* Huge embassy has troubled and costly history
* U.S. officials say looking at "smaller footprint"
* "Neo-Stalinist frown" and other brickbats
By Andrew Quinn
WASHINGTON, Feb 9 (Reuters) - For critics of U.S. policy, the huge American embassy in Baghdad came to symbolize much that was wrong about Washington's approach to Iraq.
Dubbed "the mega-bunker of Baghdad" by Vanity Fair magazine, the gargantuan embassy sparked accusations of imperial overreach, a fortified forward base for U.S. power endured by penned-in diplomats, guarded by thousands of security contractors and regarded with suspicion by many Iraqis.
This week, officials announced they have embarked on a plan to "right-size" the largest U.S. embassy in the world, the latest twist in a tale of diplomatic real estate that has been plagued with problems from the start.
"We can have a smaller footprint. We don't need as big a footprint," Deputy Secretary of State Tom Nides told reporters this week, outlining a review of both the security contractor staffing and local procurement policies of the embassy.
"Regardless of what the size is, we are going to make sure that our diplomats and the people that we have hired there are secure, number one, and two, that the ability for us to be involved in the political engagement of Iraq is at the highest possible level," Nides said.
U.S. officials stress the overall mission remains on track, and that any changes to embassy staffing will be carefully thought out.
But taken together the new approach signals a downshift for one of the most ambitious U.S. diplomatic projects to date - a slimming-down that skeptics warned almost from the start would be necessary.
The United States unveiled plans to construct the new embassy in 2004 as it prepared to formally hand sovereignty of the violence-racked country back to Iraq's new leaders one year after the U.S. invasion which toppled Saddam Hussein. It was a testament to the Bush administration's plans to turn Iraq into a free-market democracy and a major U.S. strategic ally in the troubled Middle East.
But the scale of the project raised eyebrows from the outset: sited on a 104-acre (42-hectare) plot near the banks of the Tigris River in Baghdad's fortified "Green Zone," the embassy was the biggest and most expensive U.S. diplomatic facility ever conceived.
U.S. officials said the giant complex, originally budgeted at around $1 billion and roughly as large as the Vatican, was essential if the United States was to carry through with the Iraq mission launched by the 2003 war.
"I think it's perfectly logical that we will want to have a large diplomatic presence, a large aid presence, a large presence to engage the Iraqi people in one of the most important countries in one of the world's most important regions, and that's the reason for the large embassy there," then-Secretary of State Condoleezza Rice told a congressional panel in 2007.
But the project almost immediately ran into problems as construction lagged behind schedule and cost overruns mounted.
Congress, balking at the original billion dollar price tag, approved about $600 million for construction. The State Department, saying that additional staffing plans would require more housing and office staff, warned in 2007 that the total cost could approach $750 million.
Construction defects - including faulty fire-suppression equipment that could endanger the lives of U.S. diplomats - soon surfaced, prompting multiple probes and embroiling top State Department officials in controversy. An October 2009 State Department inspector general's report found the embassy had "multiple significant construction deficiencies," and said the government should recover $130 million from the contractor, First Kuwaiti General Trading and Contracting Co.
CITY WITHIN A CITY
The plans called for the embassy to have its own water wells, electricity plant, and wastewater-treatment facility, as well as apartment blocks, diplomatic office buildings, villas for the ambassador and the deputy, a recreation building with swimming pool, gym, commissary, food court, and American Club.
Security provisions included huge walls, metal nets, screens and bulletproof glass, as well as "hardened" refuges for embassy staff to protect against mortar attack.
When it finally opened in 2008, the coral-colored complex boasted a staff of 1,200 employees including diplomats, troops and staff from 14 federal agencies - many of them relocated from the Saddam-era palace which had served as the U.S. diplomatic headquarters in Iraq since 2004.
Political analysts questioned the wisdom of the huge U.S. diplomatic footprint in central Baghdad, while architectural reviews of the embassy complex were unforgiving.
"The new American Embassy in Baghdad scowls at the world with a neo-Stalinist frown," Oxford University art historian and critic Martin Kemp wrote in Britain's Guardian newspaper.
"A hideous modernist bunker, devoid even of the residual classical motifs favored for totalitarian architecture, it speaks bleakly of the USA's position in the world."
Even as U.S. diplomats were moving into the embassy, a State Department inspector general's report said the staffing plan was bloated and needed to be cut.
And U.S. plans for an extensive post-war presence in Iraq began to unravel. In 2010, Congress cut funds for diplomatic programs in Iraq, forcing the State Department to curtail the number of consulates it planned to open.
Then negotiations with the Iraqi government for a post-2011 U.S. military presence failed, and President Barack Obama withdrew the last U.S. soldiers in December.
But the embassy became even more central to Washington's Iraq strategy in 2011 as U.S. troops departed - leaving embassy staff and their colleagues in U.S. consulates in Basra, Erbil and Kirkuk to "win the peace" after Iraq's long and costly conflict.
Plans developed last year called for roughly 16,000 people to continue the U.S. presence in Iraq, including about 2,000 diplomats and federal worker and 14,000 contractors - roughly half involved with security and the rest doing everything from keeping the kitchens running to managing the motor pool.
Now these plans appear to be back on the drawing board yet again as the State Department scrambles for cost savings in an era of budget austerity.
"Over time we want to have a more normalized embassy, and that will mean making a decision over time about contractors, the numbers of contractors, the size of some of our mission sets, without losing sight of our core mission," Nides said.
"There's never such a thing as a normal embassy, but (there can be) a more normalized embassy presence," he said.