DUBAI, Nov 2: France took centre stage in the Iraq crisis on Saturday amid reports it had been secretly negotiating with Baghdad for reform from within, as cash worries cast doubts over Britain’s appetite to take part in a possible US-led military action.

Paris “categorically” denied the report by the Saudi-owned Asharq al-Awsat newspaper that a French envoy had been shuttling to Baghdad for months in a bid to remove any pretext for US-led military action to oust President Saddam Hussein.

“No French envoy tasked with such a mission to Saddam Hussein has gone to Iraq,” the foreign ministry said.

The London-based newspaper said the French envoy had already brokered a shock amnesty of political prisoners ordered by Baghdad last month and was now negotiating Saddam’s replacement by a government of technocrats, led by his younger son, Qussay.

The envoy “has been regularly visiting Iraq for some time” to lobby for a change of “internal and foreign” policies and consequently avert US military action against Saddam, the paper said, quoting “authorized French sources”.

“Saddam Hussein granted the amnesty to prisoners (on Oct 20) at the envoy’s request,” the newspaper said.

The envoy, who spends 10 days a month in Baghdad, “openly spoke of the possibility of change without a war”, and got “a more than encouraging response” from Iraqi authorities.

Saddam even invited him to attend four cabinet meetings last month, Asharq al-Awsat said.

The envoy’s main interlocutor in Baghdad has been Deputy Prime Minister Tariq Aziz, but he has also met “at least six times” Saddam’s second son, Qussay, who is often portrayed as a possible successor to the Iraqi leader.

One of the ideas he raised was the formation of a “new generation” government of technocrats headed by Qussay.

The newspaper named the envoy as Pierre Delval, saying he went to Baghdad the first time under a false identity as the manager of a French state-run printing house.

European economy: The Iraq crisis is already hurting the European Union’s economy and has the potential to seriously hit growth, a top European economist warned on Saturday.

GDP growth, forecast at 1.5 percent for 2002, is set to slip below one percent due to the uncertainty created by the prospect of a US-led attack on Iraq, Andre Sapir, economic adviser to the president of the European Commission, said.

The Iraq crisis “is having negative effects” on the European economy, said Sapir, in Oman to attend a three-day Gulf Economic Forum bringing together Arab and Western economists and financial experts.—AFP