July 22, 2003 -- JERUSALEM - Iraq is ready to talk peace with Israel - but Israel has to come to terms with the Palestinians first, a