Associated Press

Baghdad, May 26

Westerners were starting to admit defeat in the battle with Iraq by saying economic conditions were improving for Iraqis and that Baghdad was winning the propaganda war against America, president Saddam Hussein said during a reception on Saturday.

"Westerners are saying that the economic situation of Iraqis, despite the (United Nations-imposed) sanctions, is better than that of Egyptians, and that Iraq has benefited from sanctions and improved itself in the propaganda war against US policy," the official Iraqi News Agency quoted Saddam as saying.

"Their major papers, American and English, are publishing news of their defeat," said the Iraqi leader, without elaborating. The West has wanted to kill Iraqi morale, "but what was destroyed is now rebuilt."

Iraq has been saddled with economic sanctions since invading neighbouring Kuwait in 1990, an act that sparked the 1991 Gulf War. Saddam wants the sanctions lifted, but the United Nations is refusing to do this until it verifies Iraq has dismantled its weapons of mass destruction.

Earlier this month, the UN Security Council voted to revamp the sanctions programme on Iraq, capping year-long US and British efforts to get more humanitarian goods to Iraqis while tightening the military embargo on Baghdad.

President George W Bush has warned Saddam of unspecified consequences if he prevents UN weapons inspectors from entering Iraq. Bush, who wants Saddam toppled from power, has also described Iraq as part of an "axis of evil."