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Bush defends restrictions on Iraqi contracts

President also calls on nations to forgive Iraq's debt

U.S. Secretary of State Colin Powell looks on as President Bush talks Thursday at a Cabinet meeting about the issue of reconstruction contracts for Iraq.
U.S. Secretary of State Colin Powell looks on as President Bush talks Thursday at a Cabinet meeting about the issue of reconstruction contracts for Iraq.

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WASHINGTON (CNN) -- President Bush on Thursday defended his decision to exclude countries that did not support the U.S.-led effort to topple Iraqi President Saddam Hussein from bidding on some $18.6 billion in reconstruction contracts.

But he added that he still wants those countries to contribute to Iraq's recovery by forgiving its debts.

"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 the fact that U.S. troops and other troops risked their life," he told reporters after meeting with his Cabinet.

"The U.S. people, the taxpayers understand why it makes sense for countries that risk lives to participate in the contracts in Iraq. It's very simple.

"Our people risked their lives. Coalition, friendly coalition folks risked their lives and therefore, the contracting is going to reflect that, and that's what the U.S. taxpayers expect."

The policy excludes France, Germany, Russia and Canada from bidding on construction projects. In an awkward bit of timing, Bush on Wednesday appealed to the leaders of those same countries to help speed Iraq's recovery by forgiving debt the country owes them.

"It is in every nation's interest that Iraq be free and peaceful, and we welcome contributions," Bush said.

Bush said he spoke Wednesday with French President Jacques Chirac, German Chancellor Gerhard Schroeder and Russian President Vladimir Putin -- all of whom opposed the U.S.-led war -- and asked them to meet with former U.S. Secretary of State James Baker, Bush's special envoy on Iraq, about restructuring that country's debt.

Asked whether the exclusion of those countries from bidding on construction contracts violates international law, Bush said, "I don't know what you're talking about by international law. I better consult my lawyer."

The European Commission and World Trade Organization are investigating whether the exclusion violates international law.

German Chancellor Gerhard Schroeder said Thursday that international law must apply to the awarding of contracts.

At a news conference in Berlin with U.N. Secretary-General Kofi Annan, Schroeder said it was the task of all countries to help with reconstruction in Iraq.

"It makes little sense to discuss who can and who cannot individually participate economically in reconstruction," he said. "International law must apply here, and it does not help things to look backward. ..."

Annan called the decision "unfortunate."

"I believe it is time for us to work together to try to stabilize Iraq," Annan said. "Our decisions should be unified rather than divisive, and I think we would not characterize the decision taken yesterday as unified."

France has said that it will study the U.S. position in light of international law.

Russian Defense Minister Sergei Ivanov was quick to point out his nation was still owed $8 billion from Iraq.

Exclusion stuns Canada

In Ottawa, incoming Canadian Prime Minister Paul Martin said the decision was difficult to understand because his country already spent $300 million to support Iraq and also has troops in Afghanistan.

"I find it really very difficult to fathom," said Martin, who will take the helm of Canada's government Friday from Prime Minister Jean Chretien.

U.N. Secretary-General Kofi Annan, left, and German Chancellor Gerhard Schroeder were both critical of the U.S. move.
U.N. Secretary-General Kofi Annan, left, and German Chancellor Gerhard Schroeder were both critical of the U.S. move.

"There's a huge amount of suffering going on there, and I think it is the responsibility of every country to participate in developing [Iraq]."

According to U.S. Deputy Defense Secretary Paul Wolfowitz's memo posted on a Pentagon Web site, countries that either participated in the coalition effort or supported it -- including Britain, Australia, Spain, Italy, Poland, Turkey and Japan -- were on the list of nations that could be awarded primary rebuilding contracts.

U.S. State Department spokesman Richard Boucher added that while the prime contracts would go to coalition members, those companies could choose their own subcontractors.

"Subcontracting is open to companies from virtually all nations in the world," Boucher said.

In his memo, Wolfowitz said the list was restricted due to security concerns.

While "international support and cooperation are necessary for progress in Iraq, Wolfowitz said, it is "in the public interest" to limit the countries that can compete for contracts.

On Wednesday, a Pentagon spokesman said a postponement of bidding for 26 contracts was unrelated to the controversy over restrictions on which countries may compete for the deals. The bidding originally has been scheduled for Thursday.

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