Inspectors are spying, says defiant Saddam

Saddam Hussein accused the United Nations weapons inspectors inside Iraq of spying yesterday and issued a defiant warning that his country would defeat any invading army.

After weeks of grudging compliance with the demands of the inspectors wanting to see various Iraqi installations and facilities, President Saddam accused the United States of forcing the inspectors to overstep their legitimate mandate and to engage in "intelligence work".

His accusation was immediately denied by the International Atomic Energy Agency (IAEA), the nuclear arm of the inspection programme, which also said it had found no evidence of weapons of mass destruction so far.

In Washington, Richard Boucher, a State Department spokesman, said President Saddam's accusations of spying were "baseless and false" and "may indicate an intention not to comply" with demands to disarm. President George Bush said the Iraqi leader's declaration was "discouraging news for those of us who want to resolve this issue peacefully". But he added that President Saddam still had time to comply.

Meanwhile, the British Government is expected to announce the mobilisation of 7,000 reservists in preparation for a possible war in Iraq. The Ministry of Defence will also announce today that a naval task force led by the aircraft carrier Ark Royal, accompanied by a submarine, a destroyer and two support vessels, will sail for the Gulf at the weekend.

Washington continued with its military build-up, with 100,000 ground troops expected in the region by the end of this month, when the UN inspectors will make the first official report on their mission.

In a televised speech to mark Iraq's army day, President Saddam said the weapons inspectors had a hidden agenda. He said their questioning of Iraqi scientists who might have taken part in developing weapons of mass destruction constituted "purely intelligence work".

Talking of a possible invasion, he said: "The enemy will be defeated disgracefully. It has misjudged and misbehaved after abandoning any means of honesty on which good people meet and co-operate."

Jack Straw, the Foreign Secretary, suggested that the chance of a military strike against Iraq had fallen to 60-40 against. Later, addressing a conference of Britain's ambassadors, Mr Straw attempted to link the threat from rogue states to the threat from al-Qa'ida.

"Today, the proliferation of nuclear, chemical and biological weapons presents the greatest threat to our national security, and to the peace of the world," he said. "September 11 showed that the terrorist organisation al-Qa'ida would stop at nothing to inflict mass slaughter. If they were to manage to acquire weapons of mass destruction I am certain they would use them.

"The most likely sources of technology and know-how for such terrorist organisations are rogue regimes which continue to flout their obligations under international law not to develop nuclear, chemical and biological weapons. That is why terrorism and rogue regimes are part of the same picture."

President Saddam's allegation of spying bore parallels to the situation in 1998 when UN inspectors last left Iraq. It was revealed later that the CIA had infiltrated inspection teams.

Yesterday the chief UN inspector, Mohamed al-Baradei, said: "We haven't yet seen any smoking gun that Iraq has lied in its declaration on the nuclear issue. But we're still very much in the process of an inspection and it's too early for us to come to any conclusion."