ST. PETERSBURG -- With hugs and handshakes, President Vladimir Putin and U.S. President George W. Bush publicly buried the hatchet in their disagreement over Iraq on Sunday and looked instead to jointly thwart the spread of weapons of mass destruction, especially in Iran and North Korea.

"Friends can disagree, go beyond that disagreement and work in a constructive way to ... maintain peace," Bush told reporters after a 45-minute meeting at the Konstantin Palace outside St. Petersburg.

Both leaders said that weathering the Iraq crisis -- when the two nations had taken opposite positions on U.S. military intervention to oust Saddam Hussein -- had only made them closer, even on the issue of Iran's alleged pursuit of nuclear weapons, which Moscow had heretofore denied.

"Russia and the United States have mutual concerns about the advanced Iranian nuclear program. We understand the consequences of Iran having a nuclear weapon and therefore we want to work together ... to insist that they do not have a nuclear weapon," Bush said. "I appreciate Vladimir Putin's understanding of the issue, and his willingness to work with me and others to solve this."

Putin said the positions of Russia and the United States on Iran are closer than people thought. Both countries are urging Teheran to sign additional protocols of the International Atomic and Energy Agency, which would open up nuclear facilities to thorough inspections.

Putin dropped a small fly in the ointment, however, saying Russia was wary that "the pretext of an Iranian nuclear weapons program [could be used] as an instrument of unfair competition" against Russian companies.

Washington has urged Russia to slow down work on the atomic power station it is building near the Iranian port of Bushehr pending iron-clad guarantees that Iran would return any nuclear fuel it receives for the plant, said a senior U.S. diplomat familiar with the meeting.

The diplomat said Putin's comment may have referred to uranium-enrichment technology that was recently discovered in Iraq and traced to a European company. He added that the U.S. administration suspects the technology may have gotten into Iranian hands illegally, not from the company itself.

Notwithstanding the friction on this front, Sunday's meeting was full of good will, with both leaders stressing the personal element of their sturdy relations.

"We have lots of coinciding points of view," Putin said. "This is what allows me to call President Bush my friend and him to call me his friend, not just the fact that I like him personally."

Bush, on his third trip to Putin's native city, called the Russian leader "my good friend" and invited him to visit Camp David this September, around the time of a U.S.-Russian forum on energy cooperation. Foreign Minister Igor Ivanov said Putin had accepted with pleasure.

Bush also called for the two nations to boost high-level contacts. It was not clear whether the plan to do so was directly linked to misunderstandings over Iraq, but the senior U.S. diplomat said channels of communication between the two countries needed to be broadened "to make sure the thinking of both sides would be reflected in our policy."

The diplomat added that the closer ties would build in part on existing links between U.S. National Security Adviser Condoleeza Rice and Putin's chief of staff Alexander Voloshin, who jetted to Washington earlier this year for talks before the Iraq war.

During their meeting, the presidents discussed the next phase of rebuilding postwar Iraq, in which Russia has been eager to participate. First UN sanctions and then this year's war have put a freeze on billions of dollars in Russian oil contracts and credits to Baghdad.

Citing Russian companies' extensive experience in Iraq, Putin offered "everything at our disposal, our experience and resources" to help rebuild the country.

"We do not exclude the possibility that our companies will work there," Putin said. "This will depend on the situation that is developing in Iraq, including the oil-for-food program."

Bush thanked Putin for supporting UN Resolution 1483 on lifting sanctions against Iraq and acknowledged Russia's long history of involvement in the region, but made it clear that "the Iraqi people will make the decision which is in their best interest."

The presidents also signed off on papers marking the ratification of the nuclear-arms reduction agreement known as the Moscow Treaty. The U.S. Senate ratified the document earlier this year, while the Russian parliament finally passed it about a week before the two leaders met.

(The Moscow Times 02.vi.03)