US says Iraq campaign is being fought against Russian arms

The Kremlin insisted that no such deals had taken place, in a telephone conversation with US President George W Bush.

Iraq's information ministry and two of the Russian firms at the centre of the affair have also denied the allegations.

Washington said on Monday it had "credible evidence" that Russian companies had sold military equipment such as satellite-jamming devices, anti-tank missiles and night-vision goggles to Iraq.

The row expanded on Tuesday to include exactly what the two leaders said to each other in a phone conversation about the claims.

The president of Russia also notes that the discussion concerns unproved, public declarations that can damage the relations between the two countries Alexei Gromov Kremlin press secretary

According to White House spokesman Ari Fleischer, Mr Bush complained about the sales, and Mr Putin promised to look into the allegations immediately.

But according to the Kremlin, it was Mr Putin who raised the issue with Mr Bush during Monday's telephone conversation, saying that the claims had been disproved.

The Russian leader said Washington had failed to demonstrate that the allegations were true, and that could only damage bilateral relations, press secretary Alexei Gromov said.

"The president of Russia also notes that the discussion concerns unproved, public declarations that can damage the relations between the two countries," Gromov said.

The equipment would jam vital satellite signals

The allegations against Russia were published in the Washington Post newspaper on Sunday, citing sources within the Bush administration.

The paper said that one Russian company was aiding the Iraqi regime in efforts to jam satellite signals that could guide bombs and military aircraft used by the US-led coalition.

A further two companies, it said, had sold night-vision goggles and anti-tank missiles to the regime in contravention of United Nations sanctions.

We have no Russian experts in Iraq. We have not asked any country for assistance of any kind Mohammad Said al-Sahhaf Sahhaf Iraqi Information Minister

BBC Washington correspondent Rob Watson says the incident could worsen relations between the two countries.

The relationship has already been soured by Russia's continuing opposition to the war in Iraq.

The allegations themselves were vigorously denied on Monday by Russian Foreign Minister Igor Ivanov.

Iraq on Tuesday dismissed the claims as "fabricated lies".

"We have no Russian experts in Iraq," Iraqi Information Minister Mohammad Said al-Sahhaf Sahhaf told a Baghdad news conference. "We have not asked any country for assistance of any kind."

One of the accused Russian firms, Aviaconversiya, also denied the suggestion.

"They won't find any of our technicians in Iraq," said owner Oleg Antonov. "The Americans are trying to find a scapegoat because their bombs are not falling as accurately as they want. We didn't sell anything to Iraq."

He was earlier quoted as saying that the Americans themselves had purchased his jamming equipment to test on Tomahawk cruise missiles and other weapons systems.

He did confirm that Iraqi representatives had shown interest in the equipment, which jams GPS satellite signals.

The situation seems hopeless for countries with limited resources. Nevertheless, there is a way out. The firm Aviaconversiya has developed a jammer for GPS Aviaconversiya leaflet

And a company leaflet obtained by AFP news agency specifically mentioned an Iraq-US war as a conflict where the equipment could be useful.

"There are several regions of the world where international tension exists between rival countries which are not equivalent from the military point of view. For example: the United Arab Emirates against Iran, Iraq against the USA," the leaflet says.

"The situation seems hopeless for countries with limited resources. Nevertheless, there is a way out. The firm Aviaconversiya has developed a jammer for GPS. A small number will greatly increase defence effectiveness.

Analysts say it is possible that the Russian equipment has reached Iraq through a "middleman" country - such as Ukraine or Syria.

Another company, KBP Tula, also denied selling anti-tank Kornet missiles to Iraq in the past two months.

However, deputy director Leonid Roshal told Russia's Gazeta newspaper that the anti-tank missiles had been sold to Syria.