spirit is hard to miss. In an office decorated with memorabilia from old OTI projects, Robert Jenkins, a 34-year-old personal services contractor who is OTI's team leader in Iraq, speaks passionately about the agency's work. "Every year the American people speak through Congress and say, 'Here are a bunch of cubicles filled with generally young people, who are given the ability to . . . change the world,' " he says, his eyes welling with tears. "We get paid to help people." Take away the cubicles and one might forget OTI employees and contractors were in a bureaucracy at all.

In Iraq, OTI's ability to move money quickly has endeared it to the Coalition Provisional Authority (CPA). The authority turned to OTI to refurbish government ministries ransacked by looters after Baghdad fell in April. "They're very effective in supporting CPA objectives," says a senior government official, who spoke on condition of anonymity. "CPA loves [them] for that." Iraq is uncharted territory for OTI. In size and political significance, Iraq dwarfs the agency's previous programs. What's more, OTI is just one of many agencies and contractors rebuilding Iraq under the aegis of the provisional authority. Some observers question where OTI fits in the effort. For example, OTI can renovate Iraqi schools. But so can Army civil affairs officers; Bechtel Corp.; Research Triangle Institute, a North Carolina firm doing local governance work under a $170 million contract with AID; and five nongovernmental organizations (NGOs) that are administering AID's community action program. The grassroots civil society effort is modeled on an old OTI program in Macedonia. "It's not really clear what exactly OTI's niche is, because first of all you have the civil affairs teams of the military that are doing a lot of the work that OTI normally would do," says Marina Ottaway, a scholar with the Carnegie Endowment for International Peace in Washington. "In Iraq the situation is extremely confusing because there are far too many actors."

In Iraq, OTI has been forced to work without one of its key partners, the International Organization of Migration, a widely respected nongovernmental organization with ties to the United Nations. The organization helped set up roughly 75 grant projects for OTI before suspending operations in October because of security concerns. Unstable security also has complicated efforts to interact with the community, a staple of previous OTI programs. Like all AID employees in Iraq, OTI workers travel in convoys and rely on Kroll, a private security firm based in New York, for protection. The Fallujah trip only happened after Tanner and Epstein, working through one of OTI's Iraqi employees, made contact with people who would be honor-bound to protect them during their visit to the violent city.

The trip generated seven grant projects, including the renovation of two crumbling schools that had received no maintenance from the Baathist regime since 1955. "We'd been a bit too shy up until then," says Tanner, a consultant with Bethesda, Md.-based Development Alternatives Inc., OTI's lead contractor in Iraq. "We'd not been aggressive enough in pursuing leads out there."

In dangerous areas, OTI's contracting freedom allows it to be more aggressive than some of its reconstruction counterparts. NGOs in the community-action program must hold competitions before issuing grants, a process that can take 30 days and requires a presence in the community. The NGO with responsibility for Fallujah, Cooperative Housing Foundation International, has not been able to start work there because of security concerns. But OTI can award a grant and leave. "They can hop in the helicopter and fly out to the Iraq-Iran border every day, do their work and come home. Nobody else can do that," says an NGO official in the community-action program.


OTI is aggressive by design. The office cut its teeth in the global hot spots of the 1990s. In 1994, OTI entered Haiti on the heels of U.S. Marines and started a controversial program to demobilize the Haitian military, considered a threat to Haitian president Jean-Bertrand Aristide. In the late 1990s, OTI bankrolled student and media groups opposing Serbian dictator Slobodan Milosevic, who branded OTI an arm of the CIA and harassed its employees. "Our cars were stolen, our homes were broken into," says Ray Jennings, a former OTI country representative in Serbia who is now a senior fellow at the U.S. Institute of Peace.

OTI honed its operating techniques in these early programs. In Haiti, the office tapped the International Organization of Migration to run its program to demobilize the Haitian military. OTI never goes into a country without its contractor and NGO partners, which bring much larger staffs and do most of the grant administration. OTI typically has just two of its own employees in a country. In Iraq, where OTI has eight employees, its staffers work shoulder to shoulder with their colleagues from Development Alternatives Inc. "After we've been working together for a few months, it's hard to tell who's delivering the main ideas, because it no longer matters whether it's a DAI person or an OTI person," says Bruce Spake, a manager for the company's agriculture and economics group.

