Bush's ultimatum sets stage for an unpopular war

4.30pm

Australia kicked out Iraqi diplomats while Canada and Indonesia called for more diplomacy after US President George W. Bush today demanded that Iraqi President Saddam Hussein step down within 48 hours or face war.

Oil prices fell, the dollar was firm and Asian stock markets galloped higher after Bush, in a grim 13-minute televised address to his people, said, "The tyrant will soon be gone".

Bush set the clock ticking to war, which could start as early as 1.15pm Thursday, New Zealand time, after abandoning diplomatic efforts to resolve the Iraqi crisis through the bitterly divided UN Security Council.

Australian Prime Minister John Howard, a staunch supporter of Bush's stance to disarm Iraq, said Australian troops will fight in a war. Australia has already sent a 2,000-strong force, including elite SAS troops, fighter jets and warships, to the Gulf.

"This decision was taken at a cabinet meeting this morning following a further telephone discussion between myself and President Bush," Howard told reporters before the US President issued his ultimatum.

Australia later gave all Iraqi embassy staff five days to leave the country.

Shortly after Howard first indicated a decision on troops was imminent, protesters clambered on the iconic sails that make up the roof of the Sydney Opera House and painted "No War" in large red letters. Other anti-war protests were planned across Australia.

Indonesia, the world's most populous Muslim nation, criticised the United States for its ultimatum to Iraq and said diplomatic efforts should continue.

"We cannot accept the notion that diplomacy has run its course and we believe at this very important time what is needed is to enhance diplomatic efforts," Foreign Ministry spokesman Marty Natalegawa told Reuters.

"But whatever course of action is taken over the next 48 hours, it will not have the support of the Indonesian government," he said.

Canada said it did not support Bush's ultimatum and its military would play no role in any US-led attack on Iraq.

Foreign Minister Bill Graham said he had had a "very frank and open" discussion -- diplomatic shorthand for a major disagreement -- about the ultimatum demand with US Secretary of State Colin Powell shortly before Bush spoke.

"We will not participate because we do not believe that to be in the interests of Canada or the international system," Graham told reporters.

China's new foreign minister, Li Zhaoxing, said on Tuesday war in Iraq must be avoided and UN inspections should continue.

"Try to avoid war. We are not in favour of the use of force," Li, speaking as Bush issued his ultimatum, told reporters as he arrived for the concluding session of China's annual two-week session of parliament.

Thai Prime Minister Thaksin Shinawatra told reporters a quick war could be positive, and stressed that the conflict was not religious.

"I believe if the outcome of the war is clear-cut, it could be positive. If it takes place and ends quickly, everything can get back to its normal pace," he said.

Markets, seeing war as inevitable, were expecting a conflict to be swift and decisive.

The dollar was trading at 118.60 by 3.22pm, near a three-week high against the yen, and was quoted at 1.0644 against the euro.

Tokyo's Nikkei average jumped more than two per cent at the opening following a massive rally on Wall Street. At 3.23pm, the Nikkei was up 2.12 per cent at 8,038.87.

But London's IPE Brent crude futures tumbled in opening electronic trade on Tuesday. Front-month May Brent crude opened 78 cents down at US$28.70 a barrel, the lowest since early January.

Malaysian Prime Minister Mahathir Mohamad said a US-led war on Iraq without United Nations backing could be "disastrous for the world" by making the world body superfluous.

Mahathir, whose country of 24 million people is 55 per cent Muslim, also said people in Muslim countries were "very angry".

"All they care about today is to seek revenge, because you kill my people and we kill your people and that will destabilise the world," he said. "War against Iraq will not help anybody."

That view was echoed by Philippine Foreign Affairs Undersecretary Lauro Baja.

Speaking after Bush's speech, he said war in Iraq would increase the risk of attacks by Islamic rebels in Southeast Asia.

"I think that's expected. That's why the military and the intelligence communities have made arrangements to step up security against possible terrorist attacks in our countries."

The Philippines is battling Muslim rebels the United States has linked to Osama bin Laden's al Qaeda network. Manila has said a group blamed by Indonesian police for carrying out last year's Bali bomb blasts might also be linked to bombing in the southern Philippines earlier this month in which 21 people died.

- REUTERS

Full text of Bush's speech

Herald Feature: Iraq