His comments came as President Bush prepared to say a change of government in Iraq would promote peace between Israel and the Palestinians, and British Prime Minister Tony Blair suffered a major revolt in his own party against war.

Blix is due to make a further report to the UN Security Council on March 7 on progress in tracking down Iraq's alleged weapons of mass destruction, which Baghdad denies having.

Answering reporters' questions at UN headquarters in New York, he said full cooperation on the Iraqi side or a disarmament breakthrough were still lacking, despite recent handovers of documents.

"I do not think I can say there is evidence of a fundamental decision (to disarm), but there is some evidence of some increased activity," he said.

In Washington, President Bush was to address the American Enterprise Institute later Wednesday.

"He'll talk about how a different Iraq will make it easier to achieve peace between the Israelis and Palestinians," White House spokesman Ari Fleischer said.

Oil prices hit their highest point since the 1991 Gulf war after the US government reported a big drop in winter heating fuel stocks and the administration pressed the case for war.

Pentagon planners, meanwhile, said the cost of a possible war could balloon to $95 billion or higher, eclipsing earlier estimates.

Blair Faces Revolt

In London, nearly 200 members of parliament -- possibly more than half from within the ruling Labor Party -- defied Blair's hawkish stance and staunch support for Bush, saying the case for war had not been proven.

The government put forward a motion asking parliament for backing for UN efforts to disarm Iraq, without mentioning the possibility of war. But 199 MPs backed an amendment stating the case for war was as yet unproven.

Blair's huge parliamentary majority and the support of most opposition Conservatives ensured he won the vote easily. But the scale of the revolt added to the impression of a leader standing dangerously out on a limb.

Blair is betting that political and public opinion will come round if the Security Council passes a new resolution that Britain circulated this week with the United States and Spain, saying Baghdad has missed a "final opportunity" to disarm peacefully.

So far, only four of the nine votes needed for the new resolution to pass in the 15-strong Council are assured. China, France or Russia could veto even a majority decision.

A US administration official in Moscow said Washington doubted whether Russia or China would cast a veto.

Germany, France, China and Russia have angered Washington by refusing to back its drive to be given a free hand to use force against Iraq.

Washington and London would like approval for the draft by mid-March -- rising summer temperatures mean US generals would rather fight sooner than later. Blair told parliament he thought the resolution would gain the required support.

Putin, Schroeder Discuss Iraq

German Chancellor Helmut Schroeder met Russian President Vladimir Putin Wednesday as part of a diplomatic drive by Berlin and Moscow to head off conflict.

But an unnamed Kremlin source, quoted by Russian news agencies, said the meeting should not be seen as an attempt to antagonize the United States.

Russian Defense Minister Sergei Ivanov said in Baku that he expected no major decisions before Blix's report on March 7.

While Bush was due to emphasize what he believed to be potential benefits of disarming Iraq and ousting President Saddam Hussein, it remained to be seen whether his words would allay Arab fears that chaos could ensue.

Leaders of the Arab League's 22 members are to hold a summit at the Egyptian Red Sea resort of Sharm el-Sheikh Saturday.

League Secretary-General Amr Moussa said there was a range of opinions within the group, but a general consensus against war, which he said could unleash chaos in the Middle East.

In Baghdad, hundreds of armed members of the ruling Baath Party took to the streets in a one-day exercise for war.

Some in military fatigues, others in civilian clothes, they directed traffic and stood guard at key buildings in a drill aimed at testing their ability to police the city during a war.

Warplanes over Iraq

The United States said warplanes taking part in US-British patrols over northern and southern Iraq had attacked two air defense communications installations in the south Wednesday, a day after striking at what the US military said were five missile systems in the north and south.

An Iraqi military spokesman confirmed the raids over the past two days, but said the Western planes had targeted civilian installations. He did not mention casualties.

Iraqi Vice President Taha Yassin Ramadan told the Russian newspaper Vremya Novostei that countries that supported America in any future war would be legitimate targets for retaliation.

Asked whether Iraq could attack Kuwait or Turkey, he said: "War is war. If aggression is shown against Iraq, it can of course use any means to defend itself. I want to say only that whoever helps the Americans will be seen as their accomplice."

Washington has pressed Ankara to allow US troops to invade northern Iraq from Turkey if necessary.

(China Daily February 27, 2003)