The Telegraph
Since 1st March, 1999
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Red-faced Pentagon delays Iraq tenders

Washington, Dec. 11: With the Bush administration’s decision to bar countries opposed to the war from bidding for US contracts in Iraq escalating into a trans-Atlantic trade dispute, the Pentagon last night delayed issuing tenders for reconstruction work worth $18.6 billion, which was due at the start of the week.

“The scheduled release of the solicitations in support of the Iraq reconstruction contracts has been temporarily delayed,” the Pentagon’s Iraq Programme Management Office announced yesterday.

A Pentagon spokeswoman attributed the delay to final touches being given to the contracting procedures by experts, but sources in the administration said the White House and the state department have been severely embarrassed by the timing of deputy defence secretary Paul Wolfowitz’s memo restricting reconstruction work to America’s coalition partners.

The memo, which angered the EU, Russia and Canada, became public a day before President George W. Bush was to request the Presidents of Russia and France and Germany’s chancellor to receive his envoy James Baker and negotiate a write-off of Iraqi debt.

Sources here familiar with the administration’s intense turf battles over Iraq concluded that the timing of the memo was no accident. It coincided with Baker’s appointment as Bush’s envoy to negotiate Iraqi debt.

It is Washington’s latest ill-kept secret that Baker, with very special links with the Bush family, will do more than just deal with the debt problem. His appointment is seen here as a desperate act, involving the current President’s father and other senior Republicans, to salvage the Bush presidency from the Iraqi quagmire.

It is widely expected that Baker will gradually acquire a say in all aspects of Iraqi policy, undercutting defence secretary Donald Rumsfeld and vice-president Dick Cheney, the most prominent planners of the war and the disastrous post-war reconstruction efforts.

Although various arms of the administration are putting up public display of support for the Pentagon policy, it is clear between the lines of their responses that there is across-the-board doubts about its wisdom.

State department spokesman Richard Boucher tried to soften the blow resulting from the decision by pointing out that the eligibility for reconstruction work applied only to prime contracts and that “there are very few restrictions on subcontractors.”

Privately, state department officials concede that the Pentagon has caused a setback to secretary of state Colin Powell’s efforts to let bygones be bygones and look forward to the future in dealing with America’s European allies.

Faced with the possibility of a second verdict against the US from the WTO, the US trade representative’s (USTR) office was yesterday scrambling for legal cover on Europe’s threat to take the issue to the WTO.

The White House is understood to have asked the USTR’s office to examine whether Iraqi contracts are covered by international trade procurement obligations since the coalition authority is not an entity subject to such obligations.

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