U.S. Defense Secretary Donald Rumsfeld issued a warning to Moscow on Wednesday, saying that expanding trade with Iraq would brand Russia a friend of terrorist states and frighten foreign investors away from its capital-staved economy.

"To the extent that Russia decides that it wants to parade its relationships with countries like Iraq and Libya and Syria and Cuba and North Korea, it sends a signal out across the globe that that is what Russia thinks is a good thing to do, to deal with the terrorist states'', Rumsfeld said.

Washington says it is not against the Moscow-Baghdad deal as long as it abides by United Nations Security Council sanctions against Iraq. Moscow and Baghdad both say it does.

The decision to deepen economic ties with Iraq, Rumsfeld argued, hurts Russia "because people all across the globe, business people, can make a decision: Where do they want to put a plant? Where do they want to invest?''

A military band greeted North Korean leader Kim Jong-Il on 21 August as he disembarked from his special armoured train in Russia's Far Eastern city of Komsomolsk-na-Amure.

Russian President Vladimir Putin is expected to meet the North Korean leader in Vladivostok on 23 August to discuss economic cooperation.

The talks will be the latest in a string of well-publicized contacts between the leaders of Russia and the three "axis-of-evil" states, Iran, Iraq, and North Korea, which U.S. President George W. Bush says are seeking to develop weapons of mass destruction.

At a time when the U.S. is stepping up its war on terrorism and considering a possible military campaign in Iraq to depose Saddam Hoseyn, Russia's growing ties with the axis-of-evil states would seem to put its relationship with Washington at risk. But some observers say the ties, while an assertion of autonomy, are not meant as a rebuff to Russia's allies in the West.

Russia has allowed U.S. troops into former Soviet states and accepted Washington's withdrawal from the 1972 Anti-Ballistic Missile Treaty, but the U.S. has failed to respond in kind.

"Putin was very open to cooperation. He was ready to go very far and accepted the U.S. position on missile defense, Central Asia, and many other questions", Kremenyuk said.

Kremenyuk said Putin was likely hoping for at least a restructuring of Russian debt, a large amount of which falls due next year, an important time politically because of parliamentary elections in December. But the Bush administration failed even to pressure Congress into lifting the Cold War-era Jackson-Vanik trade restrictions aimed at curbing trade with repressive communist countries.

Though Putin's recent advances toward Iran, Iraq, and North Korea may reflect a cooling in Moscow's relations with Washington, but analysts say his latest moves seem motivated more by economic interests than political ones.

Iraqi Foreign Minister Naji Sabri plans to visit Moscow in September to discuss relations with the UN and Baghdad's recent statements that it would once again allow weapons inspectors into the country.

The plan, which includes also cooperation in other economic and military fields, and was approved by the Russia government this week, was disclosed at exactly the same time that an American team led by Spencer Abraham, the Energy Secretary had arrived to Moscow to discuss related issues.

Russian and Iranian officials met in Moscow on 21 August to discuss controlling the proliferation of weapons of mass destruction as U.S. diplomats in Russia again raised concern over the possible crossover uses of nuclear technology.

At the talks, that ended on Friday, the Russian side informed the Iranians about American concerns over Moscow-Tehran nuclear and other military cooperation as well as on the return to Russia of the burned radioactive materials that can be used for the fabrication of atomic bomb.

Moscow has adamantly rejected America’s accusations that the Booshehr plant would ultimately serves Iran’s nuclear programmes for military use and have assured Washington that no sensitive and advanced military technology would be sold to the Islamic Republic of Iran.

"From the Russian perspective, American-Russian differences over this issue stems from the fact that the Islamic Republic not only does not recognise Israel, but also disputes the very existence of the Jewish State", he pointed out.

Kremenyuk agrees. He says America only opposes (Iran Russia’s energy cooperation) without making any counter-proposal".

However, political analysts in Moscow told IPS that in case Washington decided to increase its pressures on Moscow and revert to Cold War rhetoric, Putin might changes his mind over going ahead with Russia’s

Concerning Iraq, I think he'll not only protest the bombing, but will also sign the agreement that will at least set out the size of Russia's interests in Iraq. And with [North] Korea, he'll also conduct talks and complain a little about what Washington says about that", Kremenyuk said.

Celeste Wallander, a director of the Russia and Eurasia Program at Washington's Centre for Strategic and International Studies told the same Prague-based radio station that Moscow's current relations with U.S. rivals like Iran, Iraq, and North Korea show that Moscow is more interested in keeping its options open than in simply maintaining good relations with the United States.

Wallander said Putin is trying to balance the competing economic and political interests at home that influence foreign policy, such as the oil lobby and hawkish officials. In that, Russia's foreign policy is normal, like that of any other country, especially as Putin tries to develop Russia's tiny economy and restore the country's position as a global power.