Mosul Dam has been a problem for engineers since it was built in 1984

In May, the US told Iraqi authorities to make Mosul Dam a national priority, as a catastrophic failure would result in a "significant loss of life".

However, a $27m (£13m) US-funded reconstruction project to help shore up the dam has made little or no progress.

Iraq says it is reducing the risk and insists there is no cause for alarm.

An aerial view of the Mosul dam and its flood plain. Enlarge Image

However, a US watchdog said reconstruction of the dam had been plagued by mismanagement and potential fraud.

In a report published on Tuesday, the Special Inspector General for Iraq Reconstruction (SIGIR) said US-funded "short-term solutions" had yet to significantly solve the dam's problems.

SIGIR found multiple failures in several of the 21 contracts awarded to repair the dam.

Among the faults were faulty construction and delivery of improper parts, as well as projects which were not completed despite full payments having been made.

'Fundamentally flawed'

The dam has been a problem for Iraqi engineers since it was constructed in 1984.

It was built on water-soluble gypsum, which caused seepage within months of its completion and led investigators to describe the site as "fundamentally flawed".

In September 2006, the US Army Corps of Engineers determined that the dam, 45 miles upstream of Mosul on the River Tigris, presented an unacceptable risk.

"In terms of internal erosion potential of the foundation, Mosul Dam is the most dangerous dam in the world," the corps warned, according to the SIGIR report. "If a small problem [at] Mosul Dam occurs, failure is likely."

A catastrophic failure of the Mosul Dam would result in flooding along the Tigris River all the way to Baghdad US letter to Iraqi government See aerial shot and details about the dam

The corps later told US commanders to move their equipment away from the Tigris flood plain near Mosul because of the dam's instability.

The top US military commander in Iraq, Gen David Petraeus, and US ambassador Ryan Crocker then wrote to Iraqi Prime Minister Nouri Maliki urging him to make fixing the dam a "national priority".

"A catastrophic failure of the Mosul Dam would result in flooding along the Tigris River all the way to Baghdad" the letter on 3 May warned.

"Assuming a worst-case scenario, an instantaneous failure of Mosul Dam filled to its maximum operating level could result in a flood wave 20m deep at the city of Mosul, which would result in a significant loss of life and property."

If that were to happen some have predicted that as many as 500,000 people could be killed.

Alarm bells

Iraqi authorities, however, say they are taking steps to reduce the risk and they do not believe there is cause for alarm.

The Iraqi Minister for Water Resources, Latif Rashid, told the BBC that a number of steps were being taken to tackle the problem, including a reduction in water levels in the reservoir and a round-the-clock operation to pump grouting into the dam's foundations.

Work would also begin next year on a longer-term plan to make the foundations safe by encasing them in a concrete curtain, he added.

The BBC's Jim Muir in Baghdad says the debate over the dam has gone on largely behind the scenes so as not to cause public panic or attract the interest of insurgents.

MOSUL DAM - KEY FACTS Mosul Dam is Middle East's fourth largest dam in reservoir capacity and Iraq's largest Key component in Iraq's national power grid, with four 200 megawatt (MW) turbines generating 320 MW of electricity a day Built on water-soluble gypsum, which causes seepage. Subsequent erosion creates cavities beneath dam that must be plugged or "grouted" on a regular basis or dam will fail, say experts Array of piezometers have been deployed to measure water pressure and leakage Seismic equipment provides information to monitor dam's stability US-funded reconstruction project - costing $27m (£13m) - to help shore up the dam has made "little or no progress" since 2005 to significantly improve basic grouting capability of the Iraqi Ministry of Water and Resources at the dam, according to the Special Inspector General for Iraq Reconstruction (SIGIR)