Ewen MacAskill

Earlier, at a joint press conference, Chirac and Blair attempted to bury their differences 18 months after relations between France and Britain were strained by the Iraq war. Although there is still a gulf between the two over Iraq, with France keen to see a timetable for the withdrawal of U.S., British and other troops, Chirac and Blair concentrated on areas of cooperation.

Chirac, who had two hours of talks with Blair, said Iraq was the “one and only issue” over which the two countries disagreed. “Who is right or wrong, history will tell.” Chirac reiterated his view that the invasion and continued occupation of Iraq have made the world more dangerous. “If you observe the way things are developing in the world in terms of security and the expansion of terrorism — not just in the Middle East but throughout the world — if you look at all that, you cannot say, and be credible, that the situation has significantly improved,” he said.

In the months before the war in Iraq began in March of last year, Downing Street accused France of poisoning the debate in the U.N, and, at one point, deliberately distorted a statement by Chirac about using the French veto in the Security Council. But at the press conference both men were in an emollient mood.

Blair said: “On the question of Iraq, I think the differences at the time of the conflict were well known. But both of us are now working under U.N. Resolution 1546; both of us want to see a stable and democratic Iraq. And both of us will do what we can to ensure that that happens.” Chirac said he had been taken aback at suggestions in the press of divisions between France and Britain. “They do not reflect either my own beliefs — and certainly not the British government’s — or our experience of Franco-British cooperation,” he said.

He and Blair said they shared the same analysis of what needed to be done in the Israeli-Palestinian conflict, and on Africa and climate change, and emphasized that British and French soldiers were working side by side in Afghanistan.

Chirac has been pushing Britain to align itself more closely with Europe. But Thursday he said the close, almost family, relationship between the U.S. and Britain was helpful. “The fact that the U.K. can be a friendly partner between the European Union and the United States is advantageous for Europe,” he said. “The U.S. and Europe have a natural vocation to work together.”

Later, President Chirac spoke glowingly of France and Britain’s common destiny in a speech before the start of the Windsor banquet. Speaking in English and then French, the president told the guests of the respect and affection in which the French people hold the queen and the British people and evoked common struggles for freedom and against tyranny, an entente “consecrated by the blood spilled with so much sacrifice on French soil.”

“The great lesson of the entente cordiale is that, when our two countries unite their forces, few challenges can withstand them … Our common future means the European Union first and foremost.”

Chirac said France and Britain were accustomed to acting whenever international peace and security were threatened. “They are acutely sensitive to the fate of the most vulnerable countries … There is vast scope for action by our two countries where our combined efforts can help to advance peace, justice and solidarity.”

Sen. Norm Coleman, the Republican senator whose committee Thursday published a report naming George Galloway, the British M.P. for the antiwar Respect Party, and Charles Pasqua, the former French minister, in connection with the oil-for-food scandal, has called on Annan to resign. Coleman also hinted that the United States could withhold its funding, which he said amounted to about 22 percent of the U.N.’s total budget.

Annan, who was badly undermined by revelations that his son Kojo was paid by a company that secured a lucrative U.N. contract for Iraq, is refusing to resign. He is due to retire in December 2006. If Annan does not resign before then, the United States will try to ensure that the next appointee, who is due to be chosen from Asia, will be in the American camp.

Coleman’s inquiry is being conducted by the Senate permanent subcommittee on investigations. Separate inquiries are being carried out by the House Committee on International Relations, led by the Republican Henry Hyde, and the House subcommittee on national security, emerging threats and international relations, headed by Christopher Shays, another Republican.

These come on top of an internal U.N. inquiry ordered last year by Annan and headed by Paul Volcker, who has already issued two interim reports and is due to publish his final report in the summer. A spokeswoman for Volcker said Thursday the timetable could slip and that a decision on a publication date was “not yet on the horizon.” The two interim reports by Volcker have been extremely damaging to Annan, criticizing his officials as well as Kojo.

