Facing Heat, President Stands by Decision to Limit Iraq Contracts

President Bush on Thursday strongly defended his decision to bar countries that opposed the Iraq war from competing for more than $18 billion in U.S. prime reconstruction contracts, even as political pressure built for him to reverse the move.

In his first comments on a policy that has reignited transatlantic tensions, Bush said “the expenditure of U.S. dollars will reflect the fact that U.S. troops and others risk their life.... It’s very simple. Our people risk their lives.... Friendly coalition folk risk their lives. Our contracting is going to reflect that. That’s what the U.S. taxpayers expect.”

Bush scoffed at the idea that the Pentagon policy to restrict the bidding to the United States, Iraq and 61 countries that have backed the mission could violate international agreements.

“International law? I better call my lawyer. I don’t know what you’re talking about, about international law,” the president said.

The Bush administration has faced an outcry since Tuesday, when the Pentagon posted a memo, signed by Deputy Defense Secretary Paul D. Wolfowitz, saying the government was limiting eligibility for the upcoming prime contracts to rebuild Iraqi infrastructure in the interests of national security.

Critics argue that the policy, which bars bidding by France, Germany, Russia, Canada, China and about 100 other nations, will damage important alliance relationships and also set back efforts to collect aid for and ease the debt burden on Iraq. All countries are entitled to bid for subcontracts.

On Thursday, some of Bush’s domestic political allies criticized the move.

Senate Majority Leader Bill Frist (R-Tenn.) said he had “expressed concern” to the White House. Speaking on CNBC’s “Capital Report,” he said: “I do think we need to have a balanced policy as we go forward.... We have to remember that many of these countries that are being denied these contracts are supporting us elsewhere in the world, maybe fighting HIV/AIDS in Africa, maybe in Afghanistan. That’s why I hope there’ll be some moderation of the policy as we go forward.”

Another influential conservative voice, William Kristol, publisher and editor of the Weekly Standard magazine, distributed a memorandum arguing that “this particular effort to reward friends and punish enemies is stupid, and should be reversed.”

The administration, Kristol argued, would have been wiser to open the bids to all, to buy support for the Iraq effort “and demonstrate to the world a little magnanimity.”

Privately, some U.S. allies in the Iraq war also acknowledged misgivings about the approach.

“This does not make our relations with some of our neighbors any easier,” said one European diplomat in Washington whose country is closely allied with the United States.

U.S. officials insisted that the administration did not intend to fundamentally change the policy. But they suggested that other countries may be added to the list because of their contributions.

“We’ll probably find a way to add people, to make sure that anybody who is qualified is on the list,” said a senior administration official, speaking on condition that he not be named. “It’s pretty hard to predict at this point. But the president was pretty categorical today.”

The White House, however, seemed to send differing signals on how ready it was to reconsider the eligibility of some individual countries.

U.S. and German officials said that former Secretary of State James A. Baker III, recently appointed a special presidential envoy to help win debt relief for Iraq, would discuss both the debt and the contracts issues when he arrives in Berlin next week. Iraq owes about $2.4 billion to Germany. But U.S. and German officials also insisted that a German decision to restructure Iraq’s debt would not necessarily get Germany off the excluded list.

Canadian Prime Minister Jean Chretien, who is leaving office today, told reporters in Ottawa that Bush had reassured him in a phone call Thursday morning about Canada’s status. He said that Bush had told him “not to worry,” and had said that “the mention of Canada, that we were to be excluded, was not appropriate.”

Though the policy was intended to reward allies, officials from some key coalition countries said they were unhappy because the business they thought they were promised in return for support had failed to materialize and they did not expect the decision to change that.

Elena Poptodorova, Bulgaria’s ambassador to the United States, said in an interview that her country has so far received no subcontracts for work in Iraq. The Romanians, the Baltic nations, Slovakia and others in Eastern Europe share the disappointment, she said.

Although the countries that Defense Secretary Donald H. Rumsfeld dubbed “New Europe” in the run-up to the war hope to share in the $18.6 billion in newly appropriated reconstruction money, Poptodorova said, “I don’t think anybody has received subcontracts yet.” Bulgaria has deployed a battalion of 500 troops in Iraq.

Although the administration’s move was partially intended to aid coalition members, Poptodorova said Bulgaria felt that “the more international the effort, the better.”