Canada cleared to bid on Iraq projects

Bush reverses his policy, ending dispute with ally


MONTERREY, Mexico - Reversing his administration's policy, President Bush said yesterday that Canadian companies would be allowed to bid on billions of dollars in American-financed Iraqi reconstruction projects, bringing to an end a bitter dispute with a major ally.

Bush made the announcement after a breakfast meeting with Canada's prime minister, Paul Martin, at the Summit of the Americas, a conference of 34 leaders from the Western Hemisphere. The Bush administration last year barred companies from nations that opposed the war - including Canada, France, Germany and Russia - from bidding on the lucrative Iraq contracts.

But Bush administration officials said repeatedly in recent weeks that they were open to negotiations with Canada, which has pledged millions of dollars in Iraq aid. Bush cited that support in announcing his decision, which makes Canadian firms eligible to bid on a second round of contracts worth about $4.5 billion. The first round, which excluded Canada, amounted to $5 billion.

"They want Iraq to succeed, they want Iraq to be free," Bush said, sitting next to Martin at the Presidente Intercontinental here. "They understand the stakes with having a free country in the midst of the Middle East."

Martin said that "it actually does show that working together, you can arrive at a reasonable solution."

It was unclear yesterday whether Canada had done more than simply pledge aid to return to the administration's good graces, or whether Bush was merely cleaning up a major diplomatic mess from December, when the Defense Department announced that it was limiting the bidding on Iraq contracts to companies from the 63 countries that had given political or military support for the Iraq war.

Although White House officials had approved that policy, they were angered by the tone and the timing of the Pentagon directive. Defense officials in turn fumed that they were being blamed by the White House for something the Bush administration endorsed.

Either way, Canada at that point had pledged more than $225 million in Iraq aid, including about $80 million at a conference of major Iraq donors in Madrid. Canadian officials were shocked at their exclusion from the rebuilding effort and were particularly incensed by the Pentagon's explanation that the restrictions were required "for the protection of the essential security interests of the United States."

In the weeks since then, Bush spoke to the outgoing Canadian prime minister, Jean Chretien, and also to Martin on his first day in office. Canada, meanwhile, pledged no additional money to Iraq, but it did move rapidly to start projects that it had announced in its aid package, including the training of 30,000 Iraqi police officers.

"What's helpful is that we're getting this done as quickly as possible," said Bernard Etzinger, the spokesman for the Canadian embassy in Washington.

Although not involved military in Iraq, Canada has 2,000 troops in Afghanistan and has been commanding the multinational force there since August.

Bush administration officials would not say yesterday whether France, Germany and Russia, which more actively opposed the war, would also become eligible for contracts in the future. But they left open the possibility that a major commitment of money and manpower would work in their favor.

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