Bush Now Says Canada Can Bid for Work in Iraq

Reversing himself to mend an embarrassing rift, President Bush announced Tuesday that Canadian companies would be eligible for prime contracts to rebuild Iraq, and there were signs that France and Germany might also benefit from the policy shift.

Bush said that because of its pledges of $225 million in aid to Iraq, Canada would be exempt from a controversial Pentagon rule barring countries that did not support the U.S.-led war from seeking $18.6 billion in prime reconstruction contracts. Canadian companies will be eligible to bid beginning with a $6-billion installment of contracts that will be awarded this spring, U.S. officials said.

The Canadians “want Iraq to succeed,” Bush said after meeting with Canadian Prime Minister Paul Martin on the closing day of a two-day meeting of leaders of 34 Western Hemisphere democracies. “They want Iraq to be free.”

Though Bush did not mention other countries, U.S. officials said privately that the administration had decided it would also permit bidding from countries that forgave Iraqi debts, a move France, Germany and Russia have promised to consider. At the Pentagon, Defense Secretary Donald H. Rumsfeld said officials were considering permitting “three or four” other countries to bid, but he declined to name them.

Bush’s move is a sign that the administration badly wants to put behind it an episode that, to much of the world, made the United States appear vindictive.

It was also evidence that the U.S. and Europe, which went through one of their worst postwar crises over Iraq, are now determined to increase cooperation on the Mideast nation, despite lingering differences.

“It feels like we’ve hit the morning after,” said Jon Alterman, director of the Middle East Program at the Center for Strategic and International Studies in Washington. “All of them are feeling that they should be fighting less and working together more.”

In another sign of the new attitude, U.N. diplomats reported that the United Nations would send a four-man team to Iraq within the next two weeks to assess what humanitarian aid the world body might be able to provide and how it could help resolve disputes between Iraqi groups vying to be part of the new government there.

The U.N. withdrew foreign staff from Iraq in November after an attack last summer on its Baghdad headquarters killed 22 people, including its chief envoy to Iraq. The U.N. has been under pressure to increase its presence there.

A Pentagon memo issued Dec. 5 under Deputy Defense Secretary Paul D. Wolfowitz’s name said countries that had not supported the Iraq war needed to be excluded from bidding on the country’s reconstruction, to protect “the essential security interests of the United States.”

Though Bush publicly defended the directive, his aides conceded that the timing and tone were a huge mistake, as former Secretary of State James A. Baker III toured Europe days later, asking leaders to forgive the billions of dollars of Iraqi debt that U.S. officials fear could cripple the oil-rich country’s recovery.

To many allies, the rule was difficult to defend. Ireland, for one, was ineligible even though U.S. military aircraft used one of its airports for refueling.

Canadian officials were shocked. Although they hadn’t declared political support for the war, they had promised $80 million in aid at an Iraq donors conference in Madrid and $145 million in other commitments. They have 2,000 troops serving in Afghanistan, and they have pledged to train 30,000 Iraqi police officers.

To help ease the friction, Bush spoke to outgoing Canadian Prime Minister Jean Chretien on his last day in office last year, and to Martin on his first day in the job. Chretien told reporters at the time that Bush had already promised to help Canada.

Appearing at Bush’s side Tuesday, Martin said the announcement “actually does show that working together you can arrive at a reasonable solution.” Bush denied that his decision represented a thaw in relations with Canada, saying the question “assumes there was a freeze.”

“I didn’t feel there was,” he told reporters. “I understood why people disagreed with the decision I took.”

In the past month, Pentagon officials have insisted that they were not changing the criteria for eligibility, but they hinted that the door was open. They said they were continuing to review the eligibility of various countries.

After Baker visited Europe, U.S. officials denied that they would let countries take part in the reconstruction if Iraq’s debts were forgiven. But one official said in a recent interview that Bush administration officials had come to realize they could not ignore such an important source of help for the country.

Inside the administration, “it’s been made clear that forgiving debt is contributing, so it goes without saying that eventually, if they forgive debt, they would qualify,” said the U.S. official, who asked not to be identified. The official added, however, it was unclear how soon the administration would allow such countries to take part in bidding.

A Canadian official who asked not to be identified told Bloomberg news service that he was told French and German companies would be entitled to join bidding on the second round of contracts.

French and German officials in Washington declined to comment. A European diplomat said after Bush’s announcement that although U.S. diplomats had not spoken of plans to add other countries to the eligibility roster, “we have the impression that the administration is looking for a way to enlarge the list.”

In recent weeks, the French and German governments have taken steps showing their willingness to work more closely with the United States. Both governments have signaled that they would not stand in the way of a North Atlantic Treaty Organization military mission to Iraq, an idea raised again in Brussels in early December by Secretary of State Colin L. Powell. The countries also have provided humanitarian aid to Iraq and proposed to train police there.

Philip H. Gordon, director of the Brookings Institution’s Center on the United States and France, said France and Germany had made “important positive steps toward working with the United States” in Iraq, including their announcement in December that they would consider forgiving debt.

The European governments recognize that they need Iraq to become stable and can’t afford to have the world believe “they have an entirely negative agenda” on the country, Gordon said.

Reynolds reported from Monterrey and Richter from Washington.