Iraq buoyed by pledges of support

Iraq will allow Russian companies in across all industry sectors

Members of Iraq's governing council have received promises of help from Italy and Russia.

Russian pledged to reduce Iraq's $8bn debt to Moscow, while Italy said it might increase the number of its soldiers serving in Iraq.

Russia said it would slash the debt by 65% in exchange for involvement in Iraq's reconstruction.

Italy also promised to train Iraqi diplomats, magistrates and high-level civilian officials.

The head of Iraq's interim Governing Council, Abdul Aziz al-Hakim, confirmed a deal had been reached to allow Russian companies to operate in Iraq.

"We will be open to all Russian companies," Mr Hakim said in Moscow.

Most of the debt relates to Soviet military hardware that Iraq bought in the 1980s to fight neighbouring Iran.

'Generous promise'

Russian President Vladimir Putin told the Iraqi delegates: "We have always developed ties with your nation.

"We strongly hope that Russia will have good relations with the new leadership of Iraq."

It is understood that Russia's offer to reduce the debt must first be approved by the Paris Club, an informal group of creditors that co-ordinates debt repayment.

Russia has been excluded from bidding for contracts in the reconstruction of Iraq because of its opposition to the US-led war.

Iraq is currently Russia's largest creditor because of debts accumulated under the former Iraqi leader Saddam Hussein.

"We discussed the question of writing off Iraq's debt and we received a generous promise to write off the debt, or at least a part of it," Mr Hakim said.

Russia has expressed a keen interest in reconstruction work in Iraq.

"It would be wrong to reduce everything only to Iraqi oil," Russia's federation committee chairman Mikhail Margelov said on Monday.

"Infrastructure contracts are even more interesting to us in the initial stage because they give real money," he added.

Italy's offer

On Monday, Iraq's interim Foreign Minister Hoshyar Zebari held talks in Rome with his Italian counterpart Franco Frattini.

Italy has promised to help make Iraq safer by maintaining or increasing its nearly 3,000-strong military contingent in Iraq.

It has also offered to help train Iraqi officials in the judiciary and diplomatic corps.

WHO'S OWED WHAT? Japan - $4.1bn Russia - $3.5bn in original debt, $4.5bn in post-Soviet interest France - $3bn Germany - $ 2.4bn US - $2.2bn Italy - $1.7bn

Mr Zebari urged Italian businesses to invest in Iraq despite the ongoing security concerns.

Nearly 350 Italian businesses have expressed interest in tendering for contracts in Iraq, according to Italian employers' association Confindustria.

Last week Italian Prime Minister Silvio Berlusconi agreed to forgive a substantial part of Iraq's $1.7bn debt to Italy, during a meeting in Rome with US presidential envoy James Baker.

Mr Baker has also secured pledges from the governments of Britain, France, and Germany to write off some of the money borrowed by the former Iraqi regime.

The US believes reconstruction may be more difficult unless much of Iraq's $12bn debts are written off.

During a meeting with Mr Baker last week in Moscow, President Putin promised action over negotiations to reduce debts owed to Russia by Iraq,

But he also took the opportunity to criticise the US decision to invade Iraq in March.

"Everything that is done without the UN Security Council's sanction cannot be recognised as fair or justified," the president said.