A closed-door meeting which opens in central London Friday is set to ignite a fresh European row about the management of the reconstruction of Iraq at the very moment the US is preparing a new UN resolution backing the accelerated handover of power in Baghdad.

The meeting at an unidentified location has been organised by Trade Partners UK, the export promotion arm of the Department of Trade & Industry, to unveil details of $18,600 million of civil reconstruction projects to be awarded by the Coalition Provisional Authority (CPA) in 2004. Leading British European construction firms are expected to attend, but MEED has learned companies based in countries that refused to support the coalition have been excluded. No French, German or Russian contractors have been invited and none will attend the meeting.

The apparent embargo on non-coalition countries echoes calls in US congress, which earlier this month approved a $20,000 million financial package for Iraq, for opponents of the US-led war for Iraq to be excluded from major reconstruction contracts. It flies in the face of British commitments that politics would not be allowed to influence the disbursal of reconstruction finance and comes at an embarrassing moment for UK Prime Minister Tony Blair, seen in Europe as being too close to US President Bush who completes a state visit to Britain on Friday.

The ramifications of the UK failing to invite its closest European partners to participate in one of the most important business meetings of the year drew an uncertain response from Trade Partners. 'Companies from all coalition countries are able to attend. The event is open to contractors from 46 countries,' a spokesman told MEED on 20 November. He failed to specify which countries these were, but the number is identical to the countries deemed by the US to have supported the war for Iraq and subsequent occupation. Salter failed to deny that countries from non-coalition countries had been excluded from the meeting.

Concern is persisting about the way reconstruction funds, including money raised in a Madrid donors' conference last month, are being disbursed. So far, not one major reconstruction contract has been awarded to a company from non-coalition nations. US and UK banks and companies notably Bechtel, Kellogg Brown & Root, General Electric, JP Morgan, Mott MacDonald, and Halcrow have so far maintained a virtual monopoly on reconstruction contracts awarded so far.

In the new programme, which comprises 25 contracts, the US government is seeking to relax rules barring non-American firms from winning prime contracts finance by the USAID. The US may be seeking, with the co-operation of the UK government, to manage the bidding process to ensure no non-coalition countries benefit from reconstruction, at least at the prime contract stage, observers say.

News of the meeting surprised business people in France and Germany. 'I was not aware of the meeting,' says a senior official at the Federation of German Industries in Berlin. 'The CPA is influenced by hawks and not economists. If non-alliance companies are being excluded from reconstruction in Iraq they are shooting themselves in the foot.'

The conference in London followed a similar event held in Washington on 18 November and is intended to provide a platform for companies planning to bid for Iraqi contracts. The second phase of reconstruction is being financed from aid committed by the US and other countries at the Madrid donor's conference held last month. The bulk of the reconstruction finance has come from the $20,000 million approved in total by President Bush on 6 November.

Demonstrating their disenchantment with American unilateralism in Iraq, France, Germany and Russia refused to send a representative to the donors' conference in Madrid and they have so far made no financial commitments for Iraqi reconstruction work carried out by the CPA.

MEED Dubai telephone: 00 9714 390 0045. Andy Critchlow 00 9714 390 0048. Email: andy@meed-dubai.com; Website: www.meed.com.