France, Germany cautiously welcome new U.S. stance on Iraq

PARIS -- Some nations frozen out of a first round of U.S.-financed reconstruction contracts for opposing the Iraq war reacted cautiously Wednesday to a Bush administration policy shift that could allow them to bid for billions of dollars in projects.

France, Germany and Russia, which vehemently opposed the invasion that toppled Saddam Hussein, stand to benefit from the change in a decision that had barred allies that opposed the war from participating in rebuilding contracts.

Jochen Muenker, head of the Middle East division at the German Chamber of Industry and Commerce, said the U.S. policy shift was welcome.

"Naturally, it's a very encouraging development," he said in a telephone interview. "There are big German companies that have led projects in Iraq in recent decades that could shoulder such jobs."

"If confirmed, this would be a breakthrough for German business in Iraq," Muenker said. "Although, of course, the security situation makes things difficult."

French companies are also eager to participate in the reconstruction. But while the French government says it is committed to helping rebuild Iraq, it will not drop its demand for the transfer of power into Iraqi hands.

"We have expressed for a long time our availability to participate in Iraq's construction," French Defense Minister Michele Alliot-Marie told The Associated Press. "But obviously only if it is in the framework where the Iraqi authorities will get back their sovereignty and the ability to exercise their powers in full."

Alliot-Marie was to hold talks Thursday in Washington with Defense Secretary Donald H. Rumsfeld.

France has been calling for a quick transfer of power to a provisional Iraqi government and a stronger U.N. role in the transition. Paris also wants a timetable for Iraq to have a constitution and hold general elections.

The United States has agreed with Iraqi leaders on a July 1 deadline to create a provisional government and temporary constitution. Later, elections would be held to create permanent structures.

France's position is the agreement takes too long to get real power into the hands of Iraqis. France had called for a transition of power by the end of 2003 and cites the continuing violence as proof of the urgent need to grant control to a sovereign Iraqi government.

France was one of the most persistent critics of the U.S. decision to wage war in Iraq and has repeatedly called for a speedy transfer of power from U.S. control to Iraqis.

Last month, after Congress approved $18.6 billion in Iraq reconstruction money, President Bush said he would limit eligibility to countries that had helped militarily or had made other major contributions as "coalition partners."

The decision outraged France and other nations that refused to send troops to Iraq.

But on Tuesday, Rumsfeld said three or four other countries, which he declined to name, would be eligible to bid for a second wave of reconstruction contracts, which U.S. officials estimated were worth roughly $4.5 billion.

Bush outlined a new policy Tuesday as he announced Canada would be allowed to bid on some of the $18.6 billion in reconstruction work from which it had been excluded.

President Jacques Chirac said earlier this month that France was ready to assist in rebuilding the country "at the request of the Iraqis themselves."

France has offered to train Iraqi police after the U.S.-led coalition hands power to an Iraqi transitional government on July 1.

A Russian Foreign Ministry spokesman had no immediate comment.

A spokesman for the Russia-Iraq Business Council, an association that champions Russian business interests in Iraq, said he saw little hope for Russia to win any sizable contracts in Iraq.

"It's highly unlikely, particularly in the background of the latest U.S. accusations against Russia concerning arms shipments to Iraq," Yevgeny Yagupets said.

The Kremlin has denied Washington's allegations that Russian companies provided Saddam's regime with weapons before the war, but the State Department said this week it was refusing to accept the denials.