Lamy probes US contracts in Iraq

Date: 24/04/03

By David Cronin

The European Commission is studying if contracts awarded by the US for work in Iraq comply with tendering rules set down by the World Trade Organization (WTO).

Trade Commissioner Pascal Lamy has revealed that his officials are undertaking a "technical examination" of the contracts to check if they are in line with international regulations on allowing fair competition for tenders.

"In theory, this is simple," Lamy added. "The Americans are part of a WTO agreement on public procurement. But it has a certain number of exceptions for security and defence."

In a statement on 11 April, the Bush administration announced that "the prime contracts" for rebuilding Iraq "will go to US firms through the competitive procurement process" as "existing US foreign assistance law establishes a preference for US firms".

However, Washington has indicated that companies from outside the US can compete for sub-contracting work following a decision taken by the US Agency for International Development (USAID) in January.

Among the companies or organisations that have already been awarded deals are Washington-based Stevedoring Services of America, which has received a contract for seaport administration, and North Carolina's Research Triangle Institute, which has received a 'local governance' contract designed to ensure basic services are provided.

Although George W. Bush, the US president, has requested €1.5 billion for a reconstruction budget from Congress, the actual costs of rebuilding the country are expected to be much higher. Niall Ferguson, a professor at New York's Stern School of Business, identified Bechtel as one firm which stands to gain considerably from reconstruction contracts. One of the world's largest construction and engineering companies, Bechtel has long-standing links with the ruling Republicans.

Meanwhile, talks were taking place between the government and opposition parties in Copenhagen last night (23 April) about the possibility of Denmark leading a peace-keeping force in Iraq.

Danish officials say two different scenarios are being examined. The first is that the country would supply about 380 troops for helping humanitarian efforts, but would not provide the headquarters for a force. The second blueprint would involve Denmark supplying 700-800 troops, as well as providing its HQ. While the first option would be likely to secure a parliamentary majority, the minority government led by Anders Fogh Rasmussen feels it would need the support of some opposition deputies to have the second one endorsed.

It is expected that a vote on the matter could take place within a week. However, Rasmussen is keen to know what other countries would be willing to contribute to the force before tabling a proposal in the national parliament. The Netherlands, Spain, Turkey, Estonia, Latvia, Lithuania, Bulgaria and Poland have indicated they would be willing to take part.

Denmark's preference is that the force would have the blessing of the UN. "But a UN mandated operation could well take some time before it gets on its way," explained an aide to Rasmussen. "We're looking at the option of starting without a UN mandate."

The European Commission is studying if contracts awarded by the US for work in Iraq comply with tendering rules set down by the World Trade Organization.