- The Washington Times - Wednesday, April 30, 2003

Iraqi companies are not eligible to work on U.S.-funded reconstruction efforts in their own country until U.N. sanctions are lifted, according to U.S. government officials.
   Firms from Iraq, Iran, Syria, Cuba and North Korea are barred from working as subcontractors on U.S. Agency for International Development reconstruction contracts because they are not designated as countries of the free world, a USAID official said yesterday.
   The legal issue is tied to lifting sanctions against Iraq at the United Nations, a U.S. Treasury spokesman said.
   President Bush earlier this month asked U.N. Security Council members to remove the embargo against Iraq, in place since before the first Persian Gulf war, but the international body has not yet chosen a course of action.
   In the meantime, the $1.7 billion USAID-led effort to rebuild Iraq would have to exclude local Iraqi companies.
   Since Jan. 31 the State Department agency has sought nine American contractors for reconstruction work in Iraq.
   Those with awards, there have been six so far, must be U.S. companies or U.S.-based subsidiaries of foreign companies.
   But subcontractors can execute up to 90 percent of the work, said Christine E. Lyons, the USAID contracting officer handling the Iraqi work.
   Those subcontractors can come from any country of the free world a designation that does not include Iraq.
   “We’re struggling on how to deal with Iraqi firms,” said Ms. Lyons, speaking yesterday at a USAID conference for companies interested in working on Iraqi reconstruction.
   The U.S. Treasury Department enforces the U.N. sanctions. The department has granted waivers for humanitarian work in the country, which includes reconstruction efforts, but would not cover hiring local firms.
   U.S. officials are considering how to proceed.
   Last week State Department spokesman Richard Boucher said that the administration would “probably present a text or present some ideas on a [U.N.] resolution soon.”
   Soon could mean this week but Mr. Boucher would not commit to a date.
   “A high priority, as the president has said, is lifting the economic sanctions. The current sanctions regime is inappropriate given the demise of Saddam’s regime,” Mr. Boucher told reporters.
   Russian President Vladimir Putin yesterday said the U.N. sanctions against Iraq should not be lifted until it has been proven that the country does not possess weapons of mass destruction, Agence France-Presse reported.
   France also has opposed completely lifting sanctions.
   USAID contracts have been awarded for seaport administration, capital construction, personnel support, education and local governance, which involves helping local governments provide basic services in Iraq’s cities and towns.
    Still to be awarded are contracts for airport administration, logistical support, public health, and community action, which deals with citizen participation in government.
   The capital construction award is the biggest so far and could reach $680 million. San Francisco-based Bechtel Group, the winner, plans to hold May conferences in Washington and London to identify potential subcontractors.

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