Rebuilding Iraq With Clean Hands

With Saddam Hussein finally in custody and the future of Iraq looking a little more secure, we're hearing calls for President Bush to rip up the list of countries that the United States has deemed eligible to bid on prime contracts for rebuilding Iraq. Mr. Bush should stick to his guns; that list of 63 countries, all of whom helped the American-led coalition, was good policy. But it's important to be clear about why it is a good idea — because in the piñata grab for the $18.6 billion in reconstruction contracts, some basic points have gotten lost.

First, it is wrong of critics to frame inclusion on the list as a ''reward'' to our allies, or to say that countries left off it, like Russia, France and Germany, are being ''punished.'' Taxpayer-financed contracts should never be doled out as a reward — that is precisely the kind of mind-set the United States needs to be trying to banish from Iraq, where the previous regime operated entirely ran on patronage.

First, it is wrong of critics to frame inclusion on the list as a “reward” to our allies, or to say that countries left off it, like Russia, France and Germany, are being “punished.” Taxpayer-financed contracts should never be doled out as a reward – that is precisely the kind of mind-set the United States needs to be trying to banish from Iraq, where the previous regime operated entirely ran on patronage.

Rather, the list is predicated on deciding which countries can best be trusted to oversee huge rebuilding contracts in ways that square with the American goal of promoting a stable, free Iraq. As Mr. Bush put it, “friendly coalition folks risked their lives, and therefore the contracting is going to reflect that.” Assistant Secretary of Defense Paul Wolfowitz noted another prime concern: “protection of the essential security interests of the United States.”

There's been little in the last year to suggest that Russia, France and Germany share any of these goals. There is plenty of evidence, however, that they constitute an Axis of Avarice. Remember, plenty of money flowed through Saddam Hussein's Iraq, starting with the big debts the dictator ran up in the 1980's before the Persian Gulf war and the subsequent United Nations sanctions. Many countries took part in that frenzy of lending, including Japan as the No. 1 sovereign lender. Then came Russia, France, Germany and, yes, the United States as No. 5.

However, in the 1990's, as the Iraqi dictator's depravities became increasingly evident to the rest of the world, that list narrowed. Under the United Nations oil-for-food program, the despot got to tap his preferred business partners. And over the course of the seven-year program – involving the sale of $65 billion worth of oil and purchase of more than $39 billion worth of supplies and services – he turned to contractors in the countries that ultimately proved most energetic in protesting his ouster: Russia, France and, to a lesser extent, Germany and China.

What began as a relief program for Iraqis suffering under sanctions turned into a multibillion-dollar contracting business flowing through the shrouded books of the United Nations. By the end, the Russians were selling the Baathist elite luxury cars, the French were providing broadcasting equipment for the Information Ministry and the Germans and Chinese worked on the phone system.

The United Nations refused to disclose anything beyond the generic details of the contracts – the public still doesn't know the actual names of the contractors, what they earned and what they shipped to Iraq. Now, with control over the remains of the program shifting to the Coalition Provisional Authority, those records should be released.

Not only should the Iraqi people know what their money went for, the data could provide an illuminating context for the current Russian, French and German indignation over the American contracting list, and for the diplomatic jousting of the past year. Full disclosure might also help us figure out which foreign contractors were deeply complicit with the Baathist regime and which simply shipped in rice at a reasonable price.

In any case, Old Europe's indignation over the list is a marvel of hypocrisy. When Saddam Hussein specified under the oil-for-food program that that the billions generated by the program all flow through one French bank, BNP Paribas, French President Jacques Chirac did not indignantly demand, in the interest of fair play, that the business be divided among banks of various nations. It is also curious that Russia, which in its own post-tyranny days received billions in aid, only to default on its debt 1998, is now demanding back from free Iraqis every nickel it cheerfully loaned to the dictator.

This is not to say the list is perfect. Saudi Arabia is among the 63 countries included, which conjures intriguing visions of the bin Laden family's construction business making a bid. The list could be improved by breaking it into two tiers, with countries that are making the transition to democracy (Poland, Romania and Mongolia for example) getting preference over dictatorships (like Uzbekistan). Staying flexible is important: keeping open the option of revising the list could provide greater leverage for James Baker, who has been tapped to persuade Russia, France and Germany to forgive loans made to the former regime.

Perhaps the capture of Saddam Hussein will convert the Axis of Avarice into whole-hearted investors in the cause of a free Iraq. But in a free and fair society, state-financed contracts need to serve the customers, not the contractors – and certainly not the heads of state who howl loudest and contribute least.

Claudia Rosett is a senior fellow with the Foundation for the Defense of Democracies.