IRAQ: Iraq's trade minister has threatened to reconsider trade deals with Australia after Australian troops killed one of his bodyguards in a shooting incident in the capital.
The Australian government is trying to negotiate new wheat deals worth hundreds of millions of dollars with Iraq, whose state rations body is one of the world's biggest wheat buyers.
The shooting took place outside the minister's office in lawless Baghdad, where daily killings continue unabated, despite a security crackdown by the new national unity government.
Five US soldiers were killed in the previous two days, the military said - four in two attacks in western Iraq and one in a roadside bombing south of Baghdad.
In the violent Taji area north of Baghdad, Iraqi soldiers said they had found several bodies in the area where gunmen abducted factory workers travelling home in a fleet of buses.
However there was confusion over the number of workers abducted, with police putting the number at 80 or more and the industry ministry saying 30 had been seized, of whom 25 had been freed.
New Shia prime minister Nuri al-Maliki has pledged to crush the insurgency and heal sectarian wounds with a drive for national reconciliation.
President Jalal Talabani said in a statement that a committee had approved Mr Maliki's "national reconciliation" project, which would be presented to parliament on Sunday.
An official in Mr Maliki's office said recently the government was considering inviting certain members of insurgent groups to national reconciliation talks next month.
As part of the reconciliation drive, Mr Maliki has announced the release of 2,500 prisoners from US-run institutions in June, most from Saddam Hussein's once-dominant Sunni minority. The US military said 500 of those would be freed at Abu Ghraib prison outside Baghdad today.
The Australian defence force confirmed its soldiers opened fire on bodyguards of trade minister Abdul Falah al-Sudany in Baghdad on Wednesday, killing one and wounding three people.
"The minister holds the Australian government responsible and demands an apology and payment of compensation," his spokesman Muhammed Hanoun said. "If this does not happen, he will reconsider trade agreements between the two countries.
"Iraqi blood is more important than anything else," he added.
Australia said it was proceeding with wheat shipments to Iraq from a recent sale and had not been informed of Baghdad's threat to reconsider trade.
Australia's ambassador telephoned the trade minister to offer his apology and condolences for the shooting, but Mr Hanoun said the minister would not be satisfied until Australian prime minister John Howard had personally apologised.
Police said it appeared the Australians mistook the minister's bodyguards, dressed in civilian clothes and armed with AK-47 rifles, for insurgents and opened fire.
Iraq imports about three million tonnes of wheat a year to help feed its 27 million people.
Mr Howard's government has extended an inquiry into allegations that Australia's monopoly wheat exporter, AWB Ltd, paid $222 million (€130 million) in kickbacks to Saddam's former government.
AWB was the biggest wheat provider to Iraq under the UN "oil-for-food" scheme, selling $2.2 billion (€1.3 billion) worth of grain.