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Bush defends plan on Iraq contracts

WASHINGTON -- President Bush yesterday vigorously defended his decision to deny some countries a share of Iraqi reconstruction work, even as he urged the same nations to forgive billions of dollars in Iraqi debt.


Echoing the rhetoric that preceded the war in Iraq, Bush deflected criticism from European leaders. They were angered by a White House move to block firms from countries that opposed the war from $18.6 billion in contracts to rebuild the country.

"It's very simple," Bush told reporters. "Our people risked their lives. Friendly coalition folks risked their lives, and therefore the contracting is going to reflect that, and that's what the US taxpayers expect."

France, Russia, Germany, and Canada, which did not support the war but have since labored to repair their relations with the United States, were particularly vocal in their criticism of the restrictions, outlined Tuesday in a Pentagon memo signed by Deputy Defense Secretary Paul Wolfowitz. In Berlin, Chancellor Gerhard Schroeder of Germany, standing alongside UN Secretary General Kofi Annan, suggested the memo could be contrary to the spirit of international law, a remark that Bush later scoffed at while speaking with reporters.

"International law?" Bush said. "I'd better call my lawyers."

In Brussels, Chris Patten, the European commissioner for external relations, was also critical of the White House. "Returning to old arguments and division doesn't seem particularly constructive," said Patten, a former British official who has often supported US positions.

The latest round of trans-Atlantic sniping comes at a difficult time for the Bush administration, which wants to negotiate a reduction in Iraqi debt valued at $120 billion, much of which was extended by the very countries to be excluded from reconstruction contracts. As Wolfowitz's memo was released, Bush was preparing to telephone the leaders of France, Germany, and Russia to ask them to receive James A. Baker III, the former secretary of state, as an envoy to renegotiate Iraq's debt.

Diplomats said they sympathized with Baker, whose mission will now be far more difficult.

Russia, to which Iraq owes an estimated $8 billion, reversed its previous position of working with the United States on debt reduction after the release of the Pentagon memo.

"The president is sending Baker to meet with" France, Germany, and Russia "and at the same time he slaps them in the face," said Edward S. Walker Jr., president of the Washington-based Middle East Institute and a former US ambassador to Egypt. "If this was supposed to be blackmail to get these countries to write off Iraqi debt, it's a funny way to conduct international relations."

As the first wave of protest crested, the Bush administration was also showing signs of flexibility.

Bush himself told reporters early in the day that debt renegotiation "would be a significant contribution for which we would be very grateful." Prime Minister Jean Chretien of Canada told reporters that Bush had personally expressed regret that Canada was being excluded from the postwar projects, although the White House would not confirm that account.

Spokesmen for the White House and for the State Department both suggested there was room for flexibility.

"Circumstances can change, and that list of eligibility can change as circumstances change," State Department spokesman Richard Boucher said. "There are opportunities for others to participate."

Scott McClellan, the White House press secretary, said, "If others want to join in the efforts of the coalition and the efforts of the Iraqi people, then circumstances can change."

Despite European outrage, most observers expect the White House will eventually obtain a substantial reduction of Iraq's debt, a crucial first step in postwar rebuilding. In the long run, say economists, creditor nations like Russia are far more interested in establishing good relations with the new Iraq, potentially one of the Near East's richest countries, than quibbling over unpaid loans.

Though the decision to restrict US-funded contracts came as no surprise, the language of the Pentagon memo was unusually blunt. Wolfowitz, a hard-liner who has favored regime change in Iraq for more than a decade, wrote that limiting the contracts was "necessary for the protection of the essential security interests of the United States."

The implication that nations opposing the war were subversive of US security rankled American allies.

"The Europeans are grandstanding now," said Edward Chow, an oil specialist at the Carnegie Endowment for World Peace. "This is a manufactured crisis, but it reinforces all of the bad images of how this administration looks abroad and among those who think the war was all about oil and helping the corporate fat cats."

Material from Globe wire services was included in this report. Stephen J. Glain can be reached at

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