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U.S. shifts Iraq rebuilding funds to security, oil

General defends copter strike that killed journalist, 11 others

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BAGHDAD, Iraq (CNN) -- The United States announced it will shift more than $3 billion earmarked for Iraqi reconstruction to improve security and oil production, the State Department said Tuesday.

The news came the same day that insurgents launched two deadly assaults at Iraqi police targets -- killing 47 people in a car bombing at a police recruit line in Baghdad and 12 police officers in a drive-by shooting in Baquba.

"Without security, there's no possibility, as many power plants as you have, to actually get electricity, water, sewage, power to Iraqis," said Undersecretary of State for Political Affairs Marc Grossman. "And so that's why so much of this money and the reallocation that you see is moving toward security."

In order to offset the redirection of money, the United States will reduce spending on water and sewage projects by $1.9 billion and electricity by $1 billion.

Iraq has identified improving water, sewage and electricity as important reconstruction projects. Robin Raphel, a former ambassador who now works on Iraqi reconstruction issues at the State Department, acknowledged that few Iraqis have access to potable water and that most receive electricity for about half the day only.

But Grossman said Iraqis "understand our priorities and certainly understand the issue that if there's no security, nothing else is going to get done."

U.S. officials also plan to divert $450 million into Iraq's oil sector to increase production during the next six to eight months in an effort to create extra income to pay for the shortfall caused by the redirection of funds.

"The specific projects that they will target with this $450 million have an early payoff according to the engineers, according to the analysis that was done," Raphel said.

In October 2003, Congress appropriated $87 billion to help fund the war in Iraq -- $18.7 billion of which was set aside for reconstruction. About $4.08 billion of that was allocated for sewage, water and electricity projects.

The State Department said about $650 million of that $4.08 billion has already been spent.

U.S. officials have said most of the funding earmarked for reconstruction was not being spent because poor security was preventing projects from being completed.

Violence continues

Deadly attacks against police targets have been a constant of the Iraqi insurgency as rebels attempt to intimidate Iraqis and thwart them from joining the fledgling government's security forces, whose growth and power are important to Iraq's future stability.

An Islamist Web site posted claims of responsibility for both of Tuesday's attacks by a group affiliated with Jordanian militant Abu Musab al-Zarqawi.

Claims of responsibility by the group -- Unification and Jihad -- cannot be confirmed independently by CNN. The group has claimed responsibility for kidnappings and other terrorist attacks in Iraq.

The Baghdad bombing took place on a crowded road near Haifa Street, a dangerous stretch through central Baghdad dotted with markets, coffee shops and hair salons. The neighborhood has been plagued by fighting between U.S. troops and insurgents, earning a nickname from residents -- "Little Falluja." Falluja is a rebel stronghold city to the west of Baghdad that has been the scene of intense fighting.

Interior Ministry spokesman Col. Adnan Abdul Rahman said a Toyota four-door sedan was used in the attack. Saad Alamili with Iraq's Ministry of Health said 47 were killed and 114 were wounded in the attack.

The carnage along the stretch sparked anger at the United States and Iraq for poor security. Upset crowds sifted through debris and cursed Americans.

One man cursed President Bush. Another cursed Americans, saying "it's an American-Israeli conspiracy."

Video outside the Karkh police administrative and recruitment center showed smoldering wreckage of seven or eight cars.

The same police station had come under mortar attack a couple of hours earlier. Of the four mortars fired toward the building, two landed in the courtyard behind it, one landed near the front gate and a fourth did not explode. No injuries were reported.

In Baquba two hours later, gunmen attacked a police minibus in a drive-by shooting, killing 12 officers and wounding three civilians, Iraqi authorities said.

Rahman said the minibus was filled with 18 police officers. The Health Ministry provided the death toll.

Iraq's charge d'affaires at the United Nations said attacks such as those Tuesday won't keep Iraq from staging a vote for a transitional national assembly in January.

"The terrorists are in a frenzy to delay elections," Feisal Amin al-Istrabadi said. "We will not give in to these intimidations."

Under a plan just instituted by interim Prime Minister Ayad Allawi, the families of Iraqi police officers killed in the line of duty will receive death benefits for life.

Capt. Steve Alvarez, a spokesman with the multinational security transition command, said the program, started Saturday, amounts to "direct dependent payment of 1 million Iraqi dinars (just over $700) upon death."

Also, it will "pay families the decedent's full salary until what would have been the officer's 63rd birthday."

The base salary for an unranked police officer is about $230 a month. A ranked police officer gets more, about $316 a month.

The program is retroactive to April 2003, when Saddam Hussein's regime was toppled.

U.S. commander: Gunship attack justified

Maj. Gen. Pete Chiarelli, commander of the Army's 1st Cavalry Division, said the helicopter gunship attack that killed several people surrounding the wreckage of a U.S. armored vehicle Sunday was justified and that the helicopter's pilots were coming under fire at the time.

The crippled Bradley fighting vehicle was surrounded by terrorists and looters, Chiarelli said, who were threatening to steal sensitive communications equipment inside the vehicle and were attacking U.S. troops.

More than a dozen people were killed in the rocket attack, including a producer for the Arabic-language news network Al-Arabiya, whose death was captured on videotape.

Witnesses on the ground said there was no gunfire coming from the crowd that was surrounding the flaming vehicle, which had been crippled by a car bomb earlier in the day. But Chiarelli said his troops and helicopter pilots were under a great deal of gunfire.

"There was communications from our ground folks and our air folks that there was small-arms fire -- heavy small-arms fire, very well-aimed small-arms fire," Chiarelli said Tuesday during a briefing on the incident.

CNN's Diana Muriel, Octavia Nasr, Kevin Flower, Arwa Damon, Mohammad Tawfeek and Abbas al-Kazani contributed to this report.

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