'Old Europe' Feels Business Impact of Opposing War ; in Boardrooms in France and Germany, Businesses Play Catch Up, Trying to Cash in on Iraqi Reconstruction

Article excerpt

The two shiny pipe welding tractors that fill most of the space in Eginhard Vietz's production hall here might be German industry's first casualties of the Iraq war.

Shipment of the two massive machines, approved under the United Nations oil-for-food program in 2002, was called off four weeks before the first rockets began falling on Baghdad.

Now, Mr. Vietz is stuck with almost $600,000 worth of expensive equipment that was the first part of a $5 million order placed by Iraq's now-defunct South Oil Company.

"What can I do?" Mr. Vietz wonders. "I can't send them anywhere!"

In Europe's boardrooms - from Vietz's modest operation to France and Germany's powerful business associations - the economic future of postwar Iraq and its estimated $30 billion reconstruction needs have become topic A.

Fears among French and German companies that the antiwar stance taken by Prime Minister Jacques Chirac and Chancellor Gerhard Schroder would cost them business have come true - at least in the first round of contracts awarded by USAID.

All of the initial money the government development agency will give out in primary contracts for immediate postwar reconstruction has gone or will go to US companies. Up to now, only two foreign firms - both of them British - have been brought on, as subcontractors.

Siemens' telecommunications know-how or Hochtief's construction cranes have not been in demand. Nor will they be, says Vietz.

German corporate jitters

"Because of the chancellor's political slip-up, German business has no chance," says Vietz, echoing the concerns of other German executives.

Chancellor Gerhard Schroder's tough antiwar position, which he made clear as a promise to voters while battling for reelection in September, rankled the Bush administration. While his public stood behind him, Germany's business leaders implored Schroder to soften his tone.

"I was also against the war," says Vietz. "But I would have said it differently."

The postwar business front is already quite different in European countries that supported the US-led invasion. Companies in Britain and Denmark have already had contact with US officials interested in their services.

US diplomats in Denmark, which has offered 360 soldiers to help maintain stability in postwar Iraq, have already sent word through the defense minister that they would like to talk with Danish shipping company A.P. Moller/Maersk Group regarding its expertise in the region, the company says.

London-based Crown Agents has been providing logistical support to the USAID mission in Kuwait ever since the Washington-based International Resources Group received a $7.1 million contract in February.

Bechtel announced last week that the British firm Olive Security and the British part of Florida-based ArmorHoldings will provide security services and survey unexploded ordnance in Iraq.

A British business invasion

The British expect more contracts to follow soon. …

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