The spat ignited after President George Bush, bolstered by the United Nations Security Council green light for his bid to remake Iraq, went on the offensive, calling at the Group of Eight summit in Georgia for a greater NATO role in the country.

"We will work with our NATO friends to at least continue the role that now exists and hopefully expand it somewhat," Bush told reporters on Wednesday after breakfast with top war ally, British Prime Minister Tony Blair.

But French President Jacques Chirac, who led world opposition to the US invasion of Iraq last year, put up an immediate roadblock.

Discord

"I do not think that it is NATO's job to intervene in Iraq," Chirac said.

"Moreover, I do not have the feeling that it would be either timely or necessarily well understood. I see myself with strong reservations on this initiative."

"I do not think that it is NATO's job to intervene in Iraq. Moreover, I do not have the feeling that it would be either timely or necessarily well understood. I see myself with strong reservations on this initiative"

French President Chirac

Although the United States, Britain and other NATO members have troops in Iraq, the alliance has no real formal role in the country.

Discord over Iraq came as the planet's most powerful men put on a show of unity, but their smiles masked wide differences.

Iraq diplomacy had looked set to move forward after France and Germany, vehement opponents of the war, backed the UN Security Council resolution granting Iraqi sovereignty and allowing US troops to remain.

Bush also tried to prevent his watered down plans for a social, political and economic shakedown of the Middle East and northern Africa from fizzling out completely.

Arab concerns

Egypt and Saudi Arabia, alarmed by the implications of the initiative, declined an invitation to the millionaires' playground on the US east coast hosting the three-day summit.

Europe too has signalled it believes threats to the West from the Middle East can best be eased by first draining the Israeli-Palestinian bloodbath.

The White House is pushing a "Broader Middle East and North Africa Initiative" to promote political, social and economic reforms, and has rejected calls to shelve the strategy until the Israeli-Palestinian conflict cools.

But European Commission chief Romano Prodi warned on Tuesday that "the mother of all conflicts is the Israeli-Palestinian conflict", arguing only peace in the Holy Land would spur reform and Western oriented policies in the region.

European Union officials said that any US focus on the Middle East was welcome, but diplomatic adviser to the European Commission Stefano Sanino said Europe had been working on the same lines for years. "For us there is nothing new in this," he said.

Iraq debt

Sources in Cairo said Egypt and Saudi Arabia fear they are first on the Washington wish list for political, social and economic reform and declined an invitation to attend the summit.

Occupation forces are regularly
targeted by the Iraqi resistance

Tunisia, which holds the rotating presidency of the Arab League, followed suit, but the leaders of Algeria, Bahrain, Jordan and Yemen accepted Bush's invitation.

Europe and the United States were also struggling to close gaps on another issue crucial to Iraq's future - the mountain of debt it owes creditor nations.

A French official said the powers had agreed to forgive a "substantial" part of Iraq's $120 billion foreign debt. But other sources said they were still haggling on a precise figure.

US officials have called for the forgiveness of the "vast majority" of Iraq's debt obligations. But France and Germany have balked at writing off such a large sum.

The Group of Eight consists of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.