WASHINGTON, Aug 17: Russia and Iraq are planning to sign a $40 billion economic cooperation agreement, ignoring US efforts to isolate Iraqi regime, media reports said here on Saturday.

The five-year package focuses on oil but also covers electrical energy, chemical products, irrigation, railroad, construction and transportation, the Washington Post said.

“Russia was, is and will be our main partner,” Abbas Khalaf, Iraq’s ambassador to Moscow, told the newspaper.

“What we need from Moscow is moral, political and diplomatic support because Iraq has shown the whole world that it can defend itself. America’s aggressive statements against Iraq aroused negative reaction in Russia.”

It said Russia’s apparent refusal to abandon its longtime ally, would hurt Washington’s efforts to rally world leaders behind its planned military offensive against Baghdad.

Russia maintains close ties with all three countries branded the “axis of evil” by President Bush: Iran, Iraq and North Korea.

Last month Moscow released a plan calling for increased nuclear cooperation with Iran and this week invited North Korean leader Kim Jong Il for a visit.

Even evident personal friendship between President Bush and Russian President Vladimir Putin did not prevent Moscow in further strengthening its ties with the “axis of evil,” the Post said.

Oleg Buklemeshev, a top deputy to Prime Minister Mikhail Kasyanov, told the Post that the new five-year agreement was ready for signing. “All the ministries have agreed to the document,” he was quoted by the newspaper as saying. “It could happen very soon.”