The funds, deposited in the state-owned Commercial Bank of Syria, are part of billions of dollars former Iraqi President Saddam Hussein parked outside his country since the 1991 Gulf War, the Wall Street Journal, quoting US officials reported on Friday.

  

The US authorities in Iraq want the money to rebuild the conflict-torn country. Syria acknowledges the funds exist, but maintains they should first be used to pay off debts the Iraqi government ran up with private Syrian companies.

  

According to Syria's charge d'affaires in Washington, Imad Moustapha, US officials agree the Syrian claims should be settled before the money is returned to Iraq.

 

Dispute

  

However, US officials maintain the funds should be returned immediately, the paper reported.

  

Another dispute involves the origin of the Iraqi funds, the daily said. Syria claims they were the proceeds of UN-sanctioned oil-for-food deals, while US officials said the oil sales and purchases were in violation of UN resolutions.

  

The US is trying to keep the dispute with Syria quiet hoping Damascus will give in, said the daily, but US officials said the negotiations appear to have reached an impasse.

  

There is little arm-twisting Washington can do, said the daily pointing out that trade with Syria is very limited since the country is on the US State Department's list of states that "sponsor terrorism”.

  

In the background, the daily added, is the additional dispute over just how much Iraqi money is in Syria; the Iraqi Governing Council is demanding Syria return as much as $3 billion of their country's assets, according to an Iraqi official.