The Hindu Business Line : Iraq contracts and US doublespeak

THERE SHOULD be no cause for surprise at the recent US decision to award prime reconstruction contracts in war-scarred Iraq to a few select countries.

According to a statement made by the US Deputy Secretary of State for Defence, Mr Paul Wolfowitz, "it is necessary for the protection of the essential security interests of the US to limit competition for the prime contracts... to companies from the US, Iraq, coalition partners and force-contributing nations".

Admittedly, this will preclude India from participating in business worth nearly $19 billion (as far as prime contracts are concerned), which certainly is no cause for rejoicing.

But the point needs to be made that those in New Delhi and elsewhere who had been hoping for a slice of the cake have only been too naïve in expecting that Washington's otherwise accommodative posture vis-à-vis India in recent times (particularly with regard to the issue of international terrorism and Islamabad's role in furthering it) would be automatically transferred to a sphere where critical long-term US business interests are involved and where Indian diplomatic and other support for a costly US military misadventure was not easily forthcoming though sought ardently by Washington.

In fact, New Delhi's plight recedes into the shadows when compared with the impact made by meting out similar treatment to countries such as Germany, France and Canada.

These countries are not only economically far stronger than India but which have traditionally been close to Washington in international affairs ever since the beginning of the Cold War 50 years ago.

Indeed, in the light of recent developments over Iraq, the US stand on prime contracts highlights is that when it comes to hardcore economic issues, Washington is not prepared to let traditional diplomatic ties get the upper hand, particularly when there is a presidential election around the corner.

Even so, there are two points that require to be highlighted which, unfortunately, do not hold up the US administration in a good light.

The first is of course Washington's strenuous efforts to get countries such as Germany and France involved in building a post-war Iraq, an effort which even led to a UN resolution being reworded in an acceptable way for all parties concerned.

What this essentially measured was Washington's interest in getting the international community's sanction for Iraq's political future, the supreme irony being that the mess was sought to be cleared up with the involvement of countries which had openly opposed Washington's initial efforts which led to the mess being created in the first place.

Since the UN umbrella has been preferred by the US, one cannot but cite the reaction of the UN chief, Mr Kofi Annan, to Washington's investment policy.

He said: "The stability of Iraq is everyone's business and we should pool our efforts and avoid steps and decisions that are divisive. We need to rebuild international consensus...to stabilise Iraq. So I hope that we will all take steps that are unifying, that bring us together to tackle this important issue in Iraq".

Secondly, the Iraqi measures have been blatantly discriminatory as far as investment opportunities are concerned because they have explicitly barred select countries from participating in prime contracts.

From Washington's perspective there is nothing improper in doing so, but the matter does not end here.

The next time the issue of a multilateral agreement on investment (one of the `Singapore issues') crops up, the developing world must not forget to cite the Iraq case as an example of what the US is prepared to practise even while it preaches the efficacy of such an investment framework.

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