NYTimes.com Article: Diplomacy: Bush Seeks Help of Allies Barred From Ir

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Diplomacy: Bush Seeks Help of Allies Barred From Iraq Deals

December 11, 2003
 By DAVID E. SANGER and DOUGLAS JEHL 



 

WASHINGTON, Dec. 10 - President Bush found himself in the
awkward position on Wednesday of calling the leaders of
France, Germany and Russia to ask them to forgive Iraq's
debts, just a day after the Pentagon excluded those
countries and others from $18 billion in American-financed
Iraqi reconstruction projects. 

White House officials were fuming about the timing and the
tone of the Pentagon's directive, even while conceding that
they had approved the Pentagon policy of limiting contracts
to 63 countries that have given the United States political
or military aid in Iraq. 

Many countries excluded from the list, including close
allies like Canada, reacted angrily on Wednesday to the
Pentagon action. They were incensed, in part, by the
Pentagon's explanation in a memorandum that the
restrictions were required "for the protection of the
essential security interests of the United States." 

The Russian defense minister, Sergei Ivanov, when asked
about the Pentagon decision, responded by ruling out any
debt write-off for Iraq. 

The Canadian deputy prime minister, John Manley, suggested
crisply that "it would be difficult" to add to the $190
million already given for reconstruction in Iraq. 

White House officials said Mr. Bush and his aides had been
surprised by both the timing and the blunt wording of the
Pentagon's declaration. But they said the White House had
signed off on the policy, after a committee of deputies
from a number of departments and the National Security
Council agreed that the most lucrative contracts must be
reserved for political or military supporters. 

Those officials apparently did not realize that the
memorandum, signed by Paul D. Wolfowitz, deputy secretary
of defense, would appear on a Defense Department Web site
hours before Mr. Bush was scheduled to ask world leaders to
receive James A. Baker III, the former treasury secretary
and secretary of state, who is heading up the effort to
wipe out Iraq's debt. Mr. Baker met with the president on
Wednesday. 

Several of Mr. Bush's aides said they feared that the
memorandum would undercut White House efforts to repair
relations with allies who had opposed the invasion of Iraq.


White House officials declined to say how Mr. Bush
explained the Pentagon policy to President Vladimir V.
Putin of Russia, President Jacques Chirac of France and
Chancellor Gerhard Schröder of Germany. France and Russia
were two of the largest creditors of Saddam Hussein's
government. But officials hinted, by the end of the day,
that Mr. Baker might be able to show flexibility to
countries that write down Iraqi debt. 

"I can't imagine that if you are asking to do stuff for
Iraq that this is going to help," a senior State Department
official said late Wednesday. 

A senior administration official described Mr. Bush as
"distinctly unhappy" about dealing with foreign leaders who
had just learned of their exclusion from the contracts. 

Under the Pentagon rules, only companies whose countries
are on the American list of "coalition nations" are
eligible to compete for the prime contracts, though they
could act as subcontractors. The result is that the Solomon
Islands, Uganda and Samoa may compete for the contracts,
but China, whose premier just left the White House with
promises of an expanded trade relationship, is excluded,
along with Israel. 

Several of Mr. Bush's aides wondered why the administration
had not simply adopted a policy of giving preference to
prime contracts to members of the coalition, without
barring any countries outright. 

"What we did was toss away our leverage," one senior
American diplomat said. "We could have put together a
policy that said, `The more you help, the more contracts
you may be able to gain.' " Instead, the official said, "we
found a new way to alienate them." 

A senior official at the State Department was asked during
an internal meeting on Wednesday how he expected the move
to affect the responses of Russia, France and Germany to
the American request. He responded, "Go ask Jim Baker,"
according another senior official, who said of Mr. Baker,
"He's the one who's going to be carrying the water, and
he's going to be the one who finds out." 

In public, however, the White House defended the approach.
Scott McClellan, the White House spokesman, said "the
United States and coalition countries, as well as others
that are contributing forces to the efforts there, 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." 

He said contracts stemming from aid to Iraq pledged by
donor nations in Madrid last month would be open to broad
international competition. 

Richard A. Boucher, the State Department spokesman, said
Wednesday that while the bidding restriction applied to
prime contracts, "there are very few restrictions on
subcontractors." 

He also said the World Bank and International Monetary Fund
"may have different, or their own, rules for how they
contract." 

When the committee was drafting the policy, officials said,
there was some discussion about whether it would be wise to
declare that excluding noncoalition members was in the
security interests of the United States. As a matter of
trade law, countries are often allowed to limit trade with
other nations on national security grounds. 

"The intent was to give us the legal cover to make the
decision," one official said. 

But the phrase angered officials of other nations because
it seemed to suggest they were a security risk. 

Moreover, the United States Trade Representative's office
said on Wednesday that contracts with the occupation
authority "are not covered by international trade
procurement obligations because the C.P.A. is not an entity
subject to these obligations." 

"Accordingly, there is no need to invoke the `essential
security' exception to our trade obligations," the office
added. 

That raised the question of why Mr. Wolfowitz included the
phrase. 

The Pentagon was already recasting the policy on Wednesday.


"Nobody had the intent of being punitive when this was
being developed," said Larry Di Rita, spokesman for Defense
Secretary Donald H. Rumsfeld. 

"This is not a fixed, closed list," he said. "This is meant
to be forward looking and potentially expansive." 

http://www.nytimes.com/2003/12/11/international/middleeast/11PREX.html?ex=1072150446&ei=1&en=b0aa9261fde985d2


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