The Militant (logo)  
   Vol. 67/No. 46           December 29, 2003  
U.S. gov’t bars ‘old Europe’
from lucrative Iraq contracts
(front page)
Washington announced December 9 that, in the name of protecting its “essential security interests,” it will shut out French, German, Russian, and other companies from the $18.6 billion worth of contracts that the U.S.-led occupation authorities in Iraq are going to award for the reconstruction of the country. The next day, U.S. president George Bush reaffirmed that he would dispatch former secretary of state James Baker to Europe to present the demand to these same governments to write off Iraq’s debts.

The policy was made public in a memorandum signed by U.S. deputy defense secretary Paul Wolfowitz. “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,” the document said.

Bush presented this policy in a subsequent press conference and other public statements. “It’s very simple,” he stated December 11. “Our people risk their lives… coalition folks risk their lives, and, therefore, the contracting is going to reflect that. And that’s what the U.S. taxpayers expect.”

The Wolfowitz memorandum drew angry reactions from Paris, Berlin, and Moscow. All three governments had opposed the way the Anglo-American war against Iraq was carried out earlier this year, knowing that a U.S. victory would jeopardize their lucrative investments and trade relations with Iraq under the regime of Saddam Hussein. French companies had billions of dollars invested in Iraq, and the deposed Iraqi government had taken out billions more in loans from French, German, Russian, and other creditors.

The three governments had also declined to pledge funds for the reconstruction of Iraq at the U.S.-sponsored Donors’ Conference in Madrid in late October.

The Pentagon memorandum listed 63 “coalition partners,” who, having sent troops or police to Iraq, will therefore be granted some of the lucrative reconstruction contracts. Among these are NATO members Italy, United Kingdom, Denmark, Spain, Portugal, Netherlands, and Turkey. Also on the list are Eastern European governments that are candidates for NATO membership including Bulgaria, Romania, Hungary, Czech Republic, and Poland, as well as several former Soviet republics such as Georgia, Ukraine, Azerbaijan, Kazakhstan, Uzbekistan, and the three Baltic states.

Three other imperialist powers are included: Japan, Australia, and New Zealand. Just this month Tokyo decided to send about 1,000 “noncombat” troops for the occupation.

Not on the list are NATO members Germany, France, and Belgium, which were critical of the Anglo-American invasion. These three countries—along with the Netherlands and Luxemburg—were the original members of the Common Market, which later evolved into the larger European Union. Other excluded NATO members include Canada and Greece. Also iced out are China and Israel.  
Washington to rivals: ‘write off debt’
On December 10 U.S. president George Bush called his counterparts in Paris, Berlin, and Moscow, asking them to forego their share of Iraq’s $120 billion foreign debt. He said former treasury secretary and secretary of state James Baker would be visiting those countries to press that demand.

Liberal commentators said the timing of the Pentagon memorandum and the call for the debt write-off were an embarrassment for the Bush administration. But every indication is that Washington was simply acting out of a position of strength in relation to its imperialist rivals.

The Russian government, Iraq’s major military supplier for decades, is owed $8 billion, and those of France and Germany are not far behind. Bush stated that writing off part of the Iraqi debt, however, would not result in their admission into the ranks of those eligible for contracts.

The German government called the exclusion from the Iraq contracts “unacceptable.” Rejecting the U.S. “national security” argument, a spokesperson for German chancellor Gerhard Schroeder huffed, “The stabilization of Iraq is also in Germany’s strategic interest.” Russian defense minister Sergei Ivanov told reporters, “As far as the Russian government’s position on this, it is not planning any kind of write-off of that debt. Iraq is not a poor country.”

French officials did not issue an immediate public response. But Paris and Berlin responded through the European Union, which they dominate. Washington’s policy on Iraq contracts “is a gratuitous and extremely unhelpful decision,” said a spokesperson for the European Commission, the EU’s central body. He added that the commission would examine the contracts to determine whether Washington is violating the rules of the World Trade Organization (WTO).

The Wall Street Journal reported that the White House would prefer to avoid a challenge in the WTO, but that U.S. officials “had little doubt that the U.S. would win if it came to blows.”

Given that Washington controls Iraq’s ability to pay back its debts, Paris, Berlin, and Moscow do not have much leverage regarding Iraq’s debts. Condemning the stance of those three governments in relation to U.S. policy in Iraq, the Investors Business Daily editorialized, “These aren’t the acts of friends or allies, but of foes.” The paper advised the U.S. government, “Don’t pay.”

