updated 7/28/2006 11:45:36 PM ET 2006-07-29T03:45:36

Construction of a children's hospital championed by first lady Laura Bush has been put on hold after it fell behind schedule and went over budget, one of dozens of halted or delayed U.S. health projects, Iraqi health officials said Friday.

The high-tech, two-story children's hospital in Basra was intended to provide state-of-the-art care in Iraq's second-largest city. The first lady and Secretary of State Condoleezza Rice spoke highly of the project and lobbied Congress for the money.

But U.S. officials dropped contractor Bechtel Corp. from the project after it missed deadlines and ran up big cost overruns, Dr. Chasib Latif Ali, executive director of the Health Ministry, told The Associated Press. Bechtel Corp. blamed the problem on Iraq's security crisis.

Ali said the Basra hospital was just one example of health projects that the U.S. had promised but failed to deliver.

"The Americans have made a lot of promises to us, but not even 10 percent of them have materialized," Ali said.

‘The money has ran out’
He said that, of nearly 180 medical facilities promised by the U.S., contracts were awarded for 142. Only six have been completed and turned over to the Iraqis and those "are not even fully complete."

"This comes as a sharp contrast to the Japanese," Ali said. "They have promised and delivered 13 hospitals around the country, including three cutting-edge cancer centers. The Japanese have been very faithful to us, unfortunately, the Americans aren't like that."

Bechtel, which holds major contracts for reconstruction work in Iraq, was put in charge of the project in 2004, with an initial budget of $50 million. The facility was expected to be completed by Sept. 2006, "but now the money has ran out and the project has been postponed indefinitely," Ali said.

Bechtel hired a Jordanian subcontractor, which in turn hired its own Iraqi subcontractor, he said.

"Prolonging the chain of command this way only exhausted the financial resources available for the project," Ali said.

Violence adds security costs
Bechtel spokesman Drew Slaton said the company's involvement in the hospital project will end Aug. 31 because costs had soared well beyond a $50 million cap.

He said Bechtel faced substantial expenses, particularly for security, as violence in Basra escalated. In May, Bechtel projected total costs, including security expenses, would range from $75 million to $97 million. Iraqi officials said the hospital project needs an extra $72 million to be completed.

Bechtel learned the government planned to suspend the project early this month, Slaton said.

Street violence sometimes kept workers from reporting to the construction site for days at a time, he said.

Workers were dragged into the street and shot in one incident, prompting Bechtel's concrete supplier to quit the job.

Engineers leave town
Before being told to shut down, Bechtel had projected a July 2007 completion date. Now, the company said it has serious doubts whether anyone will be able to finish the job.

"We would like to see it completed, but we don't think it's practical under the current security conditions," Slaton said.

Efforts to contact Baghdad-based officials of the U.S. Agency for International Development, which was running the project, were unsuccessful.

Ali said not a single Western engineer was on site in Basra.

"They were all Iraqis," he said. "Besides, the people of Basra wanted that project so bad, no one would have harmed the people working on it."

A Health Ministry spokesman in Basra, Kadhim Radi Hassan, said a hike in the price of construction materials imported from Kuwait helped drive up costs.

Ali said the United States will be shifting $22 million from the oil sector reconstruction fund to cover with the shortfall, while Project HOPE will try to raise $30 million in hopes of finishing the hospital by the end of 2007.

The government will be asking other donor countries to chip in, Hassan said.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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