Whitehall warns UK firms to stop sending workers to Iraq

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British businesses hoping to win lucrative deals in Iraq have been told to scrap their plans to travel there because of the escalating violence against Westerners.

British businesses hoping to win lucrative deals in Iraq have been told to scrap their plans to travel there because of the escalating violence against Westerners.

In an embarrassing about-face for the Government, trade officials have warned British companies to postpone all visits to Iraq for at least a month after a sudden rise in kidnappings and killings of foreign workers by insurgents. The deliberate targeting of foreigners, culminating in the murder last Wednesday of an Italian security guard, Fabrizio Quattrocchi, has put the Government's strategy of getting British firms into Iraq under severe pressure.

The families of three other abducted Italians issued an emotional plea on the Arabic station al-Jazeera asking for the men to be released. In Baghdad, meanwhile, two Japanese hostages were set free, less than a day after another Arabic television station broadcast footage of a kidnapped US serviceman being paraded in front of cameras.

The largest security firms are now upgrading their plans for the mass evacuation of foreign workers, if the situation worsens. The BBC and ITN have admitted they are also closely monitoring the escalating violence and could withdraw their journalists.

The new warnings come three weeks after the Trade minister, Mike O'Brien, hosted an investment conference for companies keen to bid for a share of the £10bn-worth of reconstruction contracts being handed out to non-US firms in Iraq. One security expert said the Pentagon had made it clear to British bidders that "if you aren't in Iraq, you aren't going to get any work".

But, after the Foreign Office strengthened its advice against going to Iraq last Wednesday, Whitehall officials and diplomats in Baghdad began quietly calling British firms to suggest they postpone travelling there.

The move is a serious setback to attempts to prove the country is being rebuilt, in the run-up to the handover of power on 30 June. Projects to restore water and electricity, repair bridges and hospitals will be further delayed.

More than 40 foreign workers were abducted in less than two weeks, including a British contractor, Gary Teeley, who was released after six days. Others targeted have included Czech and French journalists, Japanese aid workers, US truck drivers, and South Korean missionaries.

At least six are still being held and more than 15 men are missing, with at least nine of those presumed dead.

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