HIGHLIGHTS: Return of U.N. Inspectors to be Taken up Within Context of 'A Comprehensive Settlement,' Tariq Aziz||Saddam Says U.S. Covets Mideast Oil||World Discord with Washington over Policy on Iraq Gets Louder with Mandella Appalled by it||Discord within U.S. over Policy Getting Louder, Too, With Powell Breaking Silence||Israel, Only U.S. Partner Enthusiastic about Unilateral Military Action against Iraq by Washington||Iraqi Kurdish Leader, Talabani, Endorses 'Regime Change' in Baghdad||Iraq Opens Reported Weapons Site for International Press|| STORY: Iraq, stepping up a diplomatic drive to avert a threatened U.S. attack, said on Monday it would discuss a conditional return of United Nations arms inspectors with U.N. Secretary-General Kofi Annan.

Iraqi Deputy Prime Minister Tareq Aziz said he would hold talks with Annan at the Earth Summit in Johannesburg on Tuesday to discuss the deepening crisis with the United States.

"We would consider this issue (the inspectors) within the context that I mentioned, with the comprehensive settlement," Aziz told reporters. The U.N. inspectors left Baghdad in 1998.

Aziz did not spell out what such a settlement would entail, but Sabri wrote to Annan last month proposing a deal under which "all the requirements of the relevant Security Council resolutions would be satisfied in a synchronized manner."

Iraq has in the past said U.N. arms experts would have to discuss in advance what they were looking for before searches for weapons of mass destruction resumed. Baghad insists that all its banned weapons programs have been scrapped.

Iraq has argued that the United States would use any new inspections to spy on its military capabilities or to provoke a confrontation which it could use as a pretext for war.

It was not immediately clear if Aziz's remarks, made only a day after he told CNN that letting the experts back under the direction of chief U.N. arms inspector Hans Blix was not an option, represented a genuine change of heart by Iraq.

SADDAM SAYS U.S. COVETS MIDEAST OIL

In Baghdad, President Saddam Hussein said U.S. hostility masked an ambition to grab control of the region's oil reserves.
"Why all this American animosity against Iraq?" the official Iraqi News Agency quoted Saddam as saying. "Because America believes that if it destroys Iraq, it would control oil of the Middle East which makes up 65 percent of world oil reserves."

WORLD DISCORD WITH WASHINGTON OVER POLICY ON IRAQ GETS LOUDER

Russia warned the United States that using force against Iraq could destabilize the region, Russian news agencies said.

Russian Foreign Minister Igor Ivanov, speaking at a news conference with his Iraqi counterpart Naji Sabri, said Moscow had no evidence of any Iraqi threat to U.S. security.

He said Iraq must accept the return of U.N. inspectors to determine whether it held weapons of mass destruction.

"Any decision to use force against Iraq would not only complicate an Iraqi settlement, but also undermine the situation in the Gulf and the Middle East," Ivanov said.

Sabri was visiting Russia, a permanent member of the U.N. Security Council with veto power, as part of Iraqi efforts to fend off U.S. threats of military action to topple Saddam.

Ivanov, whose country backs the U.S. "war on terror," but has long had good ties with Baghdad, said he hoped the council would never be asked to authorize a strike on Iraq "and, therefore, the right of veto will not be necessary."

Former President Nelson Mandela of South Africa told reporters he was "appalled" by United States policy on Iraq.

"What they are introducing is chaos in international affairs and we condemn that in the strongest terms," he said.

Iraq is pulling out the diplomatic stops to counter U.S. threats to remove Saddam by force for his alleged efforts to acquire doomsday weapons that Washington says Iraq might use against the West or its allies, or hand over to terrorists.

"We will dispatch envoys to all countries in the world...to explain our position and rally them against the aggression," Iraqi Vice-President Taha Yassin Ramadan, who sought support in Lebanon and Syria last week, declared in Baghdad on Monday.

Sabri, who visited China last week to argue Baghdad's case to another of the five permanent members of the U.N. Security Council, was due to visit Egypt after his talks in Russia.

DISCORD IN WASHINGTON GETS LOUDER TOO

The Bush administration has sought to portray its quarrel with Baghdad as part of the "war on global terror" which it launched after the September 11 attacks on the United States.

But discord over Iraq appeared to sharpen at the weekend when Secretary of State Colin Powell seemed to differ with Vice President Dick Cheney over U.N. inspections, and President Bush was criticized for his team's disharmony.

Last week Cheney strongly advocated a pre-emptive military strike, saying the return of arms teams would provide "no assurance whatsoever" of Iraqi compliance with U.N. resolutions.

Powell told the BBC on Sunday that reinserting the teams "as a first step" was a priority. "The president has been clear that he believes weapons inspectors should return," he said.

White House spokesman Scott McClellan insisted Powell's comments were consistent with the Bush administration's demand for "unfettered" inspections of Iraq's weapons capability.

Powell's emphasis chimed with calls by many of Washington's European and Arab allies, and its Security Council partners, to channel any action against Iraq through the United Nations.

Few countries, apart from Israel, have shown any enthusiasm for a unilateral U.S. military strike and many are fiercely opposed to any invasion explicitly aimed at "regime change."

Israeli Foreign Minister Shimon Peres said in Johannesburg on Monday his country would not be involved in any U.S. decision to attack Iraq, but questioned the wisdom of delay. "We believe that they have at least biological, they may have chemical and they are trying to achieve nuclear weapons," he said.

In Ankara, an Iraqi Kurdish rebel leader told reporters he had come away from a visit to the United States convinced that it was determined to topple Saddam, a goal he endorsed.

"I don't know how they will do it and when they will do it but they're determined on changing the regime in Baghdad," said Jalal Talabani, leader of the Patriotic Union of Kurdistan.

IRAQ OPENS REPORTED WEAPONS SITE

Meanwhile, Iraq Monday opened to reporters a facility it says the West suspects of being an arms site.

The tour for the media, part of a campaign by Baghdad to repudiate U.S. allegations that it is stockpiling weapons of mass destruction, was the latest in a series conducted over the past weeks.

Reporters were flown by helicopter to a site at al Qaim, in Anbar province, 280 miles west of Baghdad, accompanied by Hussam Mohammed Amin, head of the Iraqi National Monitoring Directorate, the office used for liaison with U.N.
inspectors.

They were shown a uranium extraction plant destroyed during the 1991 Gulf War. The floor was littered with empty and damaged barrels and heaps of twisted iron bars and concrete slabs.

PHOTO CAPTION

An aerial view shows a phosphate complex at al Qaim, Anbar province, 4281 miles west of Baghdad September 2, 2002. Iraq, accused by Washington of being part of an 'axis of evil', took reporters on a tour of the facility stamped by the West as a weapons site as part of a campaign to repudiate U.S. allegations that it is stockpiling weapons of mass destruction. Photo by Faleh Kheiber/Reuters