Prime Minister Mikhail Kasyanov has insisted that contracts signed with Iraq before the war be honored, and that Baghdad's debts be paid.

Kasyanov's comments Friday were made after talks in Rome with Italian Prime Minister Silvio Berlusconi that included the issue of Iraq's reconstruction.

The government has been eager to protect lucrative contracts held by LUKoil and other Russian oil companies to develop Iraq's oil industry.

"We believe that the contracts in force must be respected," Kasyanov said. "Debts must be paid and respected."

Iraq owes Russia at least $8 billion in Soviet-era debt, Finance Minister Alexei Kudrin was quoted by Itar-Tass as saying Saturday in Moscow.

Kudrin has said Iraq has enough oil reserves and sufficient infrastructure to be "quite solvent" enough to pay its debts.

Russia has not ruled out its participation in talks on the restructuring of Iraq's debts, "considering the current postwar situation and the long period of sanctions," Kudrin said.

President Vladimir Putin had suggested that Russia was willing to consider a U.S. request to forgive Baghdad's debts, but officials have since emphasized that this can only be considered when a legal Iraqi government is in place and in accordance with United Nations resolutions.

"We are available to start efforts within competent international organizations to find more efficient solutions," Kasyanov said Friday.

Kudrin on Saturday urged any debt-reconstruction talks to be conducted "only within the framework of relevant international organizations, primarily the Paris Club of creditors."

The prime minister's visit included meetings with Italian energy officials and Berlusconi said Italy planned to reinforce its economic relations with Russia.

"Italy sees a chance for increasing its purchase of Russian natural gas," Kasyanov said.

Italian oil and gas company Eni SpA's chief executive, Vittorio Mincato, met Friday with Kasyanov and Alexei Miller, head of Gazprom, to discuss working together in the oil and gas sectors, Dow Jones reported, citing an industry source.

The three men examined ways to enhance cooperation in the gas and upstream oil sectors with a view to a possible alliance, the source said.

Eni declined to comment.

Italy also said it plans to allocate about 1 billion euros ($1.09 billion) to recycle decommissioned Russian nuclear submarines and destroy Russian chemical weapons, Kasyanov said. And the two countries said they are considering a more extensive partnership in space exploration, including efforts to set up a global space navigation system.

In addition, Italy expressed interest in buying several Yak-130s, a Russian-made training airplane, Kasyanov said.

During its upcoming EU presidency, Italy will intensify work on the joint economic zone, which may promote Russia's accession to the World Trade Organization, Kasyanov said.

Furthermore, Italy will intensify efforts toward the introduction of visa-free travel between the EU and Russia.

"Berlusconi promised to seriously work on the problem when Italy chairs the European Union," he said.

(The Moscow Times 21.iv.03)