KUWAIT, Jan 21: Kuwait told Washington's debt envoy James Baker on Wednesday that it was willing to begin talks over reducing debts owed by Iraq, but that the issue would need parliament's approval.

Prime Minister Sheikh Sabah al Ahmad al Sabah was quoted by state news agency KUNA as telling Mr Baker that Kuwait would work with other countries to achieve a substantial reduction in Iraqi debts during this year "on condition that this is approved by constitutional institutions in the country".

Iraq is estimated to owe Gulf states 45 billion dollars, mostly given it during its 1980-1988 war with Iran. Estimates about the size of the debt owed to Kuwait are not clear but some have put the figures at 12-15 billion dollars.

Iraq insists the money from Saudi Arabia and other Gulf states was given as grants. "Kuwait is willing to begin negotiations regarding this issue on condition that the results of these talks are accepted by an internationally-recognized Iraqi government," Sheikh Sabah was also quoted by KUNA in Arabic as saying.

"Kuwait will work with creditor nations in this direction." He was quoted as saying that the issue of Iraqi debts was separate from that of billions of dollars in war reparations for damage Kuwait suffered during Iraq's 1990 invasion, which parliamentarians in the emirate have strongly opposed forgoing.

A US official travelling with Mr Baker said the envoy had "very successful and productive" talks with Sheikh Sabah. "We are very pleased that Kuwait has announced that it is committed to achieving substantial debt reduction for Iraq in 2004," the official said. "Significantly, the Kuwaitis have also stated that they are ready to initiate negotiations promptly."

Mr Baker later left Kuwait for Saudi Arabia on the last leg of his regional tour, but left Riyadh for home without commenting on his meeting. Saudi Arabia has staked a claim against Iraq for 24 billion dollars in cash and an additional six billion in oil support. -Reuters