"We will be competing with British firms, whose governent sent troops to Iraq, and Spanish firms which aside from being larger than ours come from a country which has a seat on the (United Nations) Security Council," Filipe Soares Franco, the president of Portugal's main building firm association, ANEOP, told reporters on Wednesday.

"Logically they will have more weight than Portuguese firms in the bidding process," he told a press conference on the state of the Portuguese construction sector.

The United States Agency for International Development (USAID) is expected to award eight contracts, each worth several hundred million dollars (euros), to US companies to rebuild Iraq's principal infrastructure.

About half of the total value of US aid contracts for Iraq is expected to be sub-contracted to foreign companies.

US Assistant Secretary of State for European Affairs Elizabeth Jones, who is on an official visit to Portugal, told Lusa news agency on Tuesday that US firms would not take political considerations into account when determining who would carry out sub-contract work in Iraq.

Franco said bids from Portuguese firms would also be hampered by their relatively small size and lack of experience in working in war-torn nations.

"Only half a dozen Portuguese firms have the capability to work in Iraq," he said.

Some 40 Portuguese companies have submitted bids to take part in reconstruction work in Iraq alongside US firms.

The bids are currently being examined by the government, which will then pass on a shortlist of candidates to US officials.

"Only those firms that have already demonstrated their capabilities and which have some dimension should be supported," said Franco.

Somague, Portugal's third largest construction firm, believes Portuguese firms could increase their chances of winning contracts in Iraq if they made bids jointly with firms from neighbouring Spain.

"There was joint support (from the governments of Spain and Portugal) for the US intervention in Iraq. Now that reconstruction is being discussed, it would also be beneficial to have joint action," the president of the firm, Diogo Vaz Guedes, told daily Diario Economico on Wednesday.

Portugal allowed the United States to use a military base on its mid-Atlantic Azores archipelago for the war against Iraq but did not contribute troops to the conflict.

In addition, Prime Minister Jose Manuel Durao Barroso hosted a summit on the Azores between US President George W. Bush, British Prime Minister Tony Blair and Spanish Prime Minister Jose Maria Aznar which started the countdown to the war.

SPACE.WIRE