The European Union agreed on Monday to make a modest donation to help rebuild Iraq and Britain pledged new efforts to clinch a UN resolution on the country's future before next week's donor conference in Madrid.

Foreign ministers, divided over how much to invest in the unstable country's postwar reconstruction, set a contribution of €200 million from EU coffers for 2003-04.

In a joint statement, they called for a realistic timetable for handing over power to the Iraqi people and added a clause insisting on "a strong and vital UN role" - an implicit plea to the United States to relinquish more of its control.

British Foreign Secretary Jack Straw told his colleagues London would contribute an additional €375 million in new money for reconstruction over the next two full years.

"All eyes in Iraq will be on the Madrid Donors' Conference," he said. "It is now important for the international community to send a clear signal of its willingness to help Iraqis build on the progress already made."

Diplomats in New York said the US draft, reworked after British and Spanish consultations with Security Council members, would set a December 15 deadline for Iraq's Governing Council to propose a timetable for a gradual return to full sovereignty.

Some European states which backed the US-led war to oust Saddam Hussein said they would top up the joint donation with national funds, though only Mr Straw gave a figure. Critics of the war, led by France and Germany, seemed unlikely to add much.

German Foreign Minister Joschka Fischer told reporters Berlin was paying the biggest slice of the joint EU contribution and had to be "realistic" since it was under pressure from Brussels to curb its budget deficit.

Sweden, normally a major aid donor, said it would offer only humanitarian assistance until there was either a sovereign Iraqi government or UN authority over the reconstruction process.

Italian Foreign Minister Franco Frattini, whose country backed the war, said Rome would top up the EU total with national cash but declined to say how much, saying it was still being worked out and would be similar to Spain's contribution.

Several member states argued that the EU, the world's biggest aid donor, is already stretched with priorities such as Afghanistan, the Palestinians and Liberia, which unlike Iraq do not have huge potential oil wealth.

"It's no secret that some member states also think those who broke Iraq should pay to fix it," one EU diplomat said.

Diplomats said Mr Straw and Spanish Foreign Minister Ana Palacio reeled off statistics about electricity supplies, and canals, banks and schools reopened, to counter the sense of a crisis in Iraq, and played down the daily casualty toll.

Mr Fischer countered that if everything was going so well, the occupying powers should seize the opportunity to close what he called their "legitimacy gap", diplomats said.

The World Bank, United Nations and International Monetary Fund have estimated jointly that $35.6 billion will be needed over the next four years to reactivate the Iraqi economy.

Even among countries that backed the war, there were signs of donor fatigue.

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