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Bush defends decision on Iraq rebuilding contracts

WASHINGTON—President Bush on Thursday strongly defended his decision to restrict prime Iraq rebuilding contracts to countries that supported the war, even as his aides acknowledged that the Pentagon's announcement of the new policy was badly mishandled this week.

The announcement, which alarmed and annoyed some U.S. allies, came just as Bush prepared to launch a global campaign to get countries to forgive much of Iraq's crushing foreign debt, a key to the country's long-term reconstruction.

It could undermine that campaign, as well as recent White House moves to repair ties with countries in Europe and elsewhere that have been badly splintered by differences over the Iraq war.

"It was a train wreck," a top State Department official, speaking on condition of anonymity, said of the decision-making process.

As finger-pointing began, U.S. officials said that while Bush had been informed and approved of the policy, the details and timing of the decision were left to civilian officials in the office of Defense Secretary Donald H. Rumsfeld.

The new policy bars France, Russia, Germany, Canada and other countries that are not counted as part of the U.S.-led "coalition" in Iraq from competing for prime contracts in the $18.6 billion U.S. taxpayer-financed reconstruction program.

It was authored by Rumsfeld's deputy, Paul Wolfowitz, and appeared Tuesday on a Web site run by the U.S.-led Coalition Provisional Authority.

While an international outcry continued Thursday, the president made clear that he backed the decision.

"Let me make sure everybody understands that men and women from our country, who proudly wear our uniform, risked their life to free Iraq. Men and women from other countries, in a broad coalition, risked their lives to free Iraq. And the expenditure of U.S. dollars will reflect (that) fact," Bush said after a Cabinet meeting at the White House.

He made light of suggestions that the limits on competition might violate international trade law.

"International law? I better call my lawyer; he didn't bring that up to me," Bush said.

But the White House and State Department also tried to assuage some of the anger, saying that the list of 63 nations eligible to bid could be expanded.

"We have also made clear that circumstances can change and that the list of eligibility could change as circumstances change. It's not fixed in stone," State Department spokesman Richard Boucher said.

Canadian Prime Minister Jean Chretien said Bush assured him that Canada would not be excluded.

Bush is sending James A. Baker III, his father's secretary of state, to France, Germany, Italy, Russia and the United Kingdom next week to negotiate reductions in Iraq's estimated at $125 billion debt.

Lee Feinstein, acting director of the Council on Foreign Relations' Washington office, said the contract decision "makes it extremely difficult for any of the countries on the enemies list to support Bush administration policy in Iraq."

"If anybody can overcome this debacle it's James Baker, but it's a really bad opening move," said Feinstein, who was a State Department official in the Clinton administration.

The controversial new policy was approved recently by a top interagency group known as the Deputies' Committee, officials have said.

But the timing of the Pentagon announcement came as a surprise to others in government, including the White House, a second senior state Department official said.

So did the wording of the Wolfowitz memo, said the official, who requested anonymity.

It was dated Dec. 5 and argued that limiting contract competition "is necessary for the protection of the essential security interests of the United States," a phrase that has infuriated U.S. allies.

The reaction has been most furious in Canada, which, while it opposed the war, has pledged $300 million in reconstruction aid for Iraq and sent troops to Afghanistan.

In a blistering editorial Thursday, the Toronto Star newspaper called the U.S. action a "crude display of pettiness" and an "inept insult."

"Along with most of the world, Canadians differed with the Bush administration on the need to attack Saddam Hussein's regime. But we have been a staunch ally where it matters," the paper said. "We don't deserve to be stiffed for our principles or bribed to park them at the door."

The European Commission, the executive body of the 15-nation European Union, said it would examine the 26 contracts involved to determine whether the procurement restrictions violate World Trade Organization rules. "This decision is difficult to accept and unjustified," the commission's Washington office said.

Bush also faced criticism at home from some of his conservative political allies who called the policy "heavy-handed and counterproductive."

Writing in The Weekly Standard magazine, William Kristol and Robert Kagan urged Bush to revoke the contract ban. "He might as well do it sooner rather than later, so as to minimize the diplomatic damage," they wrote.

For many Europeans, that diplomatic and political damage outweighed any future economic loss. Many never expected their companies to be prime contractors on Iraq rebuilding. Secretary of State Colin Powell signaled as far back as April that countries that opposed the war could be cut out of post-war contracts.

Anger in Europe isn't over being excluded from the contracts per se, but the wording of the decision and the way it was carried out, said a Western diplomat who requested anonymity. Europeans took it as "a slap in the face," he said.

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(Knight Ridder correspondent Ken Moritsugu contributed to this report.)

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(c) 2003, Knight Ridder/Tribune Information Services.

PHOTOS (from KRT Photo Service, 202-383-6099): USIRAQ-CONTRACTS

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