IRAQ Ban on contracts for war critics raises anger

France, Germany and Russia are among those excluded from contracts.
BRUSSELS, Belgium (AP) -- Critics said a U.S. decision to bar opponents of the war in Iraq from reconstruction contracts could complicate American efforts to restructure Iraq's estimated $125 billion debt as Europe reacted swiftly and angrily to the decision.
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.
"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 earlier, responding to a question about the contracts. "Iraq is not a poor country," he said.
Much of Iraq's estimated $125 billion debt is owed to France, Germany, Russia and other nations whose companies are excluded under the Pentagon directive.
White House is staunch
Reacting to the international outcry against the decision, the White House said it was not up for reconsideration. The only consolation offered to angry allies was that the Bush administration "will welcome the opportunity to talk to them and explain to them about why this decision was made," White House press secretary Scott McClellan 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.
"These are countries that have been with us from Day One, these are countries that are contributing forces, that have been making sacrifices, and that's why this decision was made," McClellan said. "If additional countries want to participate with our efforts in Iraq, then circumstances can change."
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.
French telecom giant Alcatel, for example, won a subcontract to carry out a third of the two-year deal awarded to Egyptian firm Orascom to build a mobile phone network in central Iraq.
Little calming
Such prospects, however, did little to assuage international anger over the directive issued by Deputy Defense Secretary Paul Wolfowitz in a memo dated Friday and posted on a Pentagon Web site Tuesday.
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 today.
But Canada's deputy prime minister, John Manley, said 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.
Paul Martin, who becomes Canada's prime minister Friday, said that the Pentagon decision was "really very difficult to fathom" and that he would raise the issue with U.S. officials.
Germany, a leading opponent of the war, called the decision "unacceptable," and government spokesman Bela Anda said it went against "a spirit of looking to the future together and not to the past."
In Moscow, Deputy Foreign Minister Yuri Fedotov said the directive "will hardly foster the mobilization of the international community" to rebuild Iraq, "more likely the opposite," according to the ITAR-Tass news agency.
In Brussels, Arancha Gonzalez, trade spokeswoman at the European Commission, said the EU was asking the United States "to provide us with information so we can see whether or not their commitments" under the World Trade Organization "have been respected."
Protecting security
The Pentagon directive said restricting contract bids was necessary to protect essential security interests. WTO rules allow for exemptions based on national security.
"We suspect that in substance it contradicts the [international] principles for international tenders for public projects, although the United States in particular always calls for observing these principles," said Ludolf von Wartenberg, general manager of the Federation of German Industry.
McClellan said the U.S. move was "fully consistent with our WTO obligations."
McClellan dodged suggestions that the move may hurt U.S. efforts to win more support in Iraq. Sen. Joe Biden, D-Del., for instance, called the new policy a "totally gratuitous slap" that "does nothing to protect our security interests and everything to alienate countries we need with us in Iraq."
Volatile situation
Despite the criticism, it was unclear how many major foreign companies were prepared to launch major reconstruction projects in Iraq as long as the security situation remains volatile.
Many international organizations, including the United Nations and the international Red Cross, have withdrawn foreign staff from Iraq because of the violence.
Danger for contractors
On Monday, a South Korean company announced it would withdraw 60 workers restoring power lines in Iraq after gunmen killed two of its engineers working on a U.S.-funded project.
Several American contractors have been killed by Iraqi insurgents, and last month a Baghdad hotel used by Halliburton subsidiary Kellogg Brown & amp; Root was rocketed. One U.S. contractor was injured.
Hochtief AG, a German construction giant, said it was not interested in projects in Iraq "as long as the situation remains so dangerous."