Pentagon rules slow defense sales to Iraq

European and Asian manufacturers could be the beneficiaries in Iraq of rigid Pentagon rules governing the credit rating of governments seeking to buy military equipment.

The Soviet Union -- traditionally the largest arms sellers to the Saddam Hussein regime -- as well as France and Korea have been named as likely suppliers if the U.S. government fails to loosen up regulations governing the financing of armaments contracts.

Defensenews.com says sales of U.S. military equipment to Iraq worth billions of dollars are at stake.

The option of paying for cash, rather than financing purchases through credit, is barred to the Iraqi government largely because down payments it has already made are tied up in an escrow account with the New York Federal Reserve Bank.

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