Contract ban stirs anger

BRUSSELS, Belgium — Russia suggested it would not restructure Iraq’s debt. Canada threatened to stop sending aid to Baghdad. The European Union said it would study whether global trade rules had been violated.

Across Europe, response was swift and angry Wednesday to the U.S. order barring firms based in important allied countries — opponents of the Iraq war — from bidding on Iraqi reconstruction projects.

Germany, another 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."

Critics said the policy could discourage countries from helping to rebuild Iraq and complicate American efforts to restructure Iraq’s estimated $125 billion debt, much of it owed to France, Germany, Russia and other nations whose companies are excluded under the Pentagon directive.

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 Wednesday, White House spokesman Sean McCormack said.

Bush "indicated he’d keep lines of communication open," McCormack said — but other White House officials made it clear the administration has no intention of reconsidering the policy.

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.

"Prime contracts for reconstruction funded by U.S. taxpayer dollars should go to the Iraqi people and those countries who are working with the United States on the difficult task of helping to build a free, democratic and prosperous Iraq," White House spokesman 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.

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.

"There are very few restrictions on subcontractors. Subcontracting opportunities are available very widely," State Department spokesman Richard Boucher said.

Such prospects, however, did little to assuage international anger over the directive issued by Deputy Defense Secretary Paul Wolfowitz.

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 the Pentagon decision was "really very difficult to fathom" and that he would raise the issue with U.S. officials.