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THE WORLD

Antiwar Nations Barred From Bids

Companies in countries that opposed the Iraq invasion will not be allowed to compete for $18.6 billion in contracts for reconstruction.

December 10, 2003|Paul Richter | Times Staff Writer

WASHINGTON — The Pentagon will bar companies from France, Germany, Russia and other countries that opposed the war in Iraq from bidding on $18.6 billion in prime contracts for reconstruction of the country, according to a memo released Tuesday.

The memo, signed by Deputy Defense Secretary Paul D. Wolfowitz, says that "for the protection of the essential security interests of the United States," only companies from the United States, Iraq and the countries that joined the coalition against Saddam Hussein will be allowed to bid on the 26 contracts to be announced soon.

The order did not come as a great surprise to the war's opponents, diplomats in Washington said, because Bush administration officials have long said that coalition members would receive special preference in any rebuilding efforts.

Nevertheless, the move is the most serious retaliation yet against the dissenters, and it comes as the Bush administration is trying to restore relations with European allies.

Sen. Joseph R. Biden Jr. of Delaware, the top Democrat on the Senate Foreign Relations Committee, said in a statement Tuesday that the action was a "totally gratuitous slap that does nothing to protect our security interests and everything to alienate countries we need with us in Iraq."

Biden said that even as the Bush administration is asking for support from NATO members for peacekeeping efforts in Iraq, "we stick a finger in the eye of those whose help we have been seeking."

The policy also came up at Tuesday's debate among the Democratic presidential candidates. Sen. John F. Kerry of Massachusetts denounced it, saying, "I can't think of anything dumber or more insulting or more inviting ... to the disdain of [other] countries and potential failure of our policy" in Iraq.

Although the ban on prime contracts covers more than 100 nations, all countries will be eligible to bid for subcontracts, defense officials noted.

Wolfowitz's three-page memo said that limiting competition for the lucrative prime contracts "will encourage the expansion of international cooperation in Iraq, and in future efforts." It also will "encourage the continued cooperation of coalition members," it said.

U.S. officials have been under pressure to produce a payoff for the countries that provided troops and other military and economic assistance to the war effort. There have been widespread public complaints in such countries as Britain, Denmark, Poland and Portugal that U.S. giants Bechtel Corp. and Halliburton Co. have won reconstruction contracts worth hundreds of millions of dollars but the United States has not given similar opportunities to companies from allied nations.

Officials of the U.S.-led coalition have promised that more companies in allied nations will be involved in future efforts.

A spokeswoman for the French Embassy in Washington declined to comment, saying officials in France were still unaware of the news. Officials at the German and Russian embassies could not immediately be reached for comment.

Canada, also barred from the bidding, said the move would make it difficult for it to contribute more funds for Iraq's reconstruction.

"To exclude Canadians just because they are Canadians would be unacceptable if they accept funds from Canadian taxpayers for the reconstruction of Iraq," Deputy Prime Minister John Manley told Associated Press. Officials say Canada has given more than $190 million to the rebuilding effort.

Retired Adm. David Nash, head of the Program Management Office, which will oversee the contract awards, had said at a conference last month that officials probably would limit bidding to companies in the United States, Iraq and allied countries. Coalition officials made a final decision several days later after consulting with Pentagon lawyers, a defense official said.

Wolfowitz's memo, found at www.rebuilding-iraq.net, was dated Friday.

Although the decision is a symbolic slap at the war's opponents, it may have little effect in limiting the commercial presence of non-coalition countries in Iraq, because many companies in those nations probably will get significant subcontracts.

For example, German industrial giant Siemens won a $95-million subcontract from Bechtel Group last month to build a turbine plant in northern Iraq.

French and Russian companies also have long-standing relationships with Iraqi government agencies and companies. The Iraqis may want to do business with them, and they may have an edge in competition because they built many of the older systems now in place.

As a practical matter, very few companies probably will qualify as serious competitors for the biggest contracts. Only very large firms with great financial resources and long experience in dealing with the U.S. government in the Middle East have a realistic chance of competing, business executives say.

The contracts will authorize work on projects to improve the electric grid, communications, public buildings, transportation, security and justice. One contract will be awarded for management of the effort and another for the equipping of the Iraqi army.

In the last several weeks, U.S. officials have been stepping up their requests to European allies to help out in Afghanistan and Iraq. North Atlantic Treaty Organization peacekeepers are now in charge of the International Security Assistance Force that is gradually expanding its presence in Afghanistan.

Last week in Brussels, Secretary of State Colin L. Powell urged NATO leaders to consider a direct role in Iraq.

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Times staff writer Ronald Brownstein contributed to this report.

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