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Allies row over rebuilding Iraq

By CNN's Abid Ali

U.S. soldier on patrol around the North Ramala oilfield in Iraq.
U.S. soldier on patrol around the North Ramala oilfield in Iraq.

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LONDON, England (CNN) -- Even before the U.S. troops begin the battle for Baghdad, an unseemly squabble has broken out among the allies over who should rebuild Iraq.

Rebuilding Iraq could cost anything between $25 billion to $200 billion, according to some estimates. The country's schools, hospitals, roads, bridges, water supply and electricity desperately need an injection of funds after 12 years of sanctions.

"Getting Iraq into a full functioning shape could cost in the region of $200 billion; that's just not the physical cost but includes the country's debt," Edmund O'Sullivan, editor-in-chief of the Middle East Economic Digest, told CNN.

"On the physical side the international community will need to find $15 billion a year over the next 10 years -- several times more than the Iraqi economy will earn."

Two contracts have already been awarded; Vice President Dick Cheney's old firm Halliburton said earlier this week that it was given a contract by the U.S. Army Corps of Engineers to put out oil fires and make emergency repairs to Iraq's oil infrastructure. Cheney was CEO from 1995 to 2000 and sold his interest in the business after the 2000 election.

USAID gave a $4.8 million contract to Stevedoring Services of America to manage the Umm Qasr port in southern Iraq.

But O'Sullivan said the biggest contract worth about $600 million had not yet been awarded because of a dispute.

"There's an almighty political scrap going on at the moment, ignoring the fact that the United Nations is trying to muscle in on post-war control, UK International Development Secretary Clare Short has questioned the legality of the U.S. to rebuild Iraq," said O'Sullivan.

Under international law an occupying force cannot alter, change or remake the infrastructure of the country.

U.S. President George W. Bush's administration plans to hand out contract worth $1.9 billion for post-war construction, half of which could go to subcontractors, the U.S. Agency for International Development has said.

British Trade and Industry Secretary Patricia Hewitt has already held meeting with 15 companies interested in helping rebuild Iraq, an official at her department told CNN.

Hewitt has held a meeting with the head of USAID to "advocate British companies interest and experience" the government official said.

"Hewitt has lobbied the USAID and may get subcontracting contracts for British companies, some Australian firms could be in line for work as they have troops in the Gulf but the French won't get anything."

But key to the rebuilding would be oil, Iraq's life-blood.

Getting Iraq's war and sanction-savaged oil fields back to their pre-1991 production level of about 3.5 million barrels a day will take at least 18 months and cost about $5 billion initially, with another $3 billion for annual running costs, according to a recent study by the James A. Baker III Institute for Public Policy at Rice University, Houston, Texas.

Many companies contacted by CNN would not comment on whether they had approached the British government for Iraqi contracts. But construction firms AMEC, Balfour Beatty and Carillion have been tipped as possible subcontractors.

AMEC, which was involved in the reconstruction and cleanup of the World Trade Center and Pentagon after September 2001, told CNN it "stands ready to help in the reconstruction" of Iraq and prime contractors, like Halliburton, were aware of its competencies having worked closely with them in the past.

Some British companies are widely expected to benefit from American goodwill but France and Germany, which opposed conflict to disarm Iraqi President Saddam Hussein, are not expecting much.

Darrell Issa, a Republican member of Congress from southern California, urged the U.S. government earlier this week to build from scratch a mobile phone networks for relief efforts based on the CDMA standard popularized by telecom equipment maker Qualcomm rather than the GSM standard, which dominates in Europe.

"If European GSM technology is deployed in Iraq, much of the equipment used to build the cell phone system would be manufactured in France, Germany, and elsewhere in western and northern Europe," Issa was quoted by Reuters as writing in an open letter to Defense Secretary Donald Rumsfeld and Wendy Chamberlain, an administrator at the U.S. Agency for International Development.

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