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QUESTION: I want to ask you first, obviously, about Iraq. Can we expect that France is going to announce a financial contribution to Iraqi reconstruction in Madrid? I recall that in an interview before the war you said that of course France would fulfill its role.

PRESIDENT CHIRAC: Naturally France will fulfill its role directly and through the EU. Of course the announcement of our decision will depend on the conditions, and the ways in which we act will depend on the framework of the resolution, a resolution that will be discussed and hopefully passed by the Security Council.

QUESTION: You're not prepared to speak about a financial amount in Madrid? Not at this point?

PRESIDENT CHIRAC: No, it's not just a question of figures but technical commitments for instance, such as the training the armed forces or Iraqi police forces, the suggestion that our German friends have made, and it's a suggestion we endorse also. Of course that will depend on the resolution.

QUESTION: Do you think that as a result of your conversation with President Bush that it will be more possible to reach a resolution than when you left Paris?

PRESIDENT CHIRAC: I dearly hope this. I don't always understand those very emotional, those almost irrational reactions that I can read in some of the commentaries in the US vis-à-vis the French position. Let me just illustrate this. I was of course very careful and attentive, listening from the French bench to President Bush's speech. I realized, while listening, that on three-fourths, indeed I would almost say that for everything apart from our assessment on Iraq, we fully agreed. That is particularly true in the fight against terrorism. In that respect France, you will remember, chaired the Security Council immediately after 9/11. It was France who made a proposal to express immediate solidarity and to show a military reaction against terrorism, against Al Qaeda, and we've not changed our minds about it. All that President Bush said about terrorism, everything President Bush had said about the fight against proliferation, that is also something that we fully endorse. We also approved the proposals made by President Bush in his speech about proliferation, everything he said about the ethics in the world, the fight against trafficking of human beings, and all the proposals he made about this subject, we also fully agree with.

Since the very beginning, we've had a divergence of views over Iraq; we fully understand the American reaction, the Americans were feeling they were directly threatened, we can understand that. But the way this reaction was conducted, that was something we felt was ill-suited to the actual situation Of course we wanted to see Saddam Hussein neutralized, but we think there were other means, more effective, less dangerous.

That's why we have a difference of view on that specific point. But you know our countries have been friends for 225 years. So there might just be small spat as it happens in every family. But it doesn't mean that it has to have consequences. There's a very deep feeling across France, and I feel it too, this esteem and gratitude and friendship for the American people.

QUESTION: Would you say then that this dispute is not so much a function of substantive, that it's a difference with this administration, the American administration as it is today? Or do you think it's a tendency that's developing? At the time of the Clinton administration, Hubert Védrine had already spoken of an American "hyperpuissance" and in a way gave the impression that France was opposed to the excessive power of the Americans, and that a counterweight to America was needed. So do you think this is a part of a trend or the result of the formation of this administration?

PRESIDENT CHIRAC: First, I didn't approve of Hubert Védrine's formula, I just wanted to recall it, I said it. I didn't think it made sense. Secondly, it's not for me to pass judgment on the US administration. The fact is that the administration's analysis is different from my own, and the only thing I'm asking for is the legitimate right of a friend to speak up and speak freely. Otherwise he wouldn't be a friend, he would be a slave. That's different. And third, I don't think that there is a trend in the American people. The American people is a democratic people...

QUESTION: But a trend of France trying to serve more and more weight as a counterweight because you no longer have to worry about the Soviet Union and the Cold War?

PRESIDENT CHIRAC: I've heard this idea and I believe it's absurd; those people who speak like this don't know France and don't know the French people. The great majority of the French share in the feeling that I was describing earlier, about friends, a sense of friendship, gratitude, respect and esteem for the US people, that's, clear, very obvious. I'm actually not sure that there is such a significant anti-French feeling in America; we've been told that there would be very serious economic consequences, there would be consequences on the French positions, because of the French position of being anti-American. It wasn't at all the French intention anyway. In fact, there was no consequence.

QUESTION: There was some drop in wine sales, I understand....

PRESIDENT CHIRAC: Don't believe that. The experts will tell you there was no drop in sales. There was simply the result of a disconnect between the euro and the dollar, the currency situation-it had nothing to do with the difficulties we're talking about. And the fact that wine had gone too high over the past two years. So the effect was the same in Germany as in the US.

