Russia and Iraq are planning to sign an economic co-operation deal worth up to $60bn, senior Iraqi diplomats say.

The Iraqi ambassador in Moscow, Abbas Khalaf, said the deal would probably be signed within the next couple of weeks.

It will include new projects as well as the modernisation of Soviet-built infrastructure in Iraq, but will not violate United Nations trade sanctions against Baghdad, he said.

Iraqi Foreign Minister Naji Sabri said the deal was designed for the next 10 years and included 67 contracts in the areas of oil and gas extraction, transport and communications.

Warning to West

In a message to the UN concerning inspections of Iraqi facilities, Mr Sabri was at pains to applaud ''Russia's great role in a settlement around Iraq and the traditional friendly nature of relations between the two countries".

Foreign Minister Naji Sabri praised Russia's "great role" in Iraqi affairs

He added: ''We have given full priority to Russian companies in Iraqi oil trading on the world market.''

Soviet or Russian specialists built much of the infrastructure in Iraq, so Baghdad wants Russian expertise to help repair or upgrade it.

A BBC correspondent in Moscow, Steve Rosenberg, says news of the deal was a warning to the West that Russia would be unlikely to support any US military operation against Iraq that would threaten its own economic interests.

Mr Khalaf said: ''What we need from Moscow is moral, political and diplomatic support because Iraq has shown the whole world that it can defend itself.

"America's aggressive statements against Iraq aroused a negative reaction in Russia.''

Moscow also continues to have close ties with the two other nations named by US President George W Bush as part of an ''axis of evil'' along with Iraq.

It recently announced plans for increased nuclear co-operation with Iran, while the North Korean leader, Kim Jong-il, is to visit Russia later this month.