White House defends policy on Iraq reconstruction

Published 9:00 pm Tuesday, December 9, 2003

WASHINGTON – The White House, defending a new policy barring companies from nations that opposed the Iraq war from bidding on $18.6 billion in reconstruction contracts, said Wednesday that countries wanting a slice of that lucrative pie must participate militarily in the postwar effort.

Responding to the angry response from Germany, Canada and other U.S. allies, White House spokesman Scott McClellan said the policy was “appropriate and reasonable.”

“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,” McClellan said.

The Pentagon policy prevents companies from countries that opposed war from bidding on reconstruction contracts because their governments opposed the American-led war that ousted Saddam Hussein’s regime.

The directive from Deputy Defense Secretary Paul Wolfowitz, dated Friday and posted on a Pentagon Web site Tuesday, limits bidders to firms from the United States, Iraq, their coalition partners and other countries which have sent troops to Iraq. It says restricting contract bids “is necessary for the protection of the essential security interests of the United States.”

The European Union, meanwhile, announced it would try to determine whether the 26 contracts listed on the Pentagon Web site justify an exemption from World Trade Organization procurement rules on the basis of national security.

McClellan said that other nations that want to be eligible for a slice of the $18.6 billion, money that Congress approved last month after a special budget request by President Bush, can do so by participating militarily, McClellan said. They can also vie for contracts being financed by a separate international fund that the White House estimates will be worth $13 billion, he said.

“The United States and coalition countries, as well as others that are contributing forces here, and the Iraqi people themselves, are the ones that have been helping and sacrificing to build a free and prosperous nation for the Iraqi people, and I think it’s totally appropriate for those U.S. taxpayer dollars to go to the entities I just mentioned,” he said.

Bush approved the decision, which circulated through several government agencies before the Pentagon announced it Tuesday, the spokesman said.

Several U.S. allies sharply criticized the decision. Germany called the decision “unacceptable” and Foreign Minister Joschka Fischer said, “We will be speaking about it with the American side.”

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 to the rebuilding effort.

In Paris, Foreign Ministry spokesman Herve Ladsous said that France had “taken note” of the Pentagon’s decision and was studying whether it follows international law.

Russia issued an implicit threat that, in response, it would take a harder line on the restructuring of Iraqi debt that Washington seeks. Russia is the country Iraq owes the most money to, followed by France, and then the United States and Germany in a virtual dead heat.

Asked whether it was productive to alienate these countries, McClellan said: “I don’t think it is.”

Democratic presidential candidate Howard Dean, meanwhile, cited the policy as an example of the Bush administration’s “confrontation” approach “all over the world.”

Bush “mistakes policy disagreements for personal disagreements and then he acts accordingly,” Dean said on CBS’ “The Early Show.” As a result, Dean said, “We’re now the most feared country on the face of the earth but no longer the most respected.”

The top Democrat on the Senate Foreign Relations Committee, Sen. Joseph Biden of Delaware, issued a statement calling 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.”

Bush administration officials have suggested publicly and privately before the war started that countries which opposed the United States on Iraq would be cut out of at least some of the lucrative rebuilding contracts administered by Washington. The order from Wolfowitz covers contracts to manage the entire rebuilding effort, train and equip the Iraqi National Army and rebuild infrastructure including roads, sewers, power plants and oil fields.

Wolfowitz wrote that the restrictions would encourage other countries to join the coalition in Iraq. A Pentagon spokesman, Maj. Joe Yoswa, said the order does not prohibit companies from the excluded countries from getting subcontracts in Iraq.

France, Germany and Russia led opposition to the U.S.-led invasion of Iraq, which got its strongest support in Europe from Great Britain and Spain.

Senior administration officials, who spoke on condition of anonymity, said Wednesday they were not surprised by the allies’ sharp criticism, but by the timing of it, given that the policy had been made plain for weeks.

They said they were not concerned that the new rift would harm efforts by former Secretary of State James Baker to seek debt relief for Iraq, and insisted they would not budge from the policy.

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