• US President George Bush laughed off European legal threats (Photo: EU Commission)

US mocks European fury over Iraq reconstruction contracts

12.12.03 @ 08:01

  1. By Richard Carter

The rhetoric was sharpened in the new transatlantic political and legal spat yesterday - just days after a trade war over steel was averted.

There was sharp criticism of the US government's decision to award lucrative Iraqi reconstruction contracts to only those countries with troops in the country from the European Commission and German Chancellor Gerhard Schröder.

A spokesman for the European Commission said that contracts should be awarded on the basis of international law and World Trade Organisation (WTO) rules. He added, "we don't need another trade conflict".

Mr Schröder said, after a meeting with UN Secretary-General Kofi Annan, "international law must apply here. It does not help to look backwards".

For his part, Mr Annan described the decision as "unfortunate". France, China and Russia also criticised the move.

Bush laughs off legal threats

But US President, George W Bush laughed off European threats of legal action. When asked about the comments, he joked, "international law? Well, I'd better call my lawyer".

The President strongly defended his decision, saying, "it's very simple: our people risked their lives, the people of the friendly coalition risked their lives and the contracts will reflect that".

However, he is keen to keep the "lines of communication open".

He telephoned the leaders of France, Germany and Russia to announce that he was sending a special envoy - James Baker - next week to discuss the restructuring of Iraqi debt.

Encouragement, not punishment

Washington says that the list of eligible countries is an encouragement to join the coalition, rather than as a retrospective punishment for countries who refused to join in the US-led assault on Iraq.

As for legal action under WTO rules, it is unclear how successful a European appeal might be. Experts pointed out yesterday that Iraq is not a member of the WTO and therefore any challenge would be difficult.

In addition, WTO rules do allow discrimination on the grounds of national security, which the US invoked yesterday when making the announcement.

The contracts are worth $18.6 billion.

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