The Washington Post leads with President Bush's defense of the administration's barring non-coalition countries from competing for primary reconstruction contracts in Iraq. "It's very simple," said the president. "Our people risk their lives. Coalition, friendly coalition folks risk their lives, and, therefore, the contracting is going to reflect that." The president added that he might issue exemptions for those countries that write off Iraq's debt. The New York Times leads with and the WP and Wall Street Journal front a preliminary report from military auditors that Halliburton overcharged the government on fuel in Iraq by $61 million. In a point that the NYT, inexcusably, doesn't make until the ninth paragraph (after the jump), the paper acknowledges that Halliburton doesn't appear to have profited from the overcharging. Rather the company apparently paid a subcontractor too much for the fuel to begin with. The Journal makes that point by the third sentence. USA Today leads with congressional momentum to increase the size of the military. Secretary of Defense Rumsfeld opposes that, arguing that the military simply isn't efficient enough with the forces it already has. The call for congressional action comes as an increasing number of reserves are being called up. "Finally, everyone has come around to see enough is enough," said a spokesman for the Republican chairman of the House Armed Services Committee. The Los Angeles Times leads with the California Assembly's passage of a compromise budget deal pushed by Gov. Schwarzenegger that includes asking voters to approve a constitutional spending limit and a $15 billion bond measure.
On Wednesday, the White House had suggested that it might back down from the reconstruction edict. But Bush's tone yesterday wasn't particularly conciliatory. When told that Germany's chancellor suggested that barring non-coalition countries from contracts violates international law, Bush responded, "International law? I better call my lawyer. I don't know what you're talking about, about international law."
The Post says that the White House, represented by Condoleezza Rice, "vigorously opposed" limiting contracts when congressional Republicans pushed the idea twice over the past year. "They didn't like it," said one GOP staffer. "They thought it was reactionary."
The papers note that some important conservatives have come out against the contract restrictions, including Senate Majority Leader Bill Frist.
The NYT continues to emphasize the awkward timing of the contract decision, with former secretary of state James Baker set to leave Monday on a five-day trip to beg other countries to forgive Iraq's debt. The Times notes that he will try to negotiate while on quiet mode: "Mr. Baker will not have a press secretary, reporters will not travel with him, and he is not expected to hold news conferences overseas."
Officials explained to the Times that the White House doesn't want Baker to be perceived as having more pull than Secretary of State Powell, which apparently he has. "Baker is Bush," said one unnamed senior administration official. "Other countries know that Powell doesn't win all the battles. If you deal with Baker, you know you're going to get what you need."
Baker works for a law firm as well as an investment company that have connections to the Middle East. A NYT editorial says Baker needs to drop both jobs.
Everybody notes inside that a suicide car bomb at a U.S. base in Ramadi killed one GI and seriously wounded three others. Filing from Ramadi, the LAT has the most detailed dispatch and emphasizes that the attackers somehow got inside the base, one of the first times that's happened.
The LAT says that the CIA is expanding its operation in Iraq and may add "as many as" 100 analysts and agents as it tries to get a handle on the guerrillas. The paper quotes former intel agents saying that isn't going to do much good. "They're just going to fill up the green zone with spooks," said former analyst, referring to the U.S.-only part of Baghdad.
The NYT's off-lead previews a congressional watchdog report concluding that the government still doesn't understand how terrorists move their money. A Justice Dept. official acknowledged that the FBI "does not systematically collect and analyze" data on suspected terror financing.
The WP fronts news that a German judge released a suspected 9/11 conspirator from detention after receiving information that an AQ 9/11 coordinator, Ramzi bin al-Shibh, currently held by the U.S., had said the alleged conspirator wasn't involved. The judge said he's not sure about the information, but had to release the suspect (who's still facing trial) anyway since the U.S. won't provide transcripts of interrogations with al-Shibh to clarify things.
The LAT and WP front the Dow breaking 10,000 for the first time in 18 months, as more indicators came out suggesting that the economy is kicking into gear.
The WP notes inside that two Time magazine journalists were wounded in Baghdad after somebody tossed a grenade into the Humvee they were in. One of the journalists, reporter Michael Weisskopf, "likely saved the lives of his companions" by trying to throw the grenade out the window. He lost his right hand but is in stable condition.