The inquiry is into the program in which Saddam Hussein was allowed to sell limited quantities of oil in return for food between 1996 and 2003. Various companies and individuals are alleged to have benefited from illegal payments.

As long as only Volcker was involved, Annan could contain the row, and U.N. officials hoped publication of Volcker’s report would mark an end to the affair. But with Republican congressmen piling in, Annan faces month after month of rows and allegations.

U.N. officials admitted Thursday that a clash between the world organization and the U.S. Congress has put in jeopardy a program of reforms on which Annan has staked his reputation. Heads of government are due in New York in September to ratify the reform package, including expansion of the Security Council, which would amount to the biggest overhaul of the U.N. since its founding in 1945.

But relations between the U.N. and Congress have deteriorated sharply in the last week over the oil-for-food program, to the extent that a U.S. federal judge has been called upon to intervene.

One U.N. official admitted that Annan, who wanted the reforms to be his legacy, is being “distracted” by issue. The official said it is now possible that Annan will not achieve in September anything other than minimal changes, and that the grandiose plan for increasing the Security Council from 15 members to 25 will be shelved.

A U.N. official close to Annan acknowledged that the publication of Volker’s report will not end the controversy. “Yes, that is true. It isn’t over with Volcker,” the official said. He added that Annan had said the disclosures about the oil-for-food program had been embarrassing but that he was determined to press ahead. Asked at a recent press conference if he was considering resigning, Annan said: “Hell, no.”

The U.N. official said that if relations between the United States and the U.N. continue to deteriorate at the present speed, he fears Congress will once again impose a freeze on U.S. funding of the organization, as it did 15 years ago. The official said: “We are doing all we can to give them the information they need. We hope it will have a sensible ending. There were mistakes [in the oil-for-food program] but not gross corruption — just minor.”

Annan was defiant. “As I had always hoped and firmly believed, the inquiry has cleared me of any wrongdoing,” he said. Asked if he would resign, he replied: “Hell, no.” But Annan, who is due to retire next year at the end of two terms, could now find it difficult to push through his reform program, and to pacify his critics.

Republican Sen. Norm Coleman said Tuesday: “His lack of leadership, combined with conflicts of interest and a lack of responsibility and accountability, point to one, and only one, outcome: his resignation.”

In Washington, the White House voiced cautious support for Annan. Spokesman Scott McClellan said: “This is a very serious matter. We have stated that repeatedly. Congress has been looking into it as well. We continue to support the United Nations; we continue to support Secretary-General Annan in his work at the United Nations. We will carefully study the report that Volcker has put forward today. We’re also looking forward to seeing the final results of his investigation.”

The inquiry is continuing and is due to issue its final report in the summer. It will give its verdict on the wider issue of the conduct of the oil-for-food-program, which was set up to minimize the impact of sanctions on Iraq by allowing Saddam Hussein to sell oil in return for food, a system open to abuse. An interim report of the inquiry released last month was critical of the U.N.’s handling of the program.

Tuesday’s report dealt with the specific issue of whether the award of a contract by the U.N. to Cotecna, which employed Kojo Annan, was free of improper or illicit influence. Cotecna was selected by the U.N. in December 1998 to conduct inspections of humanitarian goods entering Iraq.

The report concluded: “There is no evidence that the selection of Cotecna in 1998 was subject to affirmative or improper influence of the secretary general in the bidding or selection process.” But the report notes that U.N. rules were not followed: Cotecna was not asked to submit a financial statement, one that might have helped reveal the company’s financial strains at the time.

Volcker said: “Our investigation has disclosed several instances in which [Annan] might, or could, have become aware of Cotecna’s participation in the bidding process. However, there is neither convincing testimony to that effect nor any documentary evidence.”

Volcker added: “Taking all of this into account, the committee has not found the evidence is reasonably sufficient to show that the secretary general knew that Cotecna had participated in the bidding process in 1998.”