QUESTION: Let me go back to Iraq: a lot of Americans are having a lot of trouble understanding the French position. A couple of months ago France was referring to the Provisional Governing Council in Iraq as a bunch of lackeys of the US. All of a sudden, France wants to transfer sovereignty and power to this same group.

PRESIDENT CHIRAC: First, I don't think that anybody passed judgment on these Iraqi government authorities in Iraq. We never qualified them using unpleasant words. I don't think you'll be able to find a quote or statement saying that. It's the American press that reported it as being so. But in France we didn't say that for a simple reason--because we know that we had to set up some kind of a system. Naturally it wouldn't be perfect and absolutely democratic but we had to have something, it was the best possible solution, or the least negative solution. We didn't criticize them. We even had on the contrary contacts with those officials, some of these officials came to France and asked to be received and they met with the foreign minister. The most recent was Ms Al Hachimi who was wounded in an attack and had been received just a few days earlier. So I don't think you can say what you said.

QUESTION: But if you can explain to me why you want to transfer sovereignty and authority when many people feel it's going to take quite some time before this group is capable of exercising authority and when the Bush administration wants some sort of election process to legitimize it first?

A: You can see that the situation is worsening and reactions against the occupation are more and more numerous. Now, it may be an unfortunate reaction but it's a fact, it exists. And it's not just the result of terrorist tactics. It's a political reaction.

So in that context of course you're right in saying that the Iraqis will need time before they can actually lead their own affairs but I think that if we don't make this strong political, psychological gesture to tell the Iraqis that we're changing our understanding of things: you have the sovereignty, you hold your fate in your own hands. So it's really a very different approach. Telling them that they're not under occupation, that they're taking their fate in their own hands but at the same time we have to tell them that they can't do everything immediately and that it will take time before actual powers are transferred.

QUESTION: But if there are 150,000 US troops in Iraq then the country is effectively under occupation.

PRESIDENT CHIRAC: Yes, but it's not the same thing. It's not the same thing to tell people they're being occupied and that sovereignty will be exercised as long as it takes by somebody else. It's very different to tell them that we acknowledge the fact that they have a vocation to exercise their sovereignty. It's a strong political gesture. But naturally we're not in a position to do so today, still we're going to help you. That's very different in psychological terms.

QUESTION: Is it sufficient for you that the Iraqis simply occupy the seat at the UN, at OPEC, at the Arab League? Is that enough?

PRESIDENT CHIRAC: It's not enough. But it is a gesture. It's a positive trend.

QUESTION: How much more do you need before you can say that it's enough? Because this is the crux of the problem, isn't it, the resolution?

PRESIDENT CHIRAC: I think the crux of the problem is to try and understand the people. And it's not because the people is different from us that it is wrong. The situation is not good and it's not improving. There is a very real risk that it will worsen. So we have to try something different even though we're not sure it will work. We have to try and improve the situation. What does that mean? It means that we should tell the Iraqis we respect you. You are a sovereign people. Things being what they are today, you cannot exercise sovereignty normally. So we're going to help you.

So then you might say that the government institution-the Governing Council and council of ministers--is not a democratic institution, isn't perfect. But the fact is we have them, and that's why I'm saying we shouldn't criticize them. And why we've never criticized them.

QUESTION: What happens to Paul Bremer? Are you saying he should have a dual hat, a UN hat as well as an American hat?

PRESIDENT CHIRAC: And an Iraqi hat?

QUESTION: Is it possible to keep him and just simply redefine his mission?

PRESIDENT CHIRAC: That's not really the issue. The real issue is to tell the Iraqis that they are a sovereign people and that the Iraqi government has power, that possibly we could improve the situation, under the auspices of the UN maybe? It's possible.

From that point, the authorities will not be able to do away with Bremer. There will have to be a transitional phase, but the transition has to be organized by the sovereign authorities, and at their request.

QUESTION: I believe that's the US position.

PRESIDENT CHIRAC: Well if that is indeed the case, then that should be in the resolution and that would be very satisfactory. And I hope that the resolution could mention the actual transfer of sovereignty to the authorities. Afterwards, the practicalities of that is something that we can discuss. Now, you could also say that in practice it won't change much but psychologically and politically it would make a major change.

QUESTION: Let me turn to a couple of other issues. You said that you agreed with Bush on 75 % of his speech and so on.

