Furor Over Iraq Contracts
Europe reacted swiftly and angrily to the Bush administration's decision to bar opponents of the war in Iraq from reconstruction contracts. Critics said the move could complicate American efforts to restructure Iraq's estimated $125 billion foreign debt.
French President Jacques Chirac, German Chancellor Gerhard Schroeder and Russian President Vladimir Putin all raised the contracting issue during previously scheduled telephone calls with President Bush on Wednesday, the White House said.
But the White House said the ban was not up for reconsideration, though it told critics the administration "will welcome the opportunity to talk to them and explain to them about why this decision was made."
Amid the furor, the United States postponed a conference that was to have taken place Thursday for companies seeking reconstruction contracts in Iraq. The conference, at which the contract requests were to have been made public, is now scheduled for Dec. 19 at a Washington hotel. The delay was blamed on scheduling conflicts.
While the White House defended the policy on Iraq contracts, The New York Times reports officials were upset by the tone and timing of the directive, issued by deputy defense secretary Paul D. Wolfowitz just hours before Mr. Bush was scheduled to speak with foreign leaders about wiping out Iraq's debt.
The Times reports a senior administration official said the president was "distinctly unhappy" about having to talk with leaders who had just been told they would be excluded from the contracts.
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Russia, which along with France is one of Iraq's biggest debtors, signaled it would take a hard line on restructuring after being excluded from contracts.
"Iraq's debt to the Russia Federation comes to $8 billion and as far as the Russian government's position on this, it is not planning any kind of a write-off of that debt," Defense Minister Sergei Ivanov told reporters. "Iraq is not a poor country," he said.
But Germany said Thursday there was "no direct link" between debt relief and the U.S. exclusion of German companies from reconstruction contracts.
"The stabilization of Iraq is also in Germany's strategic interest," said Bela Anda, spokesman for Chancellor Gerhard Schroeder.
President Bush is sending James A. Baker abroad to lobby for restructuring and reducing Iraq's debt. Baker is expected to holds talks in Berlin before Christmas, the German government statement said.
The White House says countries wanting a share of the $18.6 billion in reconstruction contracts in the 2004 U.S. budget must participate militarily in the postwar effort.
"If additional countries want to participate with our efforts in Iraq, then circumstances can change," White House press secretary Scott McClellan said.
He said companies from anti-war countries could compete for contracts being financed by a separate international fund that the White House estimates will be worth $13 billion. Also, the ban does not prevent companies from winning subcontracts.
Such prospects, however, did little to assuage international anger over the directive issued by Wolfowitz in a memo dated Friday and posted on a Pentagon Web site Tuesday.
The European Commission called the contract ban a "political mistake," and said it would examine the contracts to see if Washington had violated its commitments to the World Trade Organization.
"This is a gratuitous and extremely unhelpful decision at a time when there is a general recognition of the need for the international community to work together for stability and reconstruction in Iraq," Chris Patten, the European Union's commissioner for international relations, said through a spokesman.
The Pentagon directive said restricting contract bids was necessary to protect essential security interests. WTO rules allow for exemptions based on national security.
Canada's deputy prime minister, John Manley, said Wednesday that the decision would make it "difficult for us to give further money for the reconstruction of Iraq." Canadian officials said the country has contributed $225 million thus far.
But the German newspaper Der Tagesspiegel sympathized with the U.S. position. "It is childish to reject the war but to be offended when afterwards no profit is to be made from reconstruction," the newspaper said Thursday.
France has made no official comment on the contract ban, but political analysts said the French government was stunned, after what appeared to be months of warming ties between Paris and Washington following France's opposition to the U.S.-led war.
"Paris has the feeling that the (U.S.) Secretary of Defense has decided to use some kind of retaliation, which was considered four or five months ago, but didn't seem to be on the agenda right now," said Francois Gere, director of the Paris-based Diplomatic and Defense Institute.