Violence forces U.S. contractor to drop Iraq work
(Agencies)
Updated: 2004-12-23 14:39

Rising violence and associated security costs have prompted a U.S. company to pull out of a $325 million contract to rebuild transportation infrastructure in Iraq, a military spokesman said on Wednesday.

The decision marks the first time a prime contractor has pulled out of an Iraqi rebuilding project, said Lt. Col. Eric Schnaible, a spokesman for the Pentagon's Iraq Project and Contracting Office.

Arlington, Virginia-based Contrack International Inc. decided by "mutual agreement" with U.S. officials to withdraw as prime contractor after eight months overseeing a consortium rebuilding roads, bridges, airport facilities and railways.

"The security environment is not always permissive to doing the kind of work that they were trying to do," Schnaible said.

Instability and the anti-American insurgency have delayed an $18.6 billion U.S.-funded rebuilding program and forced more money to be diverted to security.

Contrack issued a statement saying it was dropping out "because the original scope of work that was envisioned could not be executed in a cost effective manner under the present circumstances."

There are no plans to rebid the contract. Schnaible said the work will continue, with U.S. authorities overseeing the sub-contractors. "We've agreed to see it through from here on out," he said.

Schnaible dismissed speculation that other contractors would follow suit and drop work in Iraq.

"It's not indicative of everyone pulling out of Iraq," Schnaible said. "The work is continuing to go on."

Contrack said it and members of its consortium were "committed to the ongoing reconstruction efforts, are actively working in Iraq and continue to look for new construction opportunities in the country."

Orascom, an Egyptian group dominated by the Sawiris family, is a part owner of Contrack. Iraq's U.S.-led occupation authority awarded Orascom a contact to build a mobile phone network in central Iraq last year.

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