One of the suspects told police the incidents in London on 21 July were just bomb hoaxes designed to frighten people, a court has heard.
Hussain Osman was tracked down to Italy
After his arrest in Italy Hussain Osman told police he and his associates were retaliating for the war in Iraq.
He said the mixture in the rucksacks on their backs was made the day before, Woolwich Crown Court heard.
Mr Osman, 28, and five others deny conspiracy to murder and conspiracy to cause explosions.
It was Mr Osman who police were looking for when they shot dead Brazilian Jean Charles de Menezes on 22 July.
Mr Osman, whose real name is Hamdi Isaac, fled to Italy and was arrested in Rome on 29 July.
The court was told that Mr Osman thought police had shot dead his co-defendant Yassin Omar.
The jury listened as a transcript of his first interview, translated from Italian, was read out.
During the interview he admitted being involved in the 21 July incident but insisted the bombs were not real, the court heard.
Mr Osman said: "We made some false, fake explosives to frighten people, to stop them, because of the [Iraq] war basically."
He said: "There was a plastic and inside there was a type of flour and liquid mixed together to make it seem like explosive. It wasn't real."
Mr Osman said he had discussed the war with Mr Omar and his co-defendants Muktar Said Ibrahim and Manfo Kwaku Asiedu in the wake of the 7 July attacks.
He told the Italian authorities: "What happened on 7 July is happening in Iraq every day. I do not see any difference. They are both innocent people, both are wrong."
Mr Osman claimed Mr Ibrahim and Mr Omar came up with the idea for the fake attacks.
"They had the idea. I said if this [hoax] could change things, I would do it," he said.
During his interview Mr Osman said the hoax explosives were put together in Ramzi Mohammed's flat in Dalgarno Gardens, west London.
He was asked why nails were added and replied: "To make the thing that we did look like it could be serious and kill too.
"When fake bombs are found, they are immediately recognised as such. The aim was to make them look serious so they would take them seriously."
He said Mr Asiedu - the alleged fifth bomber who "lost his nerve" and dumped his bomb - was supposed to go towards White City Tube station with his device.
Mr Osman said he had been confident of not being caught in Italy.
He said: "As I changed my appearance, I thought I would be able to stay with friends and then when things were back to normal, I could get on with my life."
Mr Osman is on trial along with Mr Omar, 26, from New Southgate, north London, Mr Mohammed, 25, of North Kensington, west London, Mr Ibrahim, 29, of Stoke Newington, north London, Mr Asiedu, 33, of no fixed address, and Adel Yahya, 24, of High Road, Tottenham, north London.