However, Samir Sumaidy, a member of the Iraqi Governing Council, told journalists after a meeting in the Kremlin that this decision was to be confirmed by the Paris Club.

Earlier, similar readiness to write off Iraqi debts was expressed by France and Germany after Washington said earlier this month it would only give reconstruction contracts to firms from countries that backed the war effort. Russia, along with Germany and France, opposed the invasion of Iraq, and Moscow has criticized the US stance, Reuters reported.

Russia is one of Iraq's biggest creditors and is owed $8 billion in principal and interest, according to the Paris Club. According to estimates of the International Monetary Fund, the total external debt of Iraq is $120bn, including $40bn in debts to the Paris Club.

Abdul Aziz al-Hakim, the head of the US-backed Iraqi Governing Council, announced at a meeting in Moscow today that Iraq would be open for all Russian companies. According to the official, Russian companies may take part in Iraqi restoration on a competitive basis, and companies that will offer the most appropriate terms will have an opportunity to participate in restoration of the Iraqi economy.

The head of the Iraqi Governing Council also proposed to return to the discussion of contracts signed by Russian companies under the Saddam Hussein regime.

According to estimates voiced by President Putin, investments by Russian companies in Iraq may reach $4 billion.