HILLA, Iraq, Sept. 30 — This mostly easygoing provincial capital, where the Euphrates River winds around as if it is in no hurry to go farther south, holds the latest sign that political power in Iraq is leaving its historical home in Baghdad for outlying regions. That sign is a local government that knows how to spend money.
Because of security threats and a seemingly immovable bureaucracy, the federal ministries in Baghdad largely failed to spend billions of dollars of Iraqi oil revenues set aside last year to rebuild things like roads, schools, hospitals and power plants.
Although some ministries have improved slightly, what has really caught the eye of Iraqi politicians is the way some local governments have begun bypassing the morass in Baghdad by using hundreds of millions of dollars of the reconstruction money they receive from the government to finance regional projects.
The approach has found such favor among some political leaders that Iraq’s deputy prime minister, Barham Salih, arrived here with an all-star cast of senior government officials on Sunday to announce that Babil Province, whose capital is Hilla, would be rewarded with $70 million in new money and financing for a major loan program for small businesses and individuals.
Participants at a meeting where that announcement was made said they had already seen modest effects of Babil’s talent for spending money in the form of new schools, road repairs, small electricity projects and the improving commercial vigor of Hilla, where smoke can be seen rising from brick factories and the streets do not have the deserted feel of many districts in Baghdad, 50 miles north.
For a province whose entire 2007 capital budget is $112 million, $70 million is a stunning addition. In fact, the rate of spending has some authorities concerned that the push for provincial spending could drive a wave of corruption. They fear it could also unleash new centrifugal forces in a country already on the verge of breaking into semiautonomous regions.
But in Mr. Salih’s view, the degree of independence exercised by provinces like Babil in local rebuilding is consistent with Iraq’s Constitution, which envisions a federal system with substantial powers granted to regions.
Those moves were an indicator of the increasing uselessness of the old Iraqi apparatus of centralized government, Mr. Salih said.
“This central bureaucracy is broken,” he said. “The national ministries have proven incapable of spending their budgets.”
To illustrate his frustration, he related the case of a school in Babil that he said had been built with provincial money. But once it was built, the national education ministry proved so dysfunctional that it could not furnish it.
As if to punctuate those statements, Iraq’s finance minister, Bayan Jabr, who also made the trip, then announced that the portion of the capital budget that goes directly to the 18 provinces would increase by half, to nearly $4 billion next year.
The capital budget for the entire country, including the provinces, was $6 billion in 2006 and $10 billion in 2007. But some national ministries spent as little as 15 percent of their share last year, citing problems such as a shortage of employees trained to write contracts, the flight of scientific and engineering expertise from the country and the danger from militias and the insurgency.
There is also the sheer complexity of the Iraqi government bureaucracy, where gaining simple permission to speak with an official can take weeks and there appears to be little practical leverage over employees who collect salaries but do nothing. Some of those problems may be a holdover from a corrupt Baathist apparatus that drew everything out for months or even years so that each bureaucrat could take a cut.
In any case, it was by getting around some of those impediments that Babil was able to progress, said the provincial governor, Saleem S. al-Mesimawe.
“We jumped over the routine, the bureaucracy,” Mr. Mesimawe said, “and we depend on new blood — a new team.”
Other provinces that have been picking up the pace of spending, Mr. Salih said, are Diwaniya and Wasit in the south and Kirkuk in the north, along with Anbar in the west, where Sunni sheiks continue to work with American forces to fight groups linked to Al Qaeda in Mesopotamia, a homegrown militant group that American intelligence has concluded is led by foreigners. Surprisingly enough, Baghdad, which has its own municipal government and is also formally a province, is “generally among the good performers,” Mr. Salih said.
Along with praise for the pace of spending in the provinces come concerns that local governments could repeat the mistakes of the centrally controlled reconstruction program that began after the invasion and has never had a widespread impact on improving services in Iraq.
Abdulbasit Turki Saeed, president of the nation’s Board of Supreme Audit, said he was particularly concerned that the government was pushing the spending as a way to show progress for some purpose other than security. He said authorities in a province he declined to identify had at one point detained, for two days, an auditor whose findings were not appreciated locally.
“I think that spending these amounts of money in an unreasonable way will lead to corruption,” Mr. Saeed said.
He also cautioned that it would take time to determine how fully the allocations — essentially money set aside for specific contracts — would be reflected in successful construction work.
And Sabah al-Khafaji, technical director of the State Company for Automotive Industry, based in western Babil, said allocating projects within the province had become intensely political, based on the need for members of the provincial council to deliver for their constituents.
“They are successful inside Hilla, and they are successful where there are more council members: more members, more projects,” said Mr. Khafaji, who attended the presentation, in a town-hall-style setting.
But advocates of the approach say it is precisely that direct connection with citizens that sets the provincial effort apart from the centralized program. “Politics is breaking out in this country!” the ebullient Mr. Salih said in English, in response to a question after the session.
Nearly all of the national budget is dependent on oil revenues. The provincial capital budgets, like the ones that go to the national ministries, are specified in the national budget. But the provinces spend the direct allocations largely as they see fit, rather than being forced to accept projects approved by the ministries in Baghdad.
Officials at the meeting said Babil had used its capital budget faster than any other province, having allocated about 25 percent to specific contracts by the end of July, and 34 percent through September. Mr. Mesimawe, the governor, said his province had done so by creating a detailed strategic plan and a set of committees to see it through.
Still, for all the success the province has had on paper, residents who have heard a constant stream of promises since the invasion are not convinced that their living conditions will change substantially.
“The problem is that most of the council members are just talkers,” said Sahar al-Barak, a local engineer. “We haven’t seen any real development.”