DAMASCUS - Syria on Tuesday denounced U.S. accusations that Damascus was developing chemical weapons as "threats and falsifications" designed to further Israeli interests.

The cabinet said in a statement that the "escalated language of threats and accusations by some American officials against Syria are aimed at damaging its steadfastness and influencing its national decisions and (Arab) national stances."

"The cabinet rejected these accusations and allegations and saw them as a response to Israeli stimulus and a service to its (Israel's) goals and expansive greed ...," it said, and demanded an end of the "American-British occupation of Iraq."

The cabinet issued the statement after Washington said Syria was a rogue nation and that the United States would examine diplomatic and economic measures against Damascus.

In Madrid, Syria's ambassador to Spain said earlier that U.S. accusations that Syria was harboring terrorists were an insult.

"It's an insult to my country, an insult to a country that is a member of the U.N. Security Council and an insult to a peaceful country that is struggling and working for a lasting peace in the Middle East," the ambassador, Mohsen Bilal, told Spain's Cadena Ser radio.

Asked about a White House spokesman's description of Syria as a terrorist state harboring terrorists, he replied "We reject this accusation categorically because it is baseless."

Bilal also denied Syria had granted protection to senior Iraqi leaders who may have fled across the border.

He said the U.S.-led war against Iraq had been motivated by oil interests and protecting Israel. "They now have the oil, and the destruction of Iraq...Today begins the second phase of the war, which is to make Israel the most potent force in the Middle East," he said.

Defense Secretary Donald Rumsfeld accused Damascus on Monday of testing chemical weapons within the last 12-15 months and of harboring Saddam's top associates. Secretary of State Colin Powell warned of possible diplomatic or economic sanctions.

"They are blackmailing our country," Bilal said.

President Bush tried to enlist Spanish Prime Minister Jose Maria Aznar on Monday in his campaign to put pressure on Syria, asking him to warn Damascus not to give shelter to senior Saddam aides.

But Aznar, one of Bush's most loyal allies on Iraq, said in Warsaw on Tuesday "Syria has been and will be a friend of Spain."

"It will not be the target of any war actions," Aznar told a news conference after talks with Polish Prime Minister Leszek Miller, another staunch U.S. ally.

"I am convinced that the conflict will not spread to other countries in the region," he said. "I think all this furor over Syria has got out of hand and has nothing to do with reality nor with the intentions or goals of anybody," Aznar said.

He said he would talk with Syrian leaders later on Tuesday or Wednesday, but would make no demands on them.

©2003 Reuters Ltd

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