This past weekend, German Chancellor Gerhard Schröder, French President Jacques Chirac and Russian President Vladimir Putin gathered nervously in St. Petersburg. Trade with Iraq has ceased and Europe is concerned that the U.S. military victory may shut it out of an export market that years ago was one of its best in the Middle East. "Iraq used to be extremely important for us," says Brian Constant, director general of the London-based Middle East Association, which lobbies on behalf of 400 British companies with business interests in the region. "The opportunities will be great if there's a level playing field but that's a very big if."
The British government kicked up a fuss last month when it became apparent that the U.S. Agency for International Development was only considering bids by U.S. companies for the first $900 million round of reconstruction contracts. Now some British firms are in line to win subcontracts. Others have a far weaker hand to play. In Paris, the main French business federation, MEDEF, has set up a working group with government officials to figure out a strategy for future contracts. In Berlin, the German Industry Federation has assembled a delegation of German CEOs who are scheduled to travel to Washington next month on a fence-mending mission. The E.U. now accounts for less than 20% of Iraqi imports. Unless the U.S. has a change of heart, few European firms other than British ones will reap any peace dividends in Iraq.