By Richard Engel Chief foreign correspondent
NBC News
updated 6/11/2004 7:22:38 PM ET 2004-06-11T23:22:38

In a single bombing this week, on an oil pipeline, insurgents knocked out 10 percent of all of Iraq’s power.  Over the last seven months there have been 130 attacks on Iraq’s oil pipelines costing the country $200 million in lost revenues.

According to Iraqi Prime Minister Iyad Allawi, “These saboteurs are not freedom fighters; they are terrorists and foreign fighters opposed to our very survival as a free state.”

Key electrical lines have recently come under attack twice a week.  The power supply is an urgent concern — especially as the summer heats up. It’s already around 110 degrees most days, and tempers are expected to rise with the temperatures.

U.S. intelligence officials say insurgents are using this new tactic — destroying Iraq’s infrastructure — to undermine the interim government and scare off investors.

Middle East energy analyst Simon Henderson said, “Every time there’s a report of an explosion, every time there’s a picture of flames leaping from an oil pipe line, it is bad news for everybody else who is thinking of doing business in Iraq.”

And for those already here, about a quarter of every reconstruction dollar in Iraq goes to security.  Add insurance and it can be up to 50 percent.

“We can control the rest of the costs, the cost of materials, the cost of labor to the best of our ability, but the enemy is in charge of what it costs for security,” said retired Admiral David Nash, now director of the Project Management Organization.

In Baghdad, the effects of sabotage are already felt.  Power in the capital is still rationed a year after the war.  Now it is two hours on and four hours off — less than the city has had in months.

Shop owner Mustafa Sabah says people are now rushing to buy generators.

There is a race here: between U.S. and Iraq officials to build infrastructure and, with it, trust and with the militants who are realizing the summer is the best time to ensure they don’t.

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