updated 9/4/2007 11:08:53 PM ET 2007-09-05T03:08:53

Efforts to rebuild Iraq’s shuttered industrial base, including an infusion of $760 million in U.S. funds over the past year, is making slow progress but has had little success getting Iraqi products to American consumers.

Paul Brinkley, deputy under secretary of defense in charge of business transformation, said Tuesday that the U.S. government spent $180 million of that total in July alone on Iraqi goods and services.

But he acknowledged that U.S. companies, which have many questions and concerns about production and stability in Iraq, are still slow to stock Iraqi products. Considering the state of play in Iraq, Brinkley said, people are cautious about placing orders for Iraqi goods.

Fawzi Hariri, Iraq’s minister of industry and minerals, told Pentagon reporters that the unemployment rate in his country is about 40 percent, but that number is an improvement of 7 to 10 percent over last year.

Underscoring the difficulties, Brinkley said that “measurable progress” has been made in putting Iraqis back to work. Conservatively, he said, that number so far is just 5,000 people in 17 different factories.

Speaking at a Pentagon briefing, Hariri and Brinkley said they have earmarked $40 million of the $50 million that Congress approved earlier this summer for economic development in Iraq. The funding will go to about 30 Iraqi businesses scattered across the country, mostly around Baghdad and up in the largely Kurdish north.

The factories are in more secure areas of the country and include automotive, mechanical, textile, cotton, pharmaceuticals and fertilizer businesses that are either private or state-run.

Most of the money will go toward training, buying raw materials and getting the factories up and running again. Of the 240 factories operating before the war began, about 175 are open now, but many are at just 10 to 30 percent production capacity.

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