Britain and US at odds over port rebuilding project

The first signs of tension between Britain and America over the rebuilding and running of post-war Iraq have emerged with the award of a $4.8m (£3m) contract to manage the captured port of Umm Qasr.

British forces are determined to engage an Iraqi director and staff to run the country's only deep-water port, which is expected to provide the gateway for humanitarian aid and military supplies.

But the US Agency for International Development has already awarded the contract to Stevedoring Services of America, a Seattle company. The British Army is pressing ahead with its plan to reinstall the man who directed the port before the Allied invasion. Britain sees this as the first big test of the proclaimed Allied intention to ensure that Iraqi resources are used for the benefit of the Iraqi people.

While senior British officers are guarded about the implications, they have moved swiftly to ensure that Iraqis are seen to benefit from the port's regeneration.

Although Umm Qasr has a population of 30,000, the port is about the size of Dover and became the most important in the country after the docks in Basra were destroyed in the Iran-Iraq war.

The man who ran the port until the Allied invasion – which was the main maritime conduit for the oil-for-food programme – has been identified among captives taken when British troops moved into the city. He is likely to be back in his old job after careful vetting. British sources would not disclose details, but the man is likely to have quickly volunteered his identity to British officers.

The US Agency for International Development announced on Monday that Stevedoring Services of America had won a contract to "provide an initial port assessment, develop improvement plans ... and supply technical expertise to ensure an adequate flow of through shipment".

A spokesman added: "The company will be responsible for the port pilots who will guide ships up the channel, and will manage the access of trucking companies to the port and establish a system of controls to avoid theft and corruption."

The award caused considerable irritation among British companies aggrieved that their US counterparts appeared to be receiving preferential treatment. P&O made a bid for the contract but was rejected. One British service source suggested yesterday that the contract could be limited in duration, leaving the port's long-term future in Iraqi hands.

Umm Qasr may be the first of many tests for complex and unresolved issues on the ownership and control of assets in post-war Iraq. The captured port is likely to be in a "British zone" for as long as military control lasts, which could further complicate matters.