Iraq should tell Iran to stop war supplies - Bush

By David Alexander

CRAWFORD, Texas, March 1 (Reuters) - U.S. President George W. Bush said on Saturday the Iraqi government should use a visit by Iranian President Mahmoud Ahmadinejad to tell Tehran to stop arming Iraqi militias and to insist on "breathing space" to let democracy develop.

Asked whether Ahmadinejad's Baghdad visit, which begins on Sunday, undermined U.S. efforts to isolate Iran because of its nuclear enrichment program, Bush told a news conference at his Texas ranch that the talks were needed because the countries are neighbors.

But he said Iraq should deliver a clear message.

"The message needs to be: Quit sending in sophisticated equipment that's killing our citizens," Bush said. "And the message will be that, 'We're negotiating a long-term security agreement with the United States precisely because we want enough breathing space for our democracy to develop."

Washington accuses Tehran of supplying Shi'ite militias in Iraq with weapons including armour-piercing roadside bombs known as explosively formed penetrators to attack U.S. troops.

Ahmadinejad's two-day visit to Baghdad, the first by an Iranian president since 1979, is seen by some analysts as a move to upstage Bush, who has never spent the night in Iraq and used his most recent visit last month to try to isolate Tehran.

$1 BILLION LOAN

The significance of the trip increased on Friday when an Iranian Foreign Ministry official said Tehran had been discussing a $1 billion loan to Iraq, a big boost for the country's war-damaged economy.

Ahmadinejad's trip comes as the U.N. Security Council contemplates new sanctions on Iran because of its nuclear enrichment program, which Tehran insists is for peaceful power-generating purposes but the United States and its allies fear is for nuclear arms.

A U.N. vote on a new sanctions resolution had been expected on Saturday but was delayed by France and Britain in an effort to win over skeptics, diplomats said. The Security Council vote is now expected on Monday.

Bush, speaking to reporters during a visit to his ranch by Danish Prime Minister Anders Fogh Rasmussen, said his message to Ahmadinejad would be "for him to stop exporting terror" and that the international community wanted Iran's nuclear program to end.

"The international community is serious about continuing to isolate Iran until they come clean about their nuclear weapons ambitions," Bush said. "And that's why there will be action in the United Nations early next week."

Iran accuses the United States of making Iraq more insecure since it invaded in March 2003 and toppled President Saddam Hussein. Washington says Shi'ite Iran has fomented sectarian bloodshed in Iraq by arming Shi'ite groups. (Editing by Xavier Briand)