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Signs of reconstruction in Iraq

Almost three years after the invasion, U.S. military officials say they are finally starting to deliver on promises to rebuild Iraq. NBC's Jim Maceda reports.

BAGHDAD — Almost three years after the invasion, U.S. military officials say they are finally starting to deliver on old promises to rebuild Iraq.

Brig. Gen. Bill McCoy is "Mr. Fix-It," commanding the nerve center of U.S.-led reconstruction, where 500 convoys a week and $10 billion in goods and services are distributed through Iraqi ministries. He's overseen more than 3,000 projects, most of them completed.

"The biggest challenge is working in this environment where it's hard to get out," says McCoy. "It's hard to make a difference fast."

But the effort, officials say, is paying off. The new Iraq is beginning to prosper. Since the war, the average Iraqi salary has increased 100 times, from $2 to $200 a month. Unemployment has been halved from 60 percent to 30 percent. And more than 33,000 new small businesses have been created.

Many, like Hussein Shabibi's bakery, were created without any government help. Business is good — hundreds of affluent customers a month spend up to $50 for one of his designer cakes.

"They couldn't buy my cakes before the war," says Shabibi.

But the challenge ahead is rebuilding Iraq during an insurgency that's taking a huge bite out of the U.S. reconstruction budget. About $4 billion has been spent so far on security alone. Just this week, Iraqi contractors abandoned a Baghdad school site and fled to Jordan under threat. There are hundreds of similar cases.

"We finished a school, they're teaching in a school, and a terrorist comes in, drags the teachers out and murders them," says McCoy.

But now the U.S. is trying a model that's worked in Afghanistan, pioneered by Zalmay Khalilzad, now the U.S. ambassador in Iraq. Provincial reconstruction teams — PRTs — are U.S. military units that also provide humanitarian help, including on-site construction, medical aid, even teaching government skills to locals.

"Establishing PRTs is a new addition to our strategy of success in Iraq," says Khalilzad.

But is there success when even oil production — Iraq's chief export — is below prewar levels, due largely to sabotage by insurgents?

Mr. Fix-It says he will fix that, too.

"I think they believe if they continue this attack that we'll tuck our tails and run," says McCoy. "That's not going to happen."

Still, U.S. officials see an uphill fight to keep their promises to a nation in deep need.