Bush Discusses Iraq Contract Row with European Leaders

Bush had planned to use the pre-scheduled telephone calls to Berlin, Paris and Moscow to push the three leading opponents of the war in Iraq to forgive Baghdad’s debt. But the Pentagon’s decision on Tuesday to release a memo excluding all the firms from all nations that failed to support Washington’s military efforts put the White House in damage control mode.

According to a U.S. government spokesman, Bush told German Chancellor Gerhard Schröder, French President Jacques Chirac and Russian President Vladimir Putin that he planned “to keep the lines of communication open” regarding the contracts. Bush also reportedly tried to present the new policy as an invitation to other countries to join Washington’s camp rather than a form of punishment.

All three European leaders had been angered by U.S. Deputy Defense Secretary Paul Wolfowitz’s announcement on Tuesday that only firms from a list of 63 nations that would able to take part in Iraqi reconstruction efforts being funded by the U.S. government worth some $18.6 billion (€15.2 billion).

Wolfowitz said the action was vital to protecting the United States’ “essential” security interests, but many observers saw it as the Bush administration making good on a threat that those nations that opposed the U.S.-led campaign to oust Iraqi dictator Saddam Hussein would not play a large role in the rebuilding of the country.

New transatlantic row?

The matter has raised the specter of rekindling the simmering transatlantic row caused by disagreement over the war. Germany, like the countries similarly affected, called the exclusion unacceptable. “It wouldn't be in line with the spirit of looking to the future together and not into the past,” a spokesman for Chancellor Schroeder told Reuters.

Both France and the European Commission said they would look at the U.S. decision to see whether it complied with traditional international rules on government procurement.

Bush is also reportedly irked by the Pentagon’s timing on the matter, since he had been planning to use the calls to encourage France, Germany and Russia to forgive old Iraqi debts. But he apparently approved the decision and White House Press Secretary Scott McClellan defended the exclusion policy on Wednesday.

“I think it's only appropriate that those countries that have been involved with the United States from the beginning and the Iraqi people and those who are contributing forces to the efforts in Iraq would be the ones that would be eligible for the prime contracts funded by U.S. taxpayer dollars,” McClellan told a press briefing.