PRESIDENT CHIRAC: Well, it's not an exact figure. Let me just say that I agree on many items in his speech.

QUESTION: We're about to come to a decision on Iran. If they do not accept this additional protocol, would France support action against Iran in the Security Council, including perhaps economic sanctions?

PRESIDENT CHIRAC: I told President Bush that we shared the approach with the Americans on Iran and that we felt that the consensus that had emerged in the IAEA was fully supported by France, Germany and Britain as well, and that we made a very firm demonstration to the Iranian authorities to tell them about it.

So I think there are now two options: either Iran agrees to what the IAEA is asking, i.e. agreeing to all the necessary controls and giving all the information on their programs, and then also ratifying the test ban treaty. Now if that happens, then we're pleased, and I think that with the British, Germans and ourselves, if we get to that point, we may possibly have a slight difference with the American view. As I say, if that is indeed the case, then we feel it would be alright for Iran to develop a civilian nuclear program, but that can only happen in this second hypothesis. But if Iran doesn't agree to the IAEA demands, we fully agree with the Americans that the matter should go to the Security Council which should take all the appropriate decisions so that Iran can come back and apply the international law. And we have no difference of views on this point with the US.

QUESTION: And the decision could include sanctions?

PRESIDENT CHIRAC: We're open to any proposals from the Security Council. We do hope that the Iranians will be sensible.

QUESTION: Looking back at the events of the last few months, and how upset the French were by the American reactions, passionate reactions, against France, do you regret any of the actions that France took? Do you wish that France had not tried to actively organize resistance to a second resolution? Because this is what hurt the Americans so much, that they understood France's opposition but they didn't understand leading a campaign against the American position in the Security Council.

PRESIDENT CHIRAC: We weren't leading a campaign. It just came about. There was clearly a majority of peoples, of states, opposed to the war and in favor of pursuing the inspections. In a way it was an expression of global democracy. It's difficult to admit that somebody can be right against everybody else. It can happen. History might prove him to have been right. But I'm not sure that this will be the case in this particular instance on Iraq.

QUESTION: You don't think history will prove George Bush right?

PRESIDENT CHIRAC: Well you can never take on the role of history. If you start predicting history, you're more than likely to fail. I will just stick to what was my position, and that of many others, that is to say that war is always the last option. We should only resort to war when there are no other options left to reach your goals.

QUESTION: How was your meeting with President Bush yesterday?

PRESIDENT CHIRAC: It went very well. And it seems from my point of view I always enjoy cordial and excellent relations with President Bush. I've always been pleased to meet him and talk with him. I've always felt he was warm and friendly when he welcomed me. Maybe I'm thoroughly mistaken. But I must say that I always felt very much at ease with President Bush when I met him.

QUESTION: I understand that you were a good friend to George Bush, the first?

PRESIDENT CHIRAC: Yes, but now I know George Bush junior quite well also.

QUESTION: You were good friends?

PRESIDENT CHIRAC: I've actually had a lot of contacts with him, either on the phone or through talking. I've always tried to get him to understand that when France was making proposals, we weren't trying to annoy him but trying to help find a solution. It's obviously a difficult situation in Iraq, there are greater risks than expectations in Iraq nowadays. So maybe we can just calmly talk about the future, about how things will develop. Nobody has the truth. We too have some experience and whatever we say it's not absolutely necessarily stupid.

QUESTION: And not mischievous? Because there's a feeling that France, and you in particular, are enjoying the attention of the American media.

PRESIDENT CHIRAC: When I read the American press, I must say I would quite happy if they wrote and spoke less about me. Most of the time it's not particularly flattering. So I'm not particularly happy about it. Well, I'd quite like to be less popular in the American media.

QUESTION: When Tom Friedman calls you an enemy?

PRESIDENT CHIRAC: Who? I don't know this gentleman. I've not read the article. But if he said that France has become an enemy of the US, I think he's just being silly about it.

QUESTION: I'll tell him. I'm sure he will appreciate it. Tell me your vision of France, coming into a situation where the EU is expanding. You're going to have all these members of the new Europe, countries that are more attached to the US and perhaps more fearful of the US. Is this going to have an impact on how France plays its role in Europe and international affairs?

