Is the U.S. rebuilding Iraq or dismantling old alliances?

Gayle Smith, senior fellow at the Center for American Progress, asks important questions in an article called Rebuilding Iraq, or Dismantling Old Alliances? She writes:

"The Bush administration has poured another bucket of cold water on efforts to internationalize the stabilization of Iraq. With its public announcement yesterday that reconstruction contracts will be limited to coalition partners--and withheld from 'Old Europe' - the Pentagon has increased the cost to Americans, weakened the traditional alliances America needs to defeat terrorism, and undermined Iraq's long-term future. [...]

"The longer term implications are staggering. The administration has legitimized political interference in government procurement operations, setting the stage for future contracts to be subjected to the whims of individual government agencies. It has upended trade relations by using its status as occupying authority to monopolize a single market. And it has certainly lent credence to the view held by some that one of its aims is to secure the spoils of victory.

"The Bush administration's spin is that excluding other nations from bidding on reconstruction contracts is in the interests of U.S. taxpayers. If the administration really wants to serve the interests of U.S. taxpayers, it needs to focus less on revenge and more on the tasks at hand - expanding troop contributions from other nations, leveraging an increase in donor contributions to Iraq's reconstruction, and ensuring that the rebuilding of Iraq paves the way for the emergence of a vibrant, integrated economy."

Is loyalty a legitimate factor on which to decide military (or any other) contracts? Does it make sense to let one act (or lack of action) negate decades of cooperation and define "loyalty"? If loyalty is so easily negated does it have any real meaning or impact?