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U.S. decision on contracts reopens rift

<b>[(repost by clamydia) Who didn't see this coming?]</b>
WASHINGTON (AP) The Bush administration has reopened an emotional rift with Europe just as its damaged relations with Germany, France and Russia seemed on the mend.

All sides had been working to move past their divisive pre-war dispute over Iraq, cooperating on issues including trade to revive mutually beneficial relationships. But with the American decision to block some of its allies from lucrative Iraqi contracts, it's back to sharp words and threats of retaliation.

Also complicating the trans-Atlantic relationship is a pending decision to relocate U.S. military bases throughout Europe. Germany, among others, is bound to be upset if the administration decides to cut U.S. forces in Germany, sending some to eastern Europe and others home.

The Europeans did not attempt to muffle their outcry Wednesday when the Pentagon backed by the White House said only countries that supported the U.S. war in Iraq could share in the contracts being awarded for the American portion of the postwar reconstruction there.

The decision could not have taken the European capitals by surprise. Several times this year, Secretary of State Colin Powell cautioned that countries that did not assist in Iraq's liberation from Saddam Hussein could not expect to be rewarded.

Still, "unacceptable" was part of Germany's livid, official reaction.

Germany, playing a leading role in the reconstruction of Afghanistan, has not sent troops to Iraq. It has, however, offered to help train Iraqi police in the United Arab Emirates. That project may go ahead, nonetheless, and Germany is unlikely to oppose moves to ease Iraq's debt burden, estimated at $100 billion to $120 billion.

But Russia, which is owed $8 billion by Iraq even more than Iraq owes France, the United States and Germany is threatening to retaliate for being excluded.

"As far as the Russian government's position on this, it is not planning any kind of a write-off of that debt," Defense Minister Sergei Ivanov said Wednesday.

All this will complicate the task of former Secretary of State James A. Baker III, who was named last week by President Bush to oversee efforts to scale down Iraq's debt. He plans to begin his travels next week.

Having gone ahead with the Iraq war over European objections, the United States in recent months had worked to elicit Europe's support in the United Nations with a Security Council resolution to give the body a larger role in Iraq as U.S. critics had wanted.

Also, Bush had moved this fall to repair a relationship with Germany's chancellor. And the United States had backed down on a trans-Atlantic trade flap over steel tariffs.

Much of that goodwill now seems again gone.

In the meantime, and likely to make the situation worse, two senior administration officials are touring European capitals with word that several U.S. bases may be shifted.

Poland and Bulgaria are being eyed, with Germany apt to lose the presence of some U.S. Army installations and the income that comes with it.

Undersecretary of State Marc Grossman offered assurances to the Kremlin on Wednesday that Russia faced no threat if U.S. bases were relocated in the New Europe. But Ivanov expressed concern, nonetheless. "Any plans to bring the NATO infrastructure closer to our borders prompts an absolutely understandable, explicable concern," he said.

Trying to soften the blow of the contracts decision, State Department spokesman Richard Boucher said the restrictions applied only to primary contractors. "There are very few restrictions on subcontractors," he said, and lots of opportunities.

And, Boucher noted, managers of the World Bank and International Monetary Fund trust funds, through which billions of dollars in non-U.S. assistance will be channeled to Iraq, "may have different, or their own rules for how they contract."

Still, the criticism mounted.

Zbigniew Brzezinski, the national security adviser to former President Carter, called "bizarre" the Bush administration's decision to make the announcement so publicly.

"There are perfectly good reasons to discriminate between those who are very helpful and those who are less helpful," Brzezinski said in an interview. "But why rub it in with a political announcement that will further diminish the probability of serious European participation?"