Haiti led to one of OTI's chief innovations: the bullpen. When OTI got the call to go in, Barton, its first director, scoured his Rolodex for Haiti experts and other development professionals who might be willing to staff his team. The experience convinced him that OTI should have a standing roster of part-time experts, hired guns who could be called on in a pinch. "We needed help," says Barton. "And some of the best talent we wanted to attract wouldn't work on a full-time basis." Barton, a baseball fan, dubbed his collection of part-timers the bullpen. Thomas Stukel, 60, is believed to be the first person to join the bullpen. A retired AID Foreign Service officer, he spends his retirement in places such as Kosovo, persuading feuding Serbs and Albanians to harvest their crops together. "We had them in a gym, Serbs on one side, Albanians on the other side, glaring at one another," he recalls. Lately, Stukel has been scouting out countries to see whether they are ripe for an OTI program. Other AID retirees have flocked to the bullpen, where they can work up to 160 days a year. OTI's first representative in Iraq was Fritz Weden, a 67-year-old former AID mission director who joined the bullpen in late 2002.

OTI plucks younger talent from nongovernmental organizations. Jennings' path to OTI is typical. In 1994, he went to Bosnia as a freelancer and fell in with workers from the International Rescue Committee, which was receiving OTI funds. After joining the rescue committee, he migrated to OTI. By 1996 he was the office's representative in Bosnia. "You sort of grow [people] and they get experience," says Jenkins.

As OTI worked in more countries, it refined its methods. Barton, who continually pushed AID administrative staff to move faster, convinced Atwood to give OTI its own contracting officer. In 1999, OTI unveiled a contract that pre-qualified a handful of development firms to work on a task-order basis. The pact allowed OTI to move into a country with a supporting contractor without first holding a lengthy competition. In self-reviews, OTI did not hesitate to air dirty laundry. One review notes that AID mission staff saw OTI's outreach to gang members and street artists in Colombia as "self-indulgent."

Atwood acknowledges that other parts of the AID bureaucracy-particularly missions-initially were wary of OTI, which had its own budget and operating procedures. A former OTI employee remembers a telling encounter with a mission official in Indonesia who questioned how OTI could issue grants before writing a lengthy country strategy and vetting it with an AID bureau, as missions must do. "Even when mainstream AID people see the utility in OTI, they are often hostile because they resent the fact that OTI is allowed to operate in ways they think they cannot," says the employee, who asked not to be identified. In Iraq, officials say relations between OTI and the AID mission are harmonious. "This is the best relationship I've ever seen. [OTI] is truly part of the mission," says the senior government official, who adds that OTI's programs are fully linked to the Iraq AID mission's planning process. OTI's versatility has enabled it to serve as a troubleshooter for the Coalition Provisional Authority. While contractors Research Triangle Institute and Bechtel have narrowly defined duties, OTI dabbles in many areas. "The other contractors and programs are in a definite lane," says Jenkins. "And our lane is to assist the transition. So it does give us the ability to work in some of their lanes or somewhere else when [CPA Administrator L. Paul] Bremer needs something done." But OTI's role as Bremer's troubleshooter gives agency veterans pause.


Some OTI staffers worry that the office is spending too much time on Coalition Provisional Authority priorities, and not enough on the in-depth civil society work that is a hallmark of past OTI programs. "We run the risk of having the depth of engagement that has distinguished us as 'the operational office' in AID lost in the mega-programming of assistance funds," says an OTI official. The agency's liquidity is tempting to ambassadors who want to show immediate results. "You get called upon to fund these things that you would never in 100 years think of funding on your own," says Jennings. But in Iraq, OTI has little choice but to follow the provisional authority's lead, Jennings acknowledges. "I think the easiest way to sum it up is to say it's incredibly politically sensitive working in Iraq and that OTI has to decide where it can push and where it must conform to the political priorities of the CPA."

OTI handed out its first grants in Iraq before U.S. soldiers entered Baghdad. Working as part of AID's Disaster Assistance Response Team, OTI's Weden and his colleagues at Development Alternatives Inc. outfitted an Internet and telephone center in Umm Qasr. In a precursor of grants to come, they also funded a meeting center for the Umm Qasr town council. The grants were part of OTI's strategy for its first 90 days in Iraq, which was to show Iraqis "immediate, tangible examples," of progress, says Jenkins. OTI also was on the lookout for retribution killings and other human rights violations that could spur a refugee crisis, a concern of the Pentagon's Office of Reconstruction and Humanitarian Assistance. When that crisis didn't materialize, OTI refocused on what did transpire: looting.

The price tag of looting in Baghdad reached $12 billion. Iraq's 19 National Ministry headquarters were particularly hard hit. Beyond desks and chairs, looters ripped out electrical wiring, fluorescent lights and sometimes fired rocket-propelled grenades into buildings for good measure. The reconstruction office was ill-equipped to deal with the damage. Its minimal funds were tied to a grants process that took weeks for approval. AID Administrator Andrew Natsios urged OTI to help get the national ministries up and running again.

The result was the ministry-in-a-box program, a $4.1 million effort to outfit each ministry with enough office equipment to put 100 officials back to work. Each ministry got 28 standard items, ranging from 100 desks to two 20-liter water coolers. A Kurdish-owned company named KAR manufactured almost all of the equipment in Iraq. Development Alternatives Inc. picked KAR after meeting with contractors in Baghdad and holding a competition; KAR, which learned to keep costs down during the Baathist regime, submitted the low bid. "They're used to shaving the margin very thin because they were working with people who could kill them if they wanted to," says DAI's Spake. Because Iraqis have little experience running NGOs, Development Alternatives Inc. is the de facto project manager on most grants, finding Iraqi subcontractors to do construction or providing grantees with start-up materials they need to begin work. For example, DAI bought $105,530 worth of office equipment and computers for the Association of Free Prisoners, a group of former political prisoners that is working to catalog abuses of the Baathist regime.

Iraqis often have grandiose notions of what they want to accomplish, so OTI and Development Alternatives Inc. help refine those ideas into attainable projects. Some ideas go through extensive revision before a grant is issued. In early summer, OTI was approached by a nongovernmental organization run by expatriate Iraqis who wanted to set up Iraqi focus groups. Talks fizzled, but OTI was impressed with the group's Iraqi liaison, who received a $91,950 OTI grant for a project titled "the seed of civil society in Iraq." His idea was to send Iraqi volunteers into towns to do small community development projects, possibly creating new nongovernmental organizations in the process. In practice, the grant proved difficult to implement and ate up considerable DAI staff time. "The [Iraqi] gentleman was a very good talker, but had a hard time understanding that this had to be done according to U.S. regulations and rules," says Spake. This kind of experimentation is at the heart of OTI's venture capital approach. "It's very important to be willing to try a little bit of money," says OTI's Tanner. "You only know exactly who someone is after you start working with them."

OTI's work turned heads at the Coalition Provisional Authority, which in May nearly quadrupled OTI's Iraq budget from $20 million to $70 million. After ministry-in-a-box, OTI took on other projects that were top priorities for the authority, such as finding office space for the Iraqi Governing Council. In general, when the provisional authority has needed to finance other small projects-paying for a delegation of Iraqi women to visit the United States in November, for instance-OTI has picked up the tab. "One of the things we're there for is filling unforeseen gaps," says Jenkins.


In early October, OTI officials convened in Amman, Jordan, to hammer out the next phase of their Iraq strategy. Jenkins says OTI has moved past the ministry-in-a-box portion of its program and now is focusing on civil society and conflict mitigation. In the violent Sunni Triangle, this means trying to demonstrate the benefits of the U.S.-led occupation. OTI's partners in this effort are Army civil affairs officers, who, by virtue of their numbers, often are the first to identify potential grant projects. In Balad, a town in the Sunni Triangle, civil affairs officers are planning a massive project to provide clean drinking water. OTI will spend $175,500 to drill the first 50 wells, before Bechtel steps in to build 200 more.

In areas such as Al-Thawra, a sprawling slum in the south of Baghdad, civil affairs officers have been fixtures since the first days after the war. OTI and the military collaborated on a 16-day cleanup of Al-Thawra in May. Military commanders have their own development funds, and officials report cases of "grant shopping," where Iraqis hit up several U.S. officials to find the best deal. But officials who have worked in Iraq say coordination between OTI, civil affairs and other contractors generally works well, in part because everyone answers to the Coalition Provisional Authority. "It's not like we're spending money on the same schools," says the NGO official.

In Fallujah, OTI is working on its own. On Sept. 12, OTI hosted its Fallujah contacts in Baghdad to discuss additional grants. Both sides were eager for more projects, but security continues to be a challenge. Iraqi subcontractors are carrying out the five projects that OTI has funded. If conditions become too dangerous, Development Alternatives Inc. tells its subcontractors to stop working. But in Fallujah this fall, the attacks came without warning. Spake tells the story of an Iraqi subcontractor who was surveying a water project as a U.S. military convoy passed by. Suddenly, a rocket-propelled grenade hit. "The subcontractor and his workers hit the deck; they didn't want to be mistaken for insurgents," says Spake. After the convoy rolled on, a few Fallujah residents approached the subcontractor and said they were not responsible for the attack-they supported the project.

One of OTI's conditions for working in a country is security. Its official "criteria for engagement" state that OTI needs to monitor grant activities in the field-currently impossible in Fallujah-for its programs to succeed. But no one expects OTI to leave Iraq. "We make decisions, we take sides," says Jenkins. "In Iraq, we're taking the side of democracy, and we're finding people who want to work with the CPA and move things along."

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