US prepares to reward 'New Europe' with lucrative contracts in Iraq

Jan Svejnar

Aside from the need to restore basic services such as hospitals, much needs to be done to rebuild Iraq's shattered economy. A leading American economist says the former communist countries of Central and Eastern Europe should be given a key role in Iraq. Czech born Jan Svejnar, director of the University of Michigan's William Davidson Institute, says countries like the Czech Republic, Slovakia, Hungary and Poland should be allowed to become part of the economic alliance, as well as the military one.

"These are the economies that have gone through the transition from command economy to a market type economy - and Iraq, when you look at the economy, is very much like a command economy. Saddam Hussein very much centralized and put the economy during the war on a footing that was like a command economy. So these countries indeed have the key, the knowledge, of how best to transform the Iraqi economy into a functioning market economy."

But do they have the companies that can actually carry out the major infrastructure projects and win contracts?

"Yes, I think that they certainly have a number of companies that could do it and again they have the historical advantage because many of them under the soviet system, operated in Iraq and in fact supplied Iraq with machinery and equipment - much of which is still in operation there. And it's the companies in the ?New Europe' in central and Eastern Europe that could provide the spare parts and technical know-how for the operation of those plants and equipment."

In using that term though, the ?New Europe', aren't you playing the same divide and rule game that Donald Rumsfeld did with his old Europe - new Europe labels? Isn't it pushing a divisions into Europe?"

"I used it intentionally just to indicate that these are the countries that should have an advantage. But I don't mean to drive a wedge in an particular way, except perhaps to indicate that they are uniquely suited because they have gone through transition very recently, they have familiarity with eh territory in Iraq and last but not least if you think of getting consultants who can help who are cost effective, people in these countries, the technicians, advisors, consultants are much cheaper than those from western countries."

So will the U.S play favourites if you like and award contracts to Poland, the Czech Republic, Hungary, Slovakia, Slovenia?

"It's very difficult to say. I think the U.S should do so, not necessarily for favouritism but for the objective reasons that I mentioned. Namely the experience, the skills, know-how and cost effectiveness."

So they'll get contracts, even if they didn't support the war in Iraq or send in troops? Poland was there with soldiers on the ground but they were the only ones and in some countries, take the Czech Republic for example, there was a big division in the government as to whether to support the war in Iraq.

"There were divisions I fully agree with you. But I think therefore I would expect that countries such as Poland might get more attention than others. But I think that it would be wise for Washington in this context to in fact invite all of the countries to the table and participate in the reconstruction, because I think they can be very effective. And at this point the principle goal of everyone, not just Washington, but the U.N in general and western countries is to establish a democratic Iraq and a functioning economy and I think the countries of central and eastern Europe could be very effective conduits for that purpose."