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Canada’s prime minister-elect expressed shock at the Pentagon decision.

(BEGIN VIDEO CLIP)

PAUL MARTIN, CANADIAN PM-ELECT: First of all, Canada’s putting close to $300 million in terms of the reconstruction of Iraq. We have troops in Afghanistan and are carrying a very, very heavy load in that country.

I also think that what is most important is in fact the reconstruction of Iraq. There’s a huge amount of suffering going on there and I think it is the responsibility of every country to participate.

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PHILLIPS: Well, other countries say that they’re appalled. Cliff May heads the Foundation for the Defense of Democracies in Washington. And in New York, Ian Williams. He’s the U.N. correspondent for “The Nation.” Gentlemen, great to have you both.

CLIFF MAY, FOUNDATION FOR THE DEFENSE OF DEMOCRACIES: Thanks, Kyra.

IAN WILLIAMS, U.N. CORRESPONDENT, “THE NATION”: Good to be here.

PHILLIPS: Well it’s great to have you both.

Cliff, let’s start with you. Canada, that doesn’t make sense. I can understand the other countries. They didn’t help participate in Operation Iraqi Freedom. But Canada did, financially and with troops. So why leave them out of the bid process?

MAY: And I can’t tell you exactly why. That’s why there are diplomats to discuss that sort of thing.

The basic philosophy here is pretty simple. There’s a bucket of funds, all U.S. taxpayer funds, for a certain number of contracts. There are other funds and other contracts. But in terms of these, 63 nations are eligible. Those are 63 nations that were good friends to us and good friends to the Iraqi people helping in their liberation.

These are countries that sacrificed blood and treasure, as you pointed out in your earlier report. These countries are given special consideration.

I think most Americans would be up in arms if they knew their taxpayer money was going to go to France which made a fortune off of Saddam Hussein, hasn’t forgiven the debts, was opposed to the liberation of the Iraqi people. I just think it’s OK to include the 63 nations that were our best partners.

PHILLIPS: It seems to make sense that separate international funds would go to these, I guess, non-partners of the countries that didn’t help participate in Operation Iraqi Freedom.

But, Ian, it seems to make sense to say, You’re right. I don’t want my tax dollars going to France, Russia, Germany or China. They didn’t help with Operation Iraqi Freedom. Why should they get a chance to get a piece of the pie and come into Iraq now and help rebuild? It’s just money in that country’s pocket.

WILLIAMS: It’s two different aspects. One is I don’t want my taxpayers’ money to go to Halliburton to charge double the market rate for gasoline which “The New York Times” lead with this morning on the same page as they lead with the story about Paul Wolfowitz’s statement.

This isn’t really going to make any difference. I don’t think any of these countries really believe they were going to get too much of the American money involved. But it’s a gratuitous slap in the face. This is the type of type diplomacy which put these countries on the outside to begin with. And it’s going to keep them outside.

Paul Wolfowitz has effectively sort of slapped-gone to them and gratuitously in the face and said, Well, you’re not going to do this. They didn’t expect to do it, but by saying it in public, he’s made it very difficult.

No other country is going to put money into anywhere where the U.S. has control over it if they think the U.S. will impose restrictions on its use. All future funds will go to — they’ll go to the U.N. funds for Iraq. They’ll go bilateral deals with Iraq.

And there is the question — we do preach free trade to the rest of the world. Britain, when it gives money, it’s open contracts now. It’s not tied in anyway.

(CROSSTALK)

WILLIAMS: … question of whether we’re actually breaching World Trade Organization rules by trying to say that these contracts are there. We should be doing what’s best for the Iraqis, not scoring juvenile political points to prove…

(CROSSTALK)

PHILLIPS: I want you to respond to that, but let me bring up to a point because this is sort of what Ian is saying.

I did send out a few e-mails to various different types of soldiers and sailors in the field. And I got a number of comments here. I said, What do you think about the fact that these contracts are being spread in different ways and certain countries are not getting them?

These are some of the thoughts that I got from soldiers. “My opinion is that it’s a stupid idea. It just further fuels those who oppose all of this.”

Another one said, “We don’t need to be feeding anyone any more ammo to hate us right now. Politically this is really stupid. The Democrats are eating them alive for being go at it alone cowboys and here we go proving their point.”

So that’s interesting. I guess I wasn’t — I was surprised at how many troops responded in that manner. They pretty much all took the same opinion.

MAY: Well I’m sure there is some who feel that way and some who feel another way. But, again, it’s not go it alone when 63 countries who have been good partners to us are eligible.

I think some Iraqis, if you ask them, might say, You know what? Those countries like France who were not in favor of our liberation from Saddam Hussein, who saw nothing wrong with the Ba’athists, who sold weapons to Saddam Hussein and made a fortune and want to saddle us with the debt, I rather they not be in charge.

Again, there’s other moneys. There’s $13 billion, for example, pledged at Madrid and those are international funds that can go to anybody. By the way, France pledged no money. Germany pledged no money. Russia pledged no money.

So I think to say that, Britain who has been such a good ally here, and France, which has not been a good ally in terms of the liberation and the reconstruction, should be treated exactly equally. Simply doesn’t make a whole lot of sense and simply, I think, would be unfair to Britain and Australia and the 61 other countries who we are showing particular consideration to here.

PHILLIPS: Ian, final thoughts? We got to go.

WILLIAMS: Have you looked at the 61 countries? Some of them couldn’t must a love canoe to hell. That’s a political list cobbled together by the State Department to lessen the feelings of isolation in the White House. The feelings of — the very feelings of isolation which Paul Wolfowitz’s statement is going to reinforce.

PHILLIPS: Yes, Wolfowitz has said, Let’s put the past behind us. But then again, this is a bit of a blunt reminder. I guess there’s a little bit of bitterness going on.

MAY: I think what there is is that those countries who have been our friends get to the top of the list. And I’m sorry to hear Ian talk about the countries that have been our friends. That’s sort of what the French said when they said the countries who wanted to support America were missing a great opportunity to shut up. It seems to me that is the arrogant attitude.

Listen, any of these countries, France included, they can get involved with us now. This reconstruction has a long way to go. Let them come and say, We want to participate, we’re glad Iraq has been liberated, we want to help with that.

This is not forever. This is one bucket of funds, $18 billion, all U.S. money, all money to be spent by the Defense Department and U.S. agencies. Let’s include those who are in favor of liberating and helping Iraq build a decent society.

PHILLIPS: We will follow it, definitely. Cliff May, Ian Williams, gentlemen, thank you.