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Last Updated: Wednesday, 10 December, 2003, 17:53 GMT
Analysis: The law on rebuilding Iraq

By James Arnold
BBC News Online business reporter

American soldiers
Rebuilding Iraq may remain an allied preserve

Washington's decision to allow only its allies a slice of Iraqi reconstruction contracts has not exactly pleased those left out.

The German and Russian Governments warn that exclusion from the roughly $19bn-worth of rebuilding work threatens an international rift.

Canada points out that it has contributed some $190m to reconstruction funds, and so is due a few favours.

France, backed by Brussels, is looking at ways to challenge the decision under international law.

Unfortunately for them, however, it seems that their legal prospects are pitifully thin.

Competitive disadvantage

The French Government seems to feel that international competition law may be the best avenue for attacking US reconstruction policy.

Deliberately excluding certain nationalities from international tenders could, some hope, be seen as nakedly protectionist.

However, points out James Atwood, a competition specialist at Washington law firm Covington & Burling, "there is really no such thing as international competition law".

The World Trade Organisation (WTO), the only venue for international trade disputes, does not deal with antitrust cases.

That leaves competition law operating only at a national - or at its broadest, EU-wide - basis.


The WTO does, it is true, also have rules on open procurement. But these have a great big loophole for issues of national security.

Furthermore, excluding companies from this kind of tender is pretty well established practice.

Ralph Wilde, a barrister and law lecturer at University College London, points out that the contracts are being funded entirely by American taxpayers's money and not with the funds donated by governments such as Canada's.

It may seem vaguely anti-competitive, but almost all rich countries offer so-called "tied" aid - Britain being a rare exception.

Rights and wrongs

If competition law turns out to be a dead end, human-rights rules may look more promising.

The rights and obligations of occupying administrations are mainly laid out in two chunks of international law - the Hague regulations of 1907, and the Geneva conventions of 1949.

The first tactic of America's critics here is to argue that the whole war was illegal; post-war occupation, therefore, is also illegal, and so is reconstruction (or profiteering, depending on one's point of view).

Many lawyers feel that the initial use of force against Iraq may well have been illegal.

But international law is unambiguous: whether war was illegal or not, the occupier has a duty to reconstruct the country.

Conventional wisdom

The next stage in the argument is to say that the occupiers are failing in their duties under Hague and Geneva.

This is complex: United Nations resolution 1483, which authorised war, insisted that the allies adhere to international law.

The Hague regulations, in turn, insist that the law of the occupied country must be respected if possible.

And the law of Iraq - Saddam Hussein's law, that is - forbids almost all the economic reforms proposed by the occupiers.

More promising still, says Sean Murphy, professor of law at George Washington University, it could be possible to show that the allies are in some way mismanaging the Iraqi economy.

If they are damaging Iraq by freezing out well-qualified French companies, for example, then there could be a challenge under Hague.

Rights of conquest

But, Professor Murphy admits, "this is a pretty thin argument".

Hague only insists that an occupied economy be administered adequately, says Michael Schmitt, professor of international law at the Marshall Center in Germany.

Certainly, Hague has nothing specific to say about reconstruction contracts.

Indeed, it offers occupiers considerable leeway in governing a country - allowing them, for example, to confiscate state property, or to press-gang locals into labour.

Frozen out

More alarming still for France and its supporters, Hague could easily be turned against them.

The rules, says Professor Schmitt, are clear: "Participation in reconstruction must be consistent with the policies of the occupying regime."

In other words, not merely can the allies exclude anyone they like from contracts, but non-allies require the express permission of the occupiers before getting involved in reconstruction.

In the end, of course, politics may override all this: even within the US, there is considerable disquiet about the perception that America is exploiting its dominance.

But in the meantime, the law is on Washington's side.

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