Thursday, December 11, 2003

President Bush yesterday said forgiving Iraqi debt would be “a significant contribution” to postwar reconstruction efforts and suggested that such a move by France, Germany and Russia might be enough to permit those countries’ companies to compete for prime contracts to rebuild Iraq’s infrastructure.

That message will be delivered to Europe next week by former Secretary of State James A. Baker III, whom Mr. Bush has tasked with urging European powers to forgive or reconfigure the $120 billion in debt racked up by Saddam Hussein.

The diplomatic mission is complicated by the anger of France, Germany and Russia over the U.S. policy of doling out $18.6 billion in Iraq reconstruction contracts solely to countries that contributed to the war effort.

“If these countries want to participate in helping the world become more secure by enabling Iraq to emerge as a free and peaceful country, one way to contribute is through debt restructuring,” Mr. Bush said yesterday.

Mr. Bush did not equate debt forgiveness with inclusion on his list of 63 countries eligible for primary contracts, but he made it clear that countries that committed troops to the liberation of Iraq will get preferential treatment in rebuilding the country with U.S. funds.

“It’s very simple,” Mr. Bush said. “Our people risk their lives. Friendly coalition folks risk their lives, and, therefore, the contracting is going to reflect that. That’s what the U.S. taxpayers expect.”

However, half of the 63 countries on the list did not send troops to Iraq. White House spokesman Scott McClellan said those countries earned their status by backing the war when Mr. Bush first began to solicit support from the United Nations.

“They were part of the effort from the beginning,” Mr. McClellan said. “There were a variety of ways that people could signal their support or help in our efforts in Iraq.”

Asked whether a country that agreed to forgive or restructure Iraqi debt would join the list of favored nations, Mr. McClellan said, “Circumstances can change.”

Pressed to clarify, Mr. McClellan said he would not “speculate about things from this podium.”

“We will have discussions with countries if they want to discuss this [contracting] decision, or if they want to discuss matters relating to the restructuring of the debt,” Mr. McClellan said, adding that countries not on the list can still participate in Iraq’s reconstruction as subcontractors to the favored nations.

This diplomatic flap arose Tuesday upon the release of a memo written by Deputy Secretary of Defense Paul Wolfowitz. Limiting prime contracts to cooperative countries, he wrote “will encourage the expansion of international cooperation in Iraq” and “encourage the continued cooperation of coalition members.”

The policy of awarding primary contracts to coalition members first was announced by the Pentagon during a conference about Iraq’s reconstruction in London on Nov. 21 — though the list of coalition members had not yet been drafted.

“It’s only a flap now because it’s on a piece of paper,” said a Pentagon source on the condition of anonymity. “This policy has been public for some time.”

The Wolfowitz memo said limiting contracts to coalition members “is necessary for the protection of the essential security interests of the United States.”

Pentagon spokesman Col. Jay DeFrank said that statement should not be interpreted to mean that countries not on the list pose a threat to U.S. security. Mr. Wolfowitz, he said, simply was stating that “re-enforcing the coalition of supporters of our efforts in Iraq” is beneficial to the United States.

“That’s the national-security interest we’re discussing here,” Col. DeFrank said.

Canada, which contributed troops to the fight in Afghanistan and nearly $300 million to Iraq’s reconstruction, was piqued at being left off the list. But outgoing Prime Minister Jean Chretien, who leaves office today, said Mr. Bush told him in a telephone conversation yesterday that “press reports on the exclusion of Canada from Iraq’s reconstruction were not true.”

“The president assured me that this is not the case and that he would be taking action to ensure that this was done,” Mr. Chretien said. “I thanked him, and we are still good friends.”

Congressional reaction to the Bush administration policy is falling largely along party lines.

Sen. John Kerry, Massachusetts Democrat and presidential aspirant, said awarding prime contracts to war supporters “is an enormous mistake” that “borders on the stupid.”

“It is counterproductive and is the exact opposite of what we should be doing in order to bring other countries to the table,” Mr. Kerry said.

Rep. Mark Kennedy, Minnesota Republican, has drafted a letter to the president applauding the administration’s contracting policy.

“We believe both American taxpayers and the countries comprising the coalition of the willing would receive the wrong message if countries that refused to contribute to the liberation of Iraq — and in some cases actively worked against it — were allowed to profit,” said the letter, which gained the signatures of 25 House members yesterday.

Mr. Kennedy was the prime sponsor of an amendment to an appropriations bill in April that would have mandated the reconstruction policy that Mr. Bush has adopted on his own. The amendment passed the House but was removed from the appropriations bill in conference.

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