The contracts would be funded through the $87.5 billion spending package US President George Bush signed last week and overseen by a new Pentagon-run Iraq Infrastructure Reconstruction Office, the Wall Street Journal said on Monday.

The move will be closely watched by critics of the Bush administration, which has been accused of trying to farm out contracts to companies with links to the White House, notably Halliburton and Bechtel.

Halliburton has been given the task of restoring and operating Iraqi oilfields. The contract is officially temporary but could be worth $7 billion over two years.

Bechtel has been awarded contracts to rebuild the port of Umm Qasr, including the water supply, 12 electrical power stations and 1200 schools. The contracts are worth more than a billion dollars.

Non-US bids

The Bush administration for the first time also will consider bids from foreign companies, the Wall Street Journal said, citing documents prepared by the US-led occupation authority.

The award of contracts almost solely to US firms so far has triggered accusations the Bush administration and its corporate allies had aimed to profit from attacking Iraq.

European countries with previous economic links to Iraq, such as France, have been especially annoyed at being shut out of Iraq. Politicians from US allies such as Britain are upset that London’s contribution to the war effort had not earned it a role in reconstruction.

Two-year contracts to operate Iraq’s mobile telephone network were awarded last month to three Arab companies from the region: Orascom, Atheer Tel and Asia Cell. But the deal is worth only $5 million in total and is dwarfed by the contracts awarded to US firms.

US army role

The move to award contracts to a few giant multinationals would largely push to the sidelines the Army Corps of Engineers and the US Agency for International Development, which have taken care of most of the big contracts to rebuild Iraq.

However, the US army is arguing for a greater role elsewhere in the reconstruction effort. It announced last Wednesday it was negotiating to replace Halliburton, Vice President Dick Cheney's former company, as an importer of oil products into Iraq.

The army denied the talks were related to Democratic claims of price fixing by Halliburton. US lawmakers have said the Pentagon's Defence Energy Support Centre imports military fuel from Kuwait to Iraq for $1.08 to $1.19 per gallon.

This compares with the $2.65 per gallon that Halliburton reportedly charges the US government under a no-bid army contract. Halliburton has said Iraqi costs of production are higher than usual.