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Last Updated: Wednesday, 10 December, 2003, 02:28 GMT
Iraq contracts bar war opponents
Basra oil refinery
Iraqi firms will be able to bid for contracts

Companies from countries opposed to the conflict in Iraq will be barred from bidding for new rebuilding contracts worth $18.6bn, the Pentagon has said.

US Deputy Defence Secretary Paul Wolfowitz said the policy was necessary to protect America's "essential security interests".

The 26 prime contracts cover areas such as oil, power, communications, water, housing and public works centres.

The ban would exclude firms from countries such as France and Germany.

Limiting competition for prime contracts will encourage the expansion of international co-operation in Iraq
Paul Wolfowitz

The Bush administration hinted - even before the conflict - that countries opposed to the war would pay a price when it came to a share in post-war reconstruction, says the BBC's Pentagon correspondent Nick Childs.

Now, the Pentagon has published formal guidelines from Mr Wolfowitz confirming that companies from those countries cannot bid for new reconstruction contracts.

"It is necessary for the protection of the essential security interests of the United States to limit competition for prime contracts of these procurements to companies from the US, Iraq, coalition partners and force contributing nations," he said.

Other companies may bid for sub-contracts.

'Tit-for-tat response'

Mr Wolfowitz said he hoped that excluded firms would pressure their governments to join the post-war effort.

"Limiting competition for prime contracts will encourage the expansion of international co-operation in Iraq and future efforts," he wrote in a notice on the website www.rebuilding-iraq.net.

Iraqi oil pipeline
26 contracts worth $18.6bn, including:
Water services
Power generation
Restore oil infrastructure
Equip new Iraq army
Some countries excluded from bidding to protect 'essential security interests' of US

The move is likely to anger France and Germany and other traditional allies in Nato and the UN Security Council.

Procurement specialist Professor Steven Schooner, of George Washington University, said it was "disingenuous" to use national security as an excuse.

"This kind of decision just begs for retaliation and a tit-for-tat response," Reuters news agency quoted him as saying.

But a defence official also quoted by Reuters said Nato partners who opposed the US-led conflict in Iraq had known for some time they would not get prime contracts.

"This is not a slight," he said. "We still have many agreements with those countries and good working relationships with them."

The announcement will appease countries such as Britain, Italy and Spain, which provided troops to Iraq but whose companies were excluded from the first round of deals that went to US firms.

The biggest contractor in Iraq is Bechtel, the American construction firm that has an estimated $1bn contract to rebuild Iraq's infrastructure

The other major US contractor is Kellogg, Brown & Root (KBR), a subsidiary of the oilfield services company Halliburton.

The BBC's Nick Childs
"The guidelines state clearly that competition for the prime contracts should be limited"

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