PRESIDENT CHIRAC: We've got this great design--constructing Europe. Why? Because for many centuries, we'd suffered from wars and we came to the realization that war was absurd and that we had to organize ourselves, structure ourselves, come together so as to prevent war.

Secondly we also suffered from political drifts in some countries. What I'm referring to is the way that democracy itself was being questioned. So our ambition is to deeply root democracy, and to do so we have to build Europe. We also came to the second realization that if Europe was to go forward--and this has been the case ever since it started with six members--there is one essential prerequisite and that is some Franco-German agreement. The fact is that if France and Germany can agree, then Europe goes forward. If they don't get on, then Europe suffers. That was true when we were six, nine, 15, 25 and so in a way France and Germany have a responsibility. Franco-German agreement is not enough to keep Europe going but we have to have one. So that's our ambition. I don't think there's much point in talking about the new countries or old countries.

QUESTION: But what happens if these new countries don't particularly like the French-German point of view? Do you expect them to be quiet really as you already said?

PRESIDENT CHIRAC: You have to understand one thing that was expressed when these people voted to join Europe. Those countries were under Soviet pressure and the people, the majority see Europe as being the only way they can be assured of not having foreign pressure. That's why whatever the declarations made by various leaders, the vast majority of the people are determined to go forward with the construction of Europe. And each and every one knows very well that there is a Franco-German engine, the driving force, that is not a constraint but that it is in fact what enables us to go forward.

QUESTION: So you see not so much a separate French identity but a Franco-German identity in Europe? You don't see a special French will or...

PRESIDENT CHIRAC: No, it's a European identity that is being developed. France values its history and interests. But France has understood full well that peace and democracy, which are the main goals, the main objectives of tomorrow, aren't achieved by heightening national interests and that to achieve this democracy we have to integrate them, on the contrary, pool our expectations and the means we have to fulfill them. Europe has always moved forward. It's difficult of course. The path to progress is difficult, but we have never gone backward. The pace is faster, or slightly slower, but we've always gone ahead.

QUESTION: To shift back to the Middle East. What should happen to Arafat? If you were in charge of his fate, what would you do with Yassir Arafat?

PRESIDENT CHIRAC: You might like or dislike Arafat. But there are two things that we shouldn't forget: one is that he is the legitimate, elected president of the Palestinian Authority--that's a fact. Again, you might like or dislike him, but that is a fact.

The second point is that we should give our support to the Palestinian prime minister of course, but I think that people should realize that to achieve an agreement between Israel and the Palestinians, everybody will have to agree to concessions, including the territorial concession. Things being what they are, we should realize that Arafat is the only individual in a position to get the Palestinian people to agree to those concessions for peace. Nobody else can do that. So we have to be realists. It's not a question of passing judgment on Arafat. If you want to do away with Arafat, then in fact you're taking a very high risk for a possible peace. And that's why we oppose doing away with Arafat. And that's a European position, a position that all the Europeans share, including our British friends.

QUESTION: Were you any more optimistic after talking with Bush that the US will revive the roadmap and get more involved because there seems to be a kind of a lull now?

PRESIDENT CHIRAC: I told the president that I felt the US had an essential role to play, that other countries could help, but that the US is the driving force. And I said that I felt the US had to relaunch the roadmap, and that should indeed be at the heart of the discussions in the ministers' meeting of the Quartet. I think that the international conference that had been outlined for the second phase of the roadmap should be organized immediately. The Americans are the only ones who can do so or not do so.

QUESTION: What was the reaction to this?

PRESIDENT CHIRAC: I think he took it on board. It wasn't really the main point of our discussion.

QUESTION: Are you concerned that the problems of Iraq are kind of draining the energies out of US foreign policy in other areas?

PRESIDENT CHIRAC: I'm not passing judgment on American foreign policy. Especially as I understand that on other issues in the region, the Americans are, well, very much determined to achieve improvements.

But there's one last point about Iraq so as to dispel any ambiguities; contrary to what some commentators in the US press have said, I just want to make it clear and say that of course I wish for the success of the US in Iraq because stabilization is necessary, because reconstruction is inevitable, and because democratization is obviously desirable. So those goals are common goals. And if those goals are within grasp, I do hope that the Americans will succeed. The only thing I'm asking for is to be allowed to make my own contribution to the general debate, to the ideas, to say what I feel are the best ways to achieve these goals. But again I do hope for an American success.