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[casi] FW: U.S. Shuts Out France, Germany for Iraq Work

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U.S. Shuts Out France, Germany for Iraq Work

Tue Dec 9, 6:15 PM ET

By Sue Pleming

WASHINGTON (Reuters) - Citing national security reasons, U.S. Deputy Defense
Secretary Paul Wolfowitz has ruled that prime contracts to rebuild Iraq
h/news?p=%22Iraq%22&c=&n=20&yn=c&c=news&cs=nw>  - web
?cs=nw&p=Iraq> sites) will exclude firms from nations such as France and
Germany that opposed the U.S. war.


Reuters Photo


In a policy document released on Tuesday, Wolfowitz said he was limiting
competition for 26 reconstruction contracts worth up to $18.6 billion that
will be advertised in coming days.

"It is necessary for the protection of the essential security interests of
the United States to limit competition for the prime contracts of these
procurements to companies from the United States, Iraq, coalition partners
and force contributing nations," Wolfowitz said in a notice published on the
web site

The move is likely to anger France and Germany and other traditional allies
in NATO (news
h/news?p=%22NATO%22&c=&n=20&yn=c&c=news&cs=nw>  - web
?cs=nw&p=NATO> sites) and the U.N. Security Council who are being blocked
out of prime contracts after their opposition to the war. They may bid for

But the decision will placate countries such as Britain, Italy and Spain,
which provided troops to Iraq but whose companies were excluded from the
first round of deals that went to U.S. firms.

The contracts cover electricity, communications, public buildings,
transportation, public works and security and justice. Additional contracts
are also being awarded to oversee those projects.


U.S. trade lawyer Clark McFadden questioned the administration's criterion
for the contracts. "Is this going to set a precedent where national security
can be used to justify limiting competition?" he asked.

Procurement specialist Prof. Steven Schooner from George Washington
University said it was "disingenuous" to use national security as an excuse
and predicted an angry reaction from those nations excluded.

"This kind of decision just begs for retaliation and a tit-for-tat response
from countries (such as Germany, France and Russia)," said Schooner.

But a defense official said NATO partners had known for weeks they would not
get prime Iraq business. "This is not a slight. We still have many
agreements with those countries and good working relationships with them."

Wolfowitz is hoping that excluded companies will put pressure on their
governments to join the post-war effort.

"Limiting competition for prime contracts will encourage the expansion of
international cooperation in Iraq and in future efforts," wrote Wolfowitz.

The document, dated Dec. 5, listed more than 60 countries eligible for
contracts funded by the $18.6 billion appropriated by Congress to rebuild

The list included Britain, Australia, Poland, Japan, Italy, Norway, Spain,
Turkey, Jordan, Egypt, South Korea (news
h/news?p=%22South%20Korea%22&c=&n=20&yn=c&c=news&cs=nw>  - web
?cs=nw&p=South%20Korea> sites), the Philippines, Romania and Saudi Arabia.

Some officials had argued privately the United States should not limit
international competition to rebuild Iraq, where the infrastructure has been
shattered by years of neglect, war and post-conflict looting and attacks.

The roll-out of tenders to rebuild Iraq has been delayed in recent days
while "high-level" policy decisions were being taken on Iraqi reconstruction
and as lawyers checked that the final wording complied with U.S. procurement

A defense official said he expected the new contracts to be advertised on
government Web sites later on Tuesday or on Wednesday.

U.S. trade lawyer Roger Schagrin told Reuters non-coalition firms could
still get business from selling material and equipment to the lead

"Much of the money is expended on materials. A British or U.S. company could
get a prime contract and then buy 100 percent French materials," said

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