WAR ON IRAK

Guardian: Brown rejects US bid for Iraqi cash

The chancellor of the exchequer, Gordon Brown, is unwilling to comply with a US demand that he should turn over £200m Iraqi assets frozen in Britain to an American-controlled account.

Britain wants the UN to control the funds, which have been frozen since the first Gulf war began 12 years ago.

The Treasury said yesterday that Mr Brown has been in talks with his US opposite number, the treasury secretary John Snow, and wanted the money to be "used for the benefit and welfare of the Iraqi people".

Cash totalling more than £400m has been frozen in British bank accounts under UN resolutions since 1990.

The British stance is that both in the UK and the Cayman Islands, which have also been the subject of a US demand, there is no legal authority to hand the cash over to the US

The Swiss bank UBS said yesterday that it would hand over some money in blocked accounts at its US branches.

"The funds stem from payments of US oil companies to Iraqi ones for deliveries ahead of the implementation of sanctions against Iraq in 1990," its spokesman Serge Steiner said.

But officials in Switzerland said they would be unable to hand over $364m from Swiss accounts without a security council resolution.