First deals to rebuild Iraq will go only to US firms

the Bush administration is poised to award contracts worth up to $900m (£560m) to US companies for the first reconstruction projects in a post-war Iraq.

The move, which could be harbinger of the most ambitious American nation-rebuilding effort since the 1947 Marshall Plan for Western Europe, is another sign of how the US is looking beyond the war, likely to start within the next fortnight or so, to laying the foundations of a new Iraq.

The announcement is also intended to win over Iraqi public opinion to the presence of US occupying forces after what is now invariably referred to as the "liberation" of the country. US planners hope it will demonstrate America's good faith, and that a change of regime will bring speedy benefits to ordinary people.

For the five US companies invited to bid – they include the construction giants Bechtel and Fluor as well as Halliburton, the oil services group formerly headed by the Vice-President, Dick Cheney – there is the added inducement of a head start in the race for the massive economic opportunities in a post-Saddam Iraq, especially in the oil sector.

This initial "umbrella" contract, put out by the US Agency for International Deve- lopment (USAID), would cover repairs to roads and bridges, as well as mosques, schools and hospitals. But it will run for just six months. As such it will be merely the first stage of the multi-billion reconstruction effort that will be necessary.

USAID is operating under emergency procedures allowing it to ask for bids from pre-selected companies. It has kept the arrangements largely secret, to avoid giving the impression that war is certain. Even President George Bush still maintains in public he has not yet taken the decision to launch an invasion.

Halliburton refused to comment on the umbrella contract. But it confirmed that its subsidiary Kellogg, Brown and Foot is working on a plan to fight oil-well fires in Iraq. President Saddam Hussein set the Kuwaiti oilfields ablaze as his forces withdrew from Kuwait in 1991, and US officials claim explosives are being installed at the fields around Kirkuk in northern Iraq.

But the disclosure is bound to strengthen suspicions that Iraq's vast oil wealth – at 112bn barrels, its proven reserves are second only to those of Saudi Arabia – is a driving motive behind the impending US and British-led invasion. The official administration line is that Iraq's oil will be placed "in trust" for the Iraqi people. But assuming the military campaign is successful, British and US oil companies would be very well placed.

Thanks to sanctions and deteriorating infrastructure, Iraq's oil output has dropped to around 2m barrels per day compared with 3.5m when President Saddam took power in 1979. Experts say that with the right investment, output could rise to 8m or more.

But huge uncertainties remain. USAID has drawn up an 18-month plan, working with United Nations and other humanitarian agencies to provide food to the population after a war, and shelter for refugees.

Washington, however, is expecting help from other countries to achieve its goal of getting full basic health, education and power services to all Iraqis. However, hostility to war among many rich potential donors in the West, and the disarray in the UN, casts doubt on whether that support will be forthcoming. Allies such as Japan, Germany and Saudi Arabia paid for 80 per cent of the cost of the 1991 Gulf war.

The American decision to give out contracts sparked fury in Britain among union leaders and MPs opposed to war. Derek Simpson, the general secretary of the giant Amicus union, said British firms should have been included, and said he would speak to Tony Blair.

Tam Dalyell, the Father of the Commons, said on BBC Radio 4's Today programme: "Who can now doubt that the US are determined to go ahead whatever the UN say?"