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U.S. Bid Policy Elicits Outrage

Bush tries to limit the diplomatic damage of the decision to keep antiwar countries from competing for major contracts in Iraq.

December 11, 2003|Sebastian Rotella and Paul Richter | Times Staff Writers

WASHINGTON — Facing outrage from Europe, Russia and Canada, the Bush administration Wednesday appeared to soften its decision to ban countries that did not support the war in Iraq from seeking $18.6 billion in prime contracts to rebuild the nation.

President Bush phoned the leaders of France, Germany and Russia and promised to "keep lines of communication open" to discuss which countries would be allowed to bid, a White House official said. Bush had placed the calls to urge them to help restructure Iraq's massive debt, but that seemed less likely given the anger over the policy.

White House officials insisted that their policy of excluding antiwar nations from choice business deals in Iraq was unchanged. But they said they would be flexible in deciding which countries had done enough to qualify.

At a briefing, a senior defense official said the roster of 63 eligible countries "is not a fixed, closed list.... This is an open list. We're always going to reevaluate."

The official suggested that a country might qualify for the list simply by declaring itself a member of the Iraq coalition, a step that such war opponents as France and Germany might find politically unpalatable.

Officials made no mention of such flexibility when they disclosed the policy Tuesday. Though everyone would be eligible to become a subcontractor, the policy of blocking Russia and many European countries from seeking a prime contract touched a political nerve, and European opponents argued that the U.S. policy might violate international trade rules.

The U.S. action on contracts reopened wounds from the run-up to the war, which began March 20. Trying to minimize the effect, White House officials noted that the directive applied only to the $18.6 billion in U.S. reconstruction aid and not to an additional $13 billion pledged by countries during a conference in Madrid, or to any other funds that might come through international organizations or to subcontractors.

But antiwar countries complained that the Bush administration, despite its recent appeals for international help in rebuilding Iraq, had punished them by denying access to lucrative projects.

Russia warned that the U.S. could endanger any chance that Moscow might comply with Washington's requests to restructure the $8 billion that Iraq owed Russia. France said it would look into the legality of the U.S. move. Germany called the Pentagon directive "unacceptable" and an example of "extremely selfish economic lobbying."

"Nothing is left of the promises in recent weeks to concentrate on the future rather than looking into the past," declared an editorial in Germany's Maerkische Oderzeitung newspaper to be published today. "The recent call by top U.S. politicians for NATO commitment in Iraq appears to be insolence in light of the Pentagon order on contract bids. Washington cannot really believe that Berlin and Paris will first be punished and then go into battle with all flags flying."

Canada, which opposed the war but has given about $230 million to Iraq since then, said it would cut off aid if Canadian firms were barred from bidding for reconstruction contracts.

Paul Martin, who takes office Friday as Canada's prime minister, called the decision "very difficult to fathom." Canada has supplied the largest number of non-U.S. troops to Afghanistan, freeing up American forces for Iraq, he said.

"I understand the importance of these kinds of contracts, but this shouldn't just be about who gets contracts, who gets business," Martin told a news conference Wednesday. "It ought to be: What is the best thing for the people of Iraq."

A senior U.S. official said discussions were underway with the Canadians about whether they deserved to be on the list. Another official, who also asked to remain unidentified, said he believed that "Canada may be added, at some point down the line."

The policy limiting 26 prime contracts to companies from coalition nations and Iraq became public Tuesday in a memo signed by Deputy Defense Secretary Paul D. Wolfowitz. Critics overseas regard Wolfowitz as a leader of U.S. neoconservatives with a perceived hawkish disdain for international institutions and multilateralism.

The Wolfowitz memo said it was necessary to limit eligibility to protect "the essential security interests of the United States." Officials said this language was added because it was needed, under federal law, to provide a rationale when government contracting was not conducted in "full and open" competition.

U.S. officials said they were surprised that the release of the memo had been greeted with such an outcry, because the administration had signaled its intentions several times earlier. Officials also said they had indicated their plans in congressional testimony, as well as in conferences with potential contractors last month in Washington and London.

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