Rebuff for Iraq aid plans

The US Senate has defied President George W Bush by voting to convert half of a $20bn aid package to rebuild Iraq into a loan.

The Republican-run chamber voted 51-47 for a proposal to make $10bn a loan - to be converted to a grant if other countries agree to waive debts owed to them from the former regime.

The Bush administration had argued against the idea, saying loans would worsen Iraq's foreign debt and exacerbate Arab suspicions about US intentions in the country.

Hours earlier, the US president suffered another blow when France, Germany and Russia said concerns about the text of a UN resolution on Iraq meant they would not contribute troops or funds to aid efforts.

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