Cut off for un-American activities: the mobile phone firm that connected Iraqis

America's desire to rebuild Iraq in its own image even extends to setting up a mobile phone network that only works for US phones.

America's desire to rebuild Iraq in its own image even extends to setting up a mobile phone network that only works for US phones.

A Bahraini company that established a network accessible to those without American phones has been forced to scrap its plans after a week.

Batelco had started placing more than $5m (£3m) of aerials and other equipment for GSM mobiles across Baghdad. Foreign businessmen and journalists were able to abandon expensive satellite phones for the first time. But mindful of its desire to set up a tender for the country's mobile network, the US authorities apparently started to put pressure on Batelco, threatening to confiscate its equipment.

"They applied enough pressure for us to push the button," said Rashid al-Snan, the company's regional operations manager. "I feel really sorry - sorry for the Iraqis and sorry for the foreigners who were using the network. It's a pity we had to stop. We really put in an effort and felt a cheer coming towards us from all over the world."

The US-led authority in Iraq wants to hold a tender for three regional mobile phone licences - almost certain to be one of the most lucrative contracts in post-Saddam Iraq. Mobile phones were not available under the Saddam regime.

But a decision has not yet been taken on whether the mobile network should use GSM technology - used in Europe, the Middle East and many other parts of the world - or the American CDMA technology, which is only used in the US. A decision to use GSM would be a blow to US firms tendering for the contract.

A conference on the phone tenders will take place this week in Jordan. Batelco is ready to invest $50m in Iraq. "If they give us the licence, we could operate immediately," said Mr Snan. "We deserve more than anyone else to get this licence. We have shown we can do it."

The provisional authority declined to comment on the alleged threats to Batelco.