Commission to scrutinize Iraq contracts

By David Cronin

Date: 11/12/03

THE European Commission is to examine if the US decision to bar France, Germany and Russia from bidding for reconstruction contracts in Iraq flouts international trade rules.

Paul Wolfowitz, US deputy defense secretary, has sparked a furore by stating that only firms from America and 61 'coalition partners' may bid for the contracts, worth Û15 billion in total.

France, Germany and Russia, the three countries most strongly opposed to the war in Iraq, are excluded from the list, with Wolfowitz invoking security concerns for his decision to limit those eligible to bid.

He also said it was a way of rewarding allies of the US for their loyalty.

Arancha Gonzalez, the Commission's trade spokeswoman, said EU trade officials will check if the US decision is permitted under exemptions in the World Trade Organization's agreement on government procurement. THE European Commission is to examine if the US decision to bar France, Germany and Russia from bidding for reconstruction contracts in Iraq flouts international trade rules. a

The 1981 accord states that a signatory may take "any action" it deems necessary for the "protection of its national security interests".

Gonzalez said the Commission would be seeking details from the US government about the rationale behind the decision.

Berlin reacted angrily to the news yesterday. Bela Anda, spokesman for Chancellor Gerhard Schroeder, labelled it "unacceptable", adding it "would not correspond either to the spirit of what we had agreed together, which is about looking together towards the future and not the past".

The Commission previously examined deals granted earlier this year following a US decree that the "prime contracts" for rebuilding Iraq would go to American firms. That inquiry found that the contracts did not breach WTO rules.