US awarded contracts to clip wings of Iraq govt

The government, sworn in two days ahead of schedule on Monday, has recovered the use of all its ministries and has taken charge of the Development Fund of Iraqi (DFI), which still had 9.7 billion dollars on June 6.

Until the handover, former US ambassador Paul Bremer had the right to sign DFI cheques, said Communications Minister Mohammad Ali Hakim.

But now Bremer has gone, financial transactions are in the hands of Iraq's finance ministry headed by minister Abdel Mahdi, the central bank, and the committee of reconstruction of Iraq, he said.

"That means in the second half of this year all our decisions, all our finance, is going to be run by Iraqis and run by this committee."

But the new government will also be restricted by regulations and contracts put in place by the coalition, which was dissolved on Monday after 14 months of occupation.

Hakim said he had been handed contracts for mobile phone networks which were binding for the next two years.

"I have advisors, I have international people who are actually looking at this and find out if we really cannot do anything for two years," he added.

He said Washington's embassy in Baghdad, the biggest US mission in the world, would also play an important role in the new Iraq as it oversees 18 billion dollars in development funds authorised by the US Congress and administered by a Pentagon department.

"The thing that is probably going to tie us is the supplement money," he said, referring to the American fund.

"The US is going to bring some 18.6 billion (dollars) worth of supplement (and) we're going to work with them to coordinate that.

"My guess is this money is going to be distributed to American companies or companies from the coalition. That is their right."

The US military also helps distribute the billions of dollars of funds on the ground level.

Electricity Minister Aiham al-Samarrai agreed that American firms would probably win most the contracts decided by the US embassy.