Schröder, Annan Criticize U.S. Decision on Iraq Contracts

Annan described the controversial U.S. decision as “unfortunate,” and urged Washington to reverse the move so as to allow the international community to work together in order to stabilize Iraq. “It is up to those who took the decision to reverse it or maintain it, and I hope something will be done about it,” Annan told reporters in Berlin.

Speaking at Annan’s side, German Chancellor Gerhard Schröder said that international law must apply to the awarding of reconstruction contracts in Iraq.

“It makes little sense to discuss who can and who cannot individually participate economically in reconstruction. International law must apply here and it does not help things to look backwards,” Schröder said, referring to the transatlantic rift that developed in the run-up to the war in Iraq between the U.S. and the European anti-war coalition led by Germany, France and Russia.

New transatlantic row?

The European Commission also criticized U.S. plans on Thursday. “We don’t need another trade conflict,” said Chief Commission spokesman Reijo Kemppinen. The Commission’s view is that reconstruction contracts should be awarded in accordance with World Trade Organization rules.

Bush is standing firm on the Pentagon’s decision, saying the contracts would be reserved for those countries that risked lives in Iraq. But in an apparent attempt to calm European tempers, Bush spoke with the leaders of Germany, France, and Russia on Wednesday.

Bush had planned to use the pre-scheduled telephone calls to Berlin, Paris and Moscow to push for the three leading war opponents to forgive Baghdad’s debt. But the fact that the Pentagon announced on Tuesday that firms from anti-war nations would be shut out of the reconstruction efforts being funded by the U.S. government worth some $18.6 billion (€15.2 billion) put the White House in damage control mode.

According to a U.S. government spokesman, Bush told Schröder, French President Jacques Chirac and Russian President Vladimir Putin that he planned “to keep the lines of communication open” regarding the contracts. Bush also reportedly tried to present the new policy as an invitation to other countries to join Washington’s camp rather than a form of punishment.

“If these countries want to participate in helping the world become more secure, by enabling Iraq to emerge as a free and peaceful country, one way to contribute is through debt restructuring,” Bush said.

U.S. Deputy Defense Secretary Paul Wolfowitz said the action was vital to protecting the United States’ “essential” security interests, but many observers saw it as the Bush administration making good on a threat that those nations that opposed the U.S.-led campaign to oust Iraqi dictator Saddam Hussein would not play a large role in the rebuilding of the country.