But the report is critical of Kojo Annan. He left Cotecna in 1998, but, apparently unknown to the U.N. or his father, continued to be paid by the company until 2004. The report said that after the media disclosed his relationship with the company in January 1999, Kojo Annan “actively participated in efforts by Cotecna to conceal the true nature of its continuing relationship with him. Kojo Annan also intentionally deceived the secretary general about this continuing financial relationship.” Nor had he been totally forthcoming to the inquiry about the payments.

The report adds: “Significant questions remain about the actions of Kojo Annan during the fall of 1998 as well as about the integrity of Kojo Annan’s business and financial dealings with respect to the program.” The inquiry is still looking into this.

The report concluded that Cotecna had cooperated in making documents and staff available, but that it had “made false statements to the public, the United Nations and the committee.”

Annan’s former chief of staff, Iqbal Riza, is also criticized for allegedly giving the go-ahead for the shredding of documents relevant to the inquiry. The report says an assistant to Riza, who retired in December, had shredded many documents in 2004. The shredding continued even after Annan issued an order that all oil-for-food documents be preserved, Volcker said. Riza “acted imprudently” and in violation of the document preservation order, the committee concluded.

Although Abbas and Israeli Prime Minister Ariel Sharon met at the Egyptian resort of Sharm el-Sheikh last month, the Israeli government is resisting wider talks. Abbas wants direct negotiations between Israel and the Palestinians on the issues that need to be resolved in order to secure a final peace deal, including borders, refugees, Jerusalem and Israeli settlers.

The one-day conference in London, which was confined to discussion about reform of the Palestinian Authority and excluded these wider issues, could turn out to be a staging post on the way to direct negotiations. The Israelis were not present Tuesday. Abbas said the Palestinian Authority would try to find the perpetrators of last Friday’s attack but, in a comment that will infuriate Israelis, noted that Israel was responsible for security in the part of the West Bank the suicide bomber originated from.

Israeli Foreign Minister Silvan Shalom, responding to the conference, said: “I am very sorry the Palestinian leadership is still hesitating over its need to fight terror. It has to be clear that as long as they don’t take the strategic decision to dismantle terrorist infrastructure, we cannot truly advance towards peace.”

But Abbas said he expected the London meeting “will support and lead to the convening of the international conference called for in the road map, to discuss, based on international legitimacy, the resolution of all permanent status issues including: refugees, Jerusalem, borders, water and settlements, as well as all other issues pertaining to the Arab-Israeli conflict.”

The road map is a peace agreement drafted two years ago by the “quartet” of the United States, the United Nations, the European Union and Russia. Under it, after a series of measures have been implemented, including Palestinian reforms, a conference would be held to launch negotiations on a final peace deal. A further meeting would then complete the deal.

The quartet met Tuesday on the sidelines of the London conference. The group called for “immediate action by the Palestinian Authority to apprehend and bring to justice the perpetrators” of the Tel Aviv suicide bombing. But it also had a warning for the Israelis. It said a Palestinian state was viable only if it had contiguous territory and was not broken up into cantonments by the presence of large Israeli settlements. “A state of scattered territories will not work,” the group said.

U.S. Secretary of State Condoleezza Rice, who held a separate meeting with Abbas, echoed this. “Israel must also take no action that prejudices a final settlement and must help ensure that a new Palestinian state is truly viable. A state of scattered territories will not work,” she said.

German Foreign Minister Joschka Fischer told the conference that the two-state solution remained the basis for a lasting and just peace. “Therefore, we view with concern the ongoing settlement policy in the West Bank,” he said. United Nations Secretary-General Kofi Annan said there had been many positive developments recently. “This is a moment of promise and potential. The sense of expectation is palpable,” he said.

The participants issued a 15-page communiqué, the most important part of which was the creation of a U.S.-led international team, including Britain, to help the Palestinians reform their security services. The team is to be led by Lt. Gen. William Ward, the U.S. security coordinator for the region. This sign of greater U.S. involvement contrasted with George W. Bush’s first-term resistance to calls for Washington to broker a peace agreement.

The European Union pledged $330 million over the next year to help the Palestinians rebuild their economy, and the United States promised $350 million. The U.K. raised its contribution from 20 million to 30 million pounds.