Faced with mounting violence in Iraq, the Bush administration plans tomorrow to propose shifting $3.46 billion from Iraqi water, power and other reconstruction projects to improve security, boost oil output and prepare for elections scheduled for January.
Congressional sources briefed on the plan, which must still be approved by Congress, said it includes funding to cover the cost of forgiving 95 per cent of Iraq's prewar debts to the United States.
Those debts total about $4 billion.
The sources said the change reflects the realization within the administration that without better security, long-term rebuilding is impossible.
Of the more than $18 billion approved for Iraq's reconstruction, actual outlays through the end of August totaled just $930 million, according to congressional sources.