Nov. 25 (Bloomberg) -- Spare tires come in handy in Sadr City when lakes of sewage overflow trenches or bubble up from broken underground pipes. Pedestrians pull them from at-ready stacks to create a foot bridge across the excrement.

It’s a routine honed by years of neglect, indifference and, recently, good intentions sucked into a cycle of despair. Almost six years after the fall of Saddam Hussein, sewers in the sprawling Baghdad slum have become the most odorous example of how things don’t get done in Iraq.

While the U.S. has been able to pacify once-roiled areas, electricity is still spotty, drinking water is scarce and health care is limited -- even though America has spent billions of dollars on reconstruction and the Iraqi government has taken in hundreds of millions of dollars in oil revenue.

“Getting rid of this -- how can I put it delicately -- this waste material has become a dream,” says Kamal Hanjab, 44, the district council chairman. “I fear that when I die, I will be buried in it.”

Raw sewage has become something of an emblem for Sadr City, home to 2 million of Baghdad’s 5 million inhabitants. It has swamped streets since at least the early 1990s, flowing freely even as Saddam built himself eight Taj Mahal-scale palace compounds.

The sludge seeped on after the U.S.-led invasion in 2003, when American warriors-turned-plumbers tried repeatedly to unclog the works. In 2004, troops pulled a dead horse from one sewer, according to a report on the U.S. Army Corps of Engineers Web site.

Costly Repairs

Hanjab estimates it would cost $1 billion to renew the system. Built some 30 years ago, it was designed for a population of 750,000, and the pipes feeding the main drainage duct are too small to handle the current load.

Assuouan Belasam, an official in Baghdad’s city sewage department, says the central government is providing only enough money for “step-by-step” repairs, not a full renovation.

The question of how much Iraq is spending, where and on what has become a matter of controversy in the U.S. In an Aug. 9 radio address during the campaign, President-elect Barack Obama said America continues to pay to defend and rebuild the country despite a projected budget deficit of almost $500 billion, while Iraq has a surplus of $79 billion.

“This number is not accurate at all,” argued Iraqi Finance Minister Bayan Jabr in an interview published Oct. 10 on the Web site of the Council on Foreign Relations. He said the government is spending $22 billion and the central bank is holding $30 billion in reserves to support the currency, so Iraq doesn’t have a surplus.

Oil Prices

Joseph Christoff, director of international affairs at the U.S. Government Accountability Office, disagreed. In a reply to Jabr published Oct. 28 on CFR.org, he said his agency estimates Iraq will have between $67 billion and $79 billion by year-end, not including any reserve money -- even with falling crude-oil prices.

Iraq claimed it committed money to rebuilding, but it “wasn’t actually spending a lot on security, on the oil sector, the water sector and the electricity sector,” Christoff said, adding that the U.S. has invested $48 billion on renovation and security training since 2003.

Some of this work has come under fire. In an Oct. 30 report, the U.S. inspector general for Iraqi reconstruction said projects by private contractors worth $600 million have been canceled since 2003, almost half for bad management or substandard construction and the rest because of security problems or changes in plans or funding.

Skyrocketing Costs

In Fallujah, a city in western Iraq, a U.S.-financed water-treatment project meant to serve the entire city was scheduled for completion in 2006. It still isn’t finished, and costs have skyrocketed to $98 million from $33 million, though it will serve less than 40 percent of the city, according to the inspector general’s office.

At a recent meeting of Sadr City’s district council -- one of several organizations set up by the U.S. military to discuss problems and find money to fix them -- sludge is topic number one after late October rains produce the latest flood of human waste.

“Pipes are rusting,” explains Belasam, 52, who represents the city government at the session. “Some places, there are no pipes to the main line.”

“It took 72 hours to drain the sewage,” complains a council member.

“We will get more machines to suck out the, uh, stuff,” Belasam responds.

Calming Influence

An uproar ensues as council members say they’ve heard all this before. Hanjab tries to calm everyone down. “Okay, we are not blaming you for the rain,” he tells Belasam.

In an interview, Hanjab says he suspects a political motive behind the lack of progress: Many residents of Sadr City are devoted to Moqtada al-Sadr, an anti-U.S. rival of Prime Minister Nuri al-Maliki, so government officials “just don’t send money our way,” he says. The district, once called Saddam City, was renamed for al-Sadr’s father, allegedly killed by the late deposed leader’s security agents.

Violence and the threat of unrest remain an obstacle. In April and May, U.S. forces fought pitched battles against the Mahdi Army, al-Sadr’s militia. A cease-fire put the U.S. in control of a southern portion of the district. The remainder -- home to about 80 percent of the residents -- is under nominal watch by the Iraqi army.

Since U.S. troops built a wall separating the two zones, reconstruction in the north has essentially stopped. In the south, some new U.S.-funded parks have been landscaped. Still, the sewage continues to flow in both sections.

“Now, our neighborhood is split, and even if we could fix the south part, what good would it do? Most of the pipes are in the north,” Hanjab says. “There’s always some obstacle to fixing our sewers, some reason for neglect.”

To contact the reporter on this story: Daniel Williams in Baghdad at dwilliams41@bloomberg.net.

Last Updated: November 24, 2008 18:02 EST