President offers concessions after furious reaction in Baghdad to American "colonialism."

    Washington - Faced with Iraqi anger over a US plan to enable Washington to keep military forces in the country indefinitely, George Bush is offering concessions to the government of Nouri al-Maliki in an effort to salvage an agreement, it emerged yesterday.

    The proposed terms of the impending deal, which were first revealed in The Independent, have had a predictably explosive political effect inside Iraq. Negotiations between Washington and Baghdad grew fraught, with Iraqi politicians denouncing US demands to maintain a permanent grip on the country through the establishment of permanent military bases.

    Officials complained that the plan which allows US troops to occupy permanent bases, conduct military operations, arrest Iraqis and enjoy immunity from Iraqi law, would turn Iraq into a colony of the US, and create the conditions for unending conflict both in Iraq and the Middle East.

    With Washington's Iraqi allies rising up in revolt against the plans, Mr Bush ordered a negotiating shift this weekend after speaking to Mr Maliki, the Iraqi Prime Minister. "Now the American position is much more positive and more flexible than before," a leading Iraqi negotiator in the talks was quoted as saying.

    Senior Iraqi officials want a major reduction of the US military footprint in Iraq as soon as the UN Security Council mandate approving their presence expires at the end of the year. Iraqi officials also want US forces confined to barracks unless the Iraqis ask for their assistance. Emboldened by recent successes by Iraqi security forces, many officials want the US troops to leave altogether.

    President Bush, who is on a farewell tour of Europe, wants a new agreement sealed by the end of next month so he can declare a military victory in Iraq and say his 2003 invasion has been vindicated before he leaves office.

    But any long-term settlement to maintain US forces in Iraq would cut the ground from under the Democratic presidential nominee, Barack Obama, who has promised to withdraw US troops if he is elected in November.

    The Bush administration says a new agreement is needed to ensure stability in Iraq, as without one or an extended UN mandate, there would be no legal basis for US forces to remain.

    The growing Iraqi anger with the proposal was front-page news in the US yesterday. Sami al-Askari, a senior Shia politician close to Mr Maliki told The Washington Post: "The Americans are making demands that would lead to the colonisation of Iraq ... If we can't reach a fair agreement, many people think we should say, 'Goodbye, US troops. We don't need you here any more.'"

    The Democrat-controlled Congress is also uneasy about President Bush's attempt to impose a colonial-style mandate on Iraq. Both Democrats and Republicans have questioned Mr Bush's assertion that he does not require congressional approval for the proposed agreement.

    The argument is focused on negotiations on a status of forces agreement defining the legal rights and responsibilities of US forces. As framed, it gives the US military free reign to operate in the country. There is also proposed "security framework" covering the relationship between the US and Iraq.

    Momentum is also growing within the Maliki administration for the US to leave altogether. Mr Maliki was in Iran this week where the supreme leader Ayatollah Ali Khamenei told him not to sign up to any long-term security deals with Washington.

    The agreement is being negotiated by David Satterfield, the US State Department's top adviser on Iraq, who still maintains it can be initialled by a July deadline which Mr Bush set last year last year. "It's doable," he told reporters in Baghdad. "We think it's an achievable goal."

    At a news conference, Mr Satterfield kept repeating that the US wants only to create a more independent Iraq. "We want to see Iraqi sovereignty strengthened, not weakened," he said.

    But Iraqis say that US demands for long-term military bases in the country even if the numbers are reduced, give the lie to that assertion.

    US negotiatiors are also determined to maintain policies that allow them to arrest Iraqis without the approval of Iraqi courts, maintaining immunity for US troops and contractors from Iraqi prosecution and carrying out military operations without the Iraqi government's knowledge or approval.

    Washington also wants to retain control over Iraqi airspace and the right to refuel planes in the air, which has raised concerns that President Bush wants to have the option of using Iraq as a base to attack Iran.