The Canadian government, which was also critical of the U.S.-British invasion of Iraq and did not send troops there, was angry that it was barred from the contracts. Canadian deputy prime minister John Manley said December 10 that it would make it “difficult for us to give further money for the reconstruction of Iraq.” The following day Canada’s prime minister, Jean Chrétien, took a more conciliatory tone, saying Bush had assured him the reports about Canada’s exclusion “were not true.”

Washington is placing 26 contracts up for bid at this time. They include work on rebuilding Iraq’s electrical grid, water projects, and “security and justice facilities,” development of transportation and communication facilities, oil industry infrastructure, and equipping the Iraqi army. The first round of contracts was made available to U.S. companies alone.

Currently the largest contractors are U.S. conglomerates Bechtel, a construction firm with a contract estimated at $1 billion, and Kellogg, Brown and Root, a subsidiary of oilfield services company Halliburton.

Critics of Washington have raised a stink about a recent Pentagon audit that found that Halliburton, Vice President Richard Cheney’s former company, may have overcharged the U.S. army some $61 million for gasoline delivered to Iraqis.

To downplay criticism of Washington’s contract policy, U.S. officials pointed out that the same restrictions do not apply to subcontractors. The French telecommunications company Alcatel recently became the first French-based company working in Iraq, and the German company Siemens AG is there as well.

But the Pentagon memo was not subtle about the U.S. government’s intention of using the juicy contracts as a club against its competitors. “Coalition partners share in the U.S. vision of a free and stable Iraq,” it stated. “The limitation of sources to prime contractors to those countries should encourage the continued cooperation of coalition members.” The memo added, “Limiting competition for prime contracts…will encourage the expansion of international cooperation in Iraq and in future efforts.”

White House spokesman Scott McClellan stated, “If countries decide they want to… join the efforts of the coalition forces in Iraq, then circumstances can change.”  
Anti- and pro-U.S. protests in Iraq
In the preceding days, several public demonstrations had taken place in Iraq involving a range of political forces. In Hilla, a city about 60 miles southwest of Baghdad, hundreds of demonstrators sat in at the U.S.-backed provincial governor’s office for three days, forcing his resignation.

The local occupation authorities replaced him with a former Iraqi air force officer, but demonstrators continued to rally. A protest of 1,000 on December 11 chanted “Yes, yes for elections!” and “No, no to appointment!” the Washington Post reported. Union leaders threatened to call a strike to demand the governor be elected by Iraqis, not chosen by an American.

On December 3, hundreds of supporters of Shiite leader Muqtada al-Sadr, demonstrated at Hilla’s government building, demanding elections before a new national government and constitution are established. They held banners and painted graffiti with slogans such as “Down U.S.A.” and “Death to America,” according to the Washington Times.

The U.S.-dominated occupation authorities have announced plans to transfer official government powers to a “transitional” national assembly by May 31. The assembly would be chosen through “caucuses” in each of the country’s 18 provinces instead of through elections. General elections would not take place until March 2005.

At the same time, pro-occupation forces held demonstrations in several cities against “terrorism,” that is, the bombing and sniper attacks by forces loyal to the former Saddam Hussein regime. Agence France-Presse reported December 12 that these protests drew several thousand across the country.

The Baghdad demonstration included contingents from several organizations such as the pro-U.S. Iraqi National Congress, the Iraqi Women’s Organization, the Kurdish Democratic Party, the Supreme Council for Islamic Revolution in Iraq, and the Iraqi Communist Party, who waved large red hammer-and-sickle banners. They chanted “No, no to terrorism, Yes, yes to peace.” Some of the speakers expressed their support to the U.S. forces for “liberating” Iraq.

Supporters of al-Sadr intervened in the demonstration and began chanting “No, no to occupiers.”

In the Shiite cities of Najaf and Karbala, south of Baghdad, AFP reported that more than 2,500 protesters demanded the transfer of police and security from the foreign occupation forces to Iraqis. “Killing children is not resistance,” read one banner in the Najaf demonstration, referring to the deaths of Iraqi civilians by assaults launched by elements of the former regime.

“In Ramadi, west of Baghdad, a hotbed of anti-U.S. sentiment, about 100 people protested after a call by the local council. They gathered under the protection of American troops while a counterdemonstration of about 70 people threw stones at the Americans. Iraqi police dispersed them,” AFP reported.  
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