Sat, Mar 29, 2003 page12

• Non-American firms settle for crumbs

  PECKING ORDER By law, reconstruction contracts for Iraq will go to American firms. British companies expect to act as subcontractors, while European firms expect little

  • REUTERS
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  Non-American firms received oblique pledges this week, but few concrete assurances, that they will get a crack at lucrative bids to rebuild Iraq.

  Post-war reconstruction contracts for Iraq totalling US$1.9 billion will go to American firms by law, but half of the rebuilding work will be open to subcontractors, the administrator of the US Agency for International Reconstruction, Andrew Natsios, said on Wednesday.

  But while many companies in Europe and around the world reconcile themselves to the fact that they will be entitled to subcontracts only, the French government and others called for a total overhaul of the rebuilding efforts.

  France, which clashed with Britain and the US when it vehemently objected to the action in Iraq, is calling for the UN to play the key role rather than the US.

  "The UN must be at the heart of the reconstruction and administration of Iraq," French Foreign Minister Dominique de Villepin said in London on Thursday.

  "The United Nations must be in the driving seat," Greek Prime Minister Costas Simitis, whose country holds the rotating EU presidency, said in Athens.

  Non-American firms are not expecting such proposals to overturn American efforts, but neither are they banking on earning millions rebuilding Iraq's roads, schools, ports and hospitals.

  Officials on both sides of the Atlantic acknowledge that British companies will be first in line for subcontracting work, given the country's status as the US' staunchest ally in the war with Iraq.

  "We have had extensive discussions [with British companies] and there is no doubt that some of the American funds will go to British subcontractors," Natsios said.

  "I don't know if Iraq will be a source of work for Balfour Beatty. We have plenty of good contacts, and if it comes up we will look at it," said Tim Sharp, a spokesman for the British construction and engineering firm.

  So it is not clear who is going to get the money -- winners of USAID contracts for the US$2.4 billion in USAID reconstruction and humanitarian aid will be announced by the end of the month -- although there are some indications.

  On March 10, before the first shot in the war was even fired, USAID invited five American engineering companies to submit bids for a reconstruction contract.

  The winning firm would get about US$900 million to repair Iraqi roads, bridges and water treatment and power plants.

  Bidders including Bechtel Group Inc and Fluor Corp confirmed they had received the contracts. The Wall Street Journal reported that invitations also went out to Parsons Corp, Louis Berger Group Inc and Kellogg Brown & Root, a subsidiary of Halliburton Co, which was once headed by US Vice President Dick Cheney.

  On Monday, USAID gave Steve-doring Services of America (SSA) a US$4.8 million contract to manage the Iraqi port of Umm Qasr, before British or American troops had taken control of the town.

  British firms are emerging as contenders, however. Britain's Crown Agents, a procurement agency with operations around the world, is already working on purchasing activities in the Gulf region for USAID's Iraqi Initiatives as a subcontractor.

  Several British firms tipped to be involved include construction and engineering firms Balfour Beatty Plc, Carillion Plc and AMEC Plc.

  But while British companies can count on some American goodwill, many European firms will have to overcome a short but bitter legacy.

  "I am quite sure that the Americans will try hard to reserve this kind of business for themselves," said Rudolf Rupprecht, chief executive of German trucks and industrial group MAN.

  "The rebuilding situation will depend on the development in the relationship between the United States and Europe," he said.

  Relations between Europe and the US soured when countries including France and Germany opposed the US-led military strike on Iraq.
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