Thursday, December 11, 2003

Excluding countries that opposed the war in Iraq from those that will reap the largest profits in the country’s reconstruction is “perfectly appropriate and reasonable,” a White House spokesman said yesterday.

The Pentagon on Tuesday announced its policy to allow only companies based in the 63 countries that have supported the Iraq war to bid on the “prime contracts” for reconstruction.

The policy has angered France, Germany, Russia and especially Canada, which contributed troops to the effort to oust the Taliban regime and track down terrorists in Afghanistan. But Ottawa opposed the U.S.-led invasion of Iraq.

White House spokesman Scott McClellan defended the policy, saying “those who have been sacrificing” soldiers and treasure in Iraq deserve to bid on the $18.6 billion in U.S. funds to rebuild the country.

“These are countries that have been with us from Day One,” Mr. McClellan said. “These are countries that are contributing forces, that have been making sacrifices, and that’s why this decision was made.”

Meanwhile, the Iraq Program Management Office, which is overseeing the reconstruction of the country, announced yesterday that it has “temporarily delayed” its schedule for awarding contracts by February.

It was not clear whether the delay was related to the public flap stirred by the bidding policy, but a statement on the agency’s Web site said a “pre-proposal conference” scheduled for today has been put off until Dec. 19.

A Pentagon spokesman did not return calls for comment last night.

The list of preferred contract countries, compiled by Deputy Defense Secretary Paul Wolfowitz, includes 32 that have contributed troops in Iraq, such as Poland and Britain. But the list also includes small countries, like the impoverished African country of Eritrea and the former U.S. territory of the Marshall Islands, who have done little more than offer words of support in the United Nations.

“Coalition membership is a self-designated thing,” said State Department spokesman Richard Boucher, defining the list as “countries that wanted to make contributions and wanted to stand up and be counted part of the coalition.”

Officials from the White House and the State Department said it was still possible for countries to apply for inclusion on the list and thus be eligible to have their companies bid on the Iraq contracts.

Mr. Boucher said he would not “speculate on exactly what we consider to be signing up at this stage.”

“We’re not setting a particular standard for inclusion. We’re just saying [the list] is open to others to be included,” he said.

Mr. Wolfowitz wrote in his memo that the favored contracting policy is intended to “encourage the continued cooperation of coalition members” and to “encourage the expansion of international cooperation in Iraq and in future efforts.”

Incoming Canadian Prime Minister Paul Martin, who takes office tomorrow, said yesterday he “can’t fathom” why Canada has been cut off from prime contracts in Iraq.

Canada has committed nearly $300 million for the reconstruction of Iraq, Mr. Martin said, and is “carrying a very, very heavy load” in the war on terrorism.

Six Canadian soldiers have been killed in the past 20 months in Afghanistan.

“I will certainly be discussing this with the ambassador, and then we’ll see,” Mr. Martin said.

Mr. McClellan said the Pentagon’s contract policy is meant to deal specifically with allies in Iraq and not those in the larger war on terror.

“We appreciate the contributions that Canada has been making in the war on terrorism,” Mr. McClellan said. “We will look forward to visiting with Canadian officials about concerns that they have, and talk to them about these decisions, talk to them about additional ways that they may be able to participate” in Iraq.

Mr. McClellan said companies from countries not on the list can still participate in the reconstruction through subcontracts awarded by firms in the preferred nations.

For example, Mr. McClellan said, Siemens, a German company, “is already working on the ground” in Iraq. A French company is also working on diesel generators, and a Russian company has been refurbishing a power plant.

Mr. Boucher acknowledged that a number of countries had contacted U.S. diplomats yesterday to express their unhappiness with the contract decision.

German Foreign Minister Joschka Fischer complained about Germany’s exclusion directly to Secretary of State Colin L. Powell in a telephone call yesterday morning.

In Berlin, a spokesman for German Chancellor Gerhard Schroeder, a vocal opponent of the war, said the U.S. move “would not be in line with the spirit of looking to the future and not to the past.”

The European Union is considering a complaint to the World Trade Organization, an official at the executive EU body told Kyodo news agency. The official said a challenge to the listing, by claiming that targeting specific countries violates world-trade rules, could come in two or three weeks.

Mr. Wolfowitz said in his memo that limiting competition for the prime contracts to the 63-nation Iraq coalition “is necessary for the protection and essential security interests of the United States.”

A Pentagon spokesman did not return a call to explain that portion of Mr. Wolfowitz’s memo. Mr. Boucher, however, said the United States did not regard countries excluded from the contracts, which include several longtime allies, “to be any kind of risk to American security.”

A senior State Department official, speaking on the condition of anonymity, said the citation of U.S. “security interests” in the Wolfowitz memo was a legal necessity to get around contract-bidding requirements and U.S. obligations under the World Trade Organization.

The official also said other countries typically put far more restrictions on their own foreign aid contracts than does the United States.

• Betsy Pisik contributed to this report in New York.

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