Moscow accused Washington on Saturday of trying to cut Russia out of its existing deals in Iraq and pledged to block any moves to win legitimacy for the U.S.-led military campaign in the UN Security Council.

"Attempts will be undoubtedly made in the UN Security Council to find ways that would help legitimize the military operations and the postwar setup in Iraq," Foreign Minister Igor Ivanov said at a conference outside Moscow on Saturday. "We will follow this very carefully, and we will not, of course, give legitimacy to this action in the Security Council."

"Iraq does not need democracy brought on the wings of Tomahawks," he said, reiterating President Vladimir Putin's remarks Thursday that the war was "a big mistake."

But as Russia sought to keep up the pressure on the United States, Washington hit back with claims that Moscow has turned a blind eye to illegal sales of arms to Iraq by Russian firms.

Ivanov's comments came as the United Nations prepared to discuss plans from the United States and the British for three new resolutions to set up a legal framework for humanitarian relief to Iraq and, in the long term, create a new postwar administration and a restoration program. A first resolution, which was under discussion at the UN over the weekend, calls for adapting Iraq's UN oil-for-food program to prioritize contracts providing humanitarian supplies of food and medicine.

Russian and French diplomats are said to be balking at the proposals as a sign the United States and its allies are already trying to run the show once Saddam Hussein is dislodged. In addition, the future of up to $40 billion in Iraqi funds lying in UN accounts from the oil-for-food program is at stake.

Russia and France have requested that any proposals over Iraq's future, including ones to coordinate humanitarian relief, be made by UN Secretary General Kofi Annan alone. Russia and France held the majority of contracts under the UN oil-for-food program, which has now been suspended following the outbreak of war. Several Russian oil majors complained Saturday that the war had already cost them billions of dollars.

Putin on Friday, however, stepped back from warnings made earlier by his foreign minister that the standoff over the conflict could jeopardize Russia's role in the global coalition against terrorism -- a role that has become a cornerstone of Russia's burgeoning relations with the United States after Sept. 11, 2001.

"What is extremely important is to save the unity of the world community in counteracting terrorism," Putin told a Moscow meeting of the heads of the security councils of the Commonwealth of Independent States.

He said the Iraqi crisis "has gone beyond the framework of a local conflict, and today it is a potential source of instability for other regions of the world."

He stressed that this should only solidify Moscow and the rest of the CIS's drive to cooperate in the global coalition against terrorism. "I believe I am voicing the common opinion: Our countries are ready to cooperate with other states and international organizations on certain matters in the fight against terrorism," Putin said.

Ivanov on Saturday also retreated from his earlier statement about the anti-terrorism coalition. "The Iraqi crisis isn't the end of life," he said. "We believe Washington's action against Iraq is a mistake, but it must not damage out long-term partnership."

This partnership has an "independent importance as a major factor of global stability," Ivanov said, in remarks posted on the Foreign Ministry's web site.

At the same time, he lashed out at the United States for what he said were its attempts to push Russia out of its economic interests in Iraq -- namely a request for the expulsion of Iraqi diplomats and the freezing of Iraqi bank accounts. A senior U.S. diplomat confirmed earlier the United States has pushed for Russia to declare Iraqi diplomats persona non grata, but Ivanov's comments Saturday were the first time Russia has acknowledged those requests."What threat could they [the diplomats] present for U.S. security?" Ivanov said.

The request to expel diplomats and freeze Iraqi assets was "not made by accident," Ivanov was quoted by Interfax as saying. "In this way, they are saying that [all the contracts that were] signed up until now are illegal, and that legality begins with the arrival of a new administration, even a temporary one."

The future of the biggest contract won by a foreign oil major in Iraq, LUKoil's $20 billion deal to develop the vast West Qurna field, has already been thrown into doubt after Iraqi officials accused LUKoil of seeking postwar guarantees for the field. Other medium-sized Russian oil companies, however, have won smaller contracts to develop Iraq's fields, which contain the world's second-largest reserves.

One of those companies, state-owned Tatneft, said Saturday that the war has already cost it up to $1 billion in losses as it had to stop work and pull out its staff.

Tatneft's deputy director Khamit Khazayev said the company closed down deals it had to develop 33 oil wells, as well as an upcoming contract to develop another 60 wells, Itar-Tass reported.

Mashinoimport said it had lost up to $1 billion worth of contracts. The company, which has been a major participant in the oil-for-food program, was to sign contracts soon for up to $1 billion on supplying equipment, developing the Garaf oil field and repairing fields in southern Iraq, Mashinoimport director Olga Vdovichenko told Itar-Tass on Saturday.

Ivanov on Saturday accused the United States of planning to take over Iraq's oil riches once the military onslaught was over. "Although it is being said that Iraq's natural resources belong only to the Iraqi people, there will be an enormous desire to acquire these resources," he said.

"We must defend our interests so that the contracts signed under Saddam Hussein will not be canceled and declared invalid," he said.

Deputy Prime Minister Viktor Khristenko also warned on Friday that Russia would defend its stakes in Iraq.

But Yukos head Mikhail Khodorkovsky said Friday that Russia would have to face reality and seek to win new contracts under a post-Hussein regime. Yukos does not have any existing contracts with Iraq.

Scattered protests were held over the weekend in Moscow. About 2,000 members of the pro-Kremlin youth group Walking Together rallied Saturday outside the U.S. ambassador's residence, Spaso House, carrying several thousand blue containers of oil. The organization's head, Vasily Yakimenko, said the demonstrators were "ready to bring as much as is needed" to meet American demands and stop war.

Other protests, however, were not so well attended. About 100 Communist demonstrators gathered opposite the U.S. Embassy on Saturday, while later in the evening a convoy of about 100 cars tooted their horns to protest the war as they slowly drove by the embassy, NTV television reported.

In telephone conversations Sunday with his Chinese, Indian and Mexican counterparts, Ivanov once again stressed Moscow's opposition to war.

Ivanov and Chinese Foreign Minister Li Zhaoxing agreed that only the Security Council has the right to make decisions on the restoration of Iraq, the Foreign Ministry said in a statement.

The two foreign ministers also called "for an immediate halt to the military actions against Iraq, which were initiated bypassing the UN Security Council and have no legal basis," the ministry said.

The State Duma on Friday passed a resolution criticizing the actions of the U.S.-led anti-Hussein coalition and calling for UN Secretary General Kofi Annan and Putin to bring the issue back to the United Nations.

Meanwhile, the Emergency Situations Ministry started erecting a tent camp near the Iraqi border with Iran. The camp is expected to host 5,000 refugees. Four Russian cargo planes with relief items for the camp landed in Iran over the weekend, Interfax said Sunday.

(The Moscow Times 24.iii.03)