"Now that Iraq is liberated, the United Nations should lift economic sanctions on that country," Bush told Boeing defense workers in Saint Louis, Missouri.

It is hard to see how that could be fully achieved until a new and internationally recognised government takes control over Iraq.

The Security Council members -- in particular the five permanent members -- were bitterly divided over the US-led invasion which toppled the regime of Saddam Hussein this month.

And they remain divided over the extent of the role the UN should play in the post-war reconstruction.

Asked to comment on Bush's remarks, the UN ambassador to the United Nations, John Negroponte, told reporters:

"I think we visualize some kind of step-by-step procedure with respect to post-conflict resolutions regarding Iraq and certainly one of the issues we're going to have to deal with early on is sanctions."

But he added: "If you're asking me do we have specific language or specific formulations to propose at this specific moment in time, the answer is no."

The sanctions, the most sweeping ever ordered by the council, were imposed on August 6, 1990, four days after Saddam's army invaded Kuwait on August 2.

They included an embargo on Iraq's oil exports and a ban on all other trade.

As the sanctions began to bite, and the living standards of Iraqi citizens collapsed, the council agreed to allow Iraq to export oil to pay for badly needed imports of humanitarian goods.

Iraq has exported around 64 billion dollars worth of oil since the so-called oil-for-food programme was set up in December 1996. But the UN retained control over Iraq's revenues, held in an escrow account at the French bank BNP-Paribas.

Without an internationally recognised government in Baghdad, the UN would have no-one to transfer the oil revenues to. And there would be no national authority to sign contracts with purchasers of Iraq's oil.

Anticipating such difficulties, the Security Council adopted a resolution on March 28 -- nine days after the start of the US-led invasion -- authorizing UN Secretary General Kofi Annan to take over the running of the oil-for-food programme for 45 days.

Under existing council resolutions, 25 percent of Iraq's oil revenue is set aside to meet Kuwaiti claims for compensation dating from the invasion and seven-month occupation by Iraqi troops.

The Geneva-based Compensation Commission has already awarded more than 32 billion dollars in damages, including a record 15.9-billion-dollar claim by the Kuwait Petroleum Company (KPC), endorsed by the Security Council in 2000.

Before lifting the sanctions, the council would probably have to decide whether or not to call a halt to compensation claims.

That in turn would depend on whether council members were satisfied that Iraq had met the conditions of the ceasefire which ended the 1991 Gulf War, when a US-led coalition drove Iraqi forces out of Kuwait.

Among the conditions were Iraq's recognition of the Kuwaiti border, payment of Iraqi debts prior to the invasion and war damages, and the return of Kuwaiti and foreign prisoners and looted property.

SPACE.WIRE