Time To Mend Fences

European Union governments, even those which were criticalof the Iraq war, have been quick to welcome America's capture of former Iraqidictator Saddam Hussein, hoping the move will speed up the transfer ofsovereignty to a transitional Iraqi government and establish conditions foreconomic and social reconstruction.

Europe's satisfaction at seeing Saddam under custody and its newfoundgoodwill towards the US provides an opportunity to begin mending the trans-atlanticrift. To do so, however, US President George W. Bush must take quick, decisiveaction to revise a surprise Pentagon decision excluding European countries thatopposed the Iraq conflict from bidding for US-funded reconstruction contracts.

With Saddam facing trial, "I hope we can leave our divisions behind andclose the chapter of misunderstanding between the US and Europe," saysItalian Prime Minister Silvio Berlusconi, whose country also holds the currentEU presidency. French President Jacques Chirac and Germany's Gerhard Schroeder,who led Europe's anti-Iraq war camp, have also greeted Saddam's arrest as anideal opportunity for turning the page on violence and terrorism in Iraq.

Events in Baghdad certainly make the task of former Secretary of State JamesBaker easier than anticipated. The US President's special envoy Baker, who isthis week touring key European capitals to try to secure agreement on lighteningIraq's crippling debt burden, did not secure any firm commitments on amounts ordeadlines in either Paris or Berlin. He was also interrogated on the Pentagon'smove to bar French, German and Russian firms from bidding for $18.6 billionworth of contracts in Iraq. But the new mood was evident even before Bakerarrived in Paris. French Foreign Minister Dominique de Villepin told members ofthe Iraqi Governing Council that creditor countries would probably strike a debtrelief deal on Baghdad's $120 billion foreign debt burden in 2004, a decisionlater confirmed in Chirac's talks with Baker.

Berlin was just as conciliatory, although Schroeder raised the issue of thecontracts with Baker, and German Defense Minister Peter Struck warned thatSaddam's arrest did not magically dispel differences between the US and Germany."France, Germany and the United States agree that there should besubstantial debt reduction for Iraq in the Paris Club in 2004, and will workclosely with each other and with other countries to achieve thisobjective," the three nations said in a joint statement issued in Berlin,Paris and Washington.

The US has welcomed the first concrete sign of cooperation from two keynations that tried to prevent the war and have refused to contribute troops tothe post-war stabilization of the country. But getting Europeans to follow uptheir promises with real money, know-how, and eventually soldiers forpeace-keeping will require replacing what senior EU officials describe as"Pentagon diplomacy" with a more far-sighted and balanced vision oftrans-atlantic cooperation.

The Pentagon move "is not the wisest decision" especially since theUS needs European help to ease Iraq's crippling foreign debt and help speed upreconstruction, cautions EU foreign and security policy chief Javier Solana.Europe's financial stake in Iraq is substantial. Baghdad is believed to owe anestimated $3 billion to France, $4.4 billion to Germany, and $8 billion toRussia. EU governments - excluding France and Germany - have collectivelypromised up to $800 million, including 200 million Euros in aid from theEuropean Commission in reconstruction aid for Iraq and French companies, whichhave old ties to Iraq and intimate knowledge of, for instance, the telephonesystem, which may prove to be vital in rebuilding the country's infrastructure.

Most Europeans are hoping that American policymakers will see the folly oftheir ways and recognize that their hard-line stance poses a major threat toefforts to rebuild trans-atlantic trust and cooperation. Unless the US policy isreversed, fear many in Europe, international divisions over Iraq will resurface,making the process of finding funds for rebuilding the country even moredifficult.

EU officials who have been laboring to re-establish normal relations withAmerica following the falling out over Iraq say the Pentagon move has triggered"confusion and incomprehension" in Europe. "We thought we hadbeen fairly successful in patching up ties, finding a new way to worktogether," says an EU diplomat. "But if the US cannot forget the pastand keeps re-opening old wounds, why should anyone else?"

Despite initial euphoria following Saddam's capture, European attitudes toBaker's calls for debt forgiveness will be much more skeptical now, warns thediplomat, adding: "The question we're asking is simple: who's running theshow in Washington and what is the US planning to do in Iraq?"

Others in Brussels are also worried that as with its past characterization of'old' and 'new' Europe, the Pentagon may have triggered another bout of EUin-fighting over Iraq. Britain, which joined the invasion and is a key US ally,has already said Washington is within its rights to take such action. "It'sfor the Americans to decide how they spend their money. This is Americanmoney," British Prime Minister Tony Blair said at an EU summit in Brussels.Another US ally, Italian Prime Minister Silvio Berlusconi, has also stressed itis "logical" that US and its coalition partners should get the prizecontracts given that America fought the war.

The US move comes at a time when both Europe and America appeared to bemoving beyond feuding over Iraq. Washington decided to scrap its controversialtariffs on imports of foreign steel rather than trigger a trade war with the EUwhich had threatened retaliatory sanctions worth millions of dollars. EUgovernments have gone out of their way to head off a showdown with Washingtonover European defense ambitions by agreeing that their plans to set up anindependent military planning cell would be closely coordinated with NATO. EUnations are also carefully considering a request by US Secretary of State ColinPowell that NATO consider an enhanced role in Iraq, possibly as early as nextyear.

Most importantly, EU governments have spent the last few months trying to puttrans-atlantic relations on a more even keel. In fact, even as many in the blocdenounced the US decision on contracts, leaders from the disparate group of 25present and future EU states were rallying around a joint declaration whichpledged a "constructive, balanced and forward-looking EU partnership"with the United States. "The trans-atlantic relationship isirreplaceable," said the statement. But unless the US reverses its ban onits erstwhile critics and uses the capture of Saddam to rebuild bridges withEurope, the trans-atlantic rift is unlikely to be fully mended even by as suavea diplomat as James Baker.

Shada Islam is a Brussels-based journalist specializing in EU trade policyand Europe's relations with Asia, Africa and the Middle East. This articleappeared in YaleGlobal Online (http://yaleglobal.yale.edu), a publication of theYale Center for the Study of Globalization, and is reprinted by permission.Copyright © 2003 Yale Center for the Study of Globalization