Already, Postwar Bids Begin ; Reconstruction Is on the Agenda at an EU Meeting with Colin Powell Today

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The Iraq war may be far from over, but already European countries and companies are desperately jostling for position so as not to miss out on the peace.

A vast reconstruction program - the biggest since the 1945 Marshall Plan for Europe - is being planned for postwar Iraq, and contracts worth tens of billions of dollars will theoretically be up for grabs once the guns fall silent.

But governments and businesses in Europe are increasingly alarmed that President Bush's administration will argue that, since Washington paid for the war with its dollars and its soldiers, so its businesses should prosper from the peace.

Perceptions that the war has a secondary motive - to secure plump deals for Bush cronies - grew last week, when the Houston energy services firm Halliburton, once headed by Vice President Dick Cheney, showed up at the top of the list of potential contractors. Yesterday Halliburton declined to bid for a primary contract, although the firm remains interested in subcontracts. Officials there declined to say whether their decision was related to questions of favoritism.

The stakes in rebuilding Iraq are high. With its vast oil reserves and richly talented, 2 million strong exile community, the country has huge potential. But after years of sanctions and decades of mismanagement, the economy is a shambles. Estimates have put the cost of rebuilding roads, schools, hospitals, the transport system, oil wells, airports, and government at more than $100 billion.

Britain and its EU partners want the US to put together a much broader alliance for rebuilding Iraq than the narrow "coalition of the willing" assembled to fight the war.

Leaders in London, Paris, and Brussels are adamant that the UN play a preeminent role in helping form a new government in Baghdad so that aid and development money can be released from multiple channels, not just from US coffers.

But the early signals have not been encouraging. An initial $900 million package of contracts tendered through USAID has put US companies in the driver's seat for the first awards. Already a US stevedoring company has beaten a British rival to a deal to manage the Iraqi port of Umm Qasr.

Britain is perhaps in the most peculiar position. Because its soldiers are dying in Iraq, business here is leery of "ambulance chasing."

Still, the big concern - which Foreign Secretary Jack Straw is expected to raise with Secretary of State Colin Powell during a meeting today with EU officials in Brussels - is that despite fighting the war, Britain will miss out on the peace, just as it did in Kuwait 12 years ago.

Trade Secretary Patricia Hewitt has urged USAID not to overlook British firms, and a trade group has set up a meeting next week with the government to thrash out how best to win work.

"We feel our companies have strengths there - many of them were working in Iraq until 1991," says Nigel Peters, deputy executive director of the British Consultants and Construction Bureau, a trade group of some 300 firms, 80 of which have voiced an interest in securing work in Iraq.

The problem is that USAID money is the only reconstruction cash available at the moment, and it is usually tied to US companies or at the very least, companies with US security clearance. British firms like Balfour Beatty, a construction company; Costain, a construction contractor; and utility service provider Thames Water may not thus get in at the ground floor, but they are confident of securing subcontracting work in this first round of aid money - and that could be enough to gain a head start over others. …