As war ebbs, Europe returns to Iraq

France and Germany opposed the US-led invasion but are now eyeing new investments in the war-torn country.

President Bush was hardly out of the White House before his European opponents to the invasion of Iraq began lining up for what are expected to be lucrative contracts to rebuild the oil-rich country.

In recent weeks, France and Germany, which Donald Rumsfeld, former secretary of Defense, once chided as "Old Europe" for their opposition to the war, spearheaded Europe's forceful return to Baghdad. On separate visits with similar goals, French President Nicolas Sarkozy and German Foreign Minister Frank-Walter Steinmeier swung through Baghdad. Their message was clear: As the danger subsides and the US scales back, Europe should move in quickly with money and know-how to rebuild everything from power stations, water systems, schools, and hospitals to roads and bridges.

"German companies should study the possibility of increasing their presence in Iraq, given the improvement in the security situation," Mr. Steinmeier said during his Feb. 17-18 visit. "We have seen a noticeable improvement in the area of security over the last couple of months."

Steinmeier is the second German government official to visit Iraq in recent months. His visit was preceded by Germany's former economics minister Michael Glos. But Steinmeier's visit, coupled with political meetings, was the first solid evidence of a shift in German foreign policy. And it is an indication that Germany is now intent on reestablishing its once strong political and economic ties with Baghdad.

While some commentators have seen the European visits to Iraq as a sign of rivalry and heightened tension in transatlantic relations, others say Germany and France are both keen to play a greater role in Iraq reconstruction in order to show their support for the new US administration of President Obama and support their own agendas within the alliance.

"The German government is particularly interested in working closely and positively with the Obama administration," says Guido Steinberg, political analyst with the German Council on Foreign Relations.

Mr. Obama is urging US partners in NATO to play a greater role in fighting insurgent forces in Afghanistan. The Germans have some 3,650 troops in the country and last week announced they would send another 600 troops. Steinmeier's visit to Baghdad also sends a signal to Washington that Berlin has reached the limit of its military options in Afghanistan but can play a greater role in rebuilding Iraq.

"For the Germans, you have to see their engagement in Iraq in connection with Afghanistan," says Mr. Steinberg.

Against this political backdrop, Steinmeier set out to lay the groundwork for a long-term German engagement in Iraq. In addition to talks with Iraqi government officials on how Germany might help support the new democratic government in Baghdad by training police and teachers, for example, Steinmeier opened a business office, a clearinghouse for German companies hoping to do business in Iraq.

"The office will help revive what used to be intensive economic relations between Germany and Iraq," says Economics Minister Karl Theodor zu Guttenberg in Berlin.

Mr. Sarkozy's visit is both an effort to reestablish France's old ties to the Iraqi oil industry as well as a vehicle for longer-term French foreign policy in the region. Since becoming president, Sarkozy has been a driving force for forging deeper European engagement with the Middle East. It is the first visit of a French leader since the US-led invasion of Iraq and is intended to reestablish France's close political and economic ties with Baghdad. Sarkozy said he would return to Baghdad in the summer with a high-level delegation of French business leaders.

"My coming here is to tell French companies: The time is at hand – come and invest," Sarkozy said during his visit.

The Europeans are clearly getting a warm welcome in Baghdad.

"German companies won't have to undertake any special efforts in order to establish themselves here," Iraq's Prime Minister Nouri al-Maliki said. "They used to be very active here and enjoy a fine reputation."

Europe's involvement in Iraq during the Saddam Hussein-era spanned French investment in Iraq's oil industry and German engineering products as well as huge loans to the Iraqi government. France, Russia, and China were the main foreign investors in Iraq's oil industry under Mr. Hussein. Business and political ties suffered after the United Nations-imposed economic sanctions on Iraq and in the wake of the US-led invasion. Both France and Germany were among the main Paris Club lenders that agreed, after the ousting of Hussein's government, to forgive 80 percent of the $39 billion in Iraq's foreign debt owed to Paris Club members.

European businesses have not been waiting for their political leaders to rebuild bridges with Baghdad. In December, Iraq announced that it had awarded German engineering giant Siemens AG a €1.5 billion contract to provide 16 gas- and oil-fired turbines for electric-power stations being built in Rumaila-Basra, Taza-Kirkuk, Dibis-Kirkuk, Baiji, and Sadder-Baghdad.

The Iraqi government has also reopened its oil industry to foreign investment and begun talks with the French company Total as well as the Anglo-Dutch energy giant Royal Dutch Shell to develop five new oil fields in northern and southern Iraq. The Iraqis are also talking to US oil companies Chevron and ExxonMobil about the development.

The Iraqi government is also opening the door to Russia and China, whose energy companies had received concessions to produce oil from Hussein. And Iran, a longtime rival of Iraq, is drilling nine oil wells north of Baghdad.

With its focus now shifting toward Afghanistan, and the troubled legacy of the Bush administration in Iraq, Washington may not have much choice but to welcome the flood of assistance pouring into Iraq from countries that were opposed to the US-led war.

With Mr. Bush's exit, the last of the wartime leaders who locked horns over Iraq has left the political stage. That could open new opportunities for dialogue within NATO about a broader Mideast strategy in which the US and Europe understand that each have genuine interests in resolving problems in the region.

"The Europeans have not had a genuine interest in Iraq in the past," says Steinberg. "They have seen Iraq as a function of the transatlantic relationship and that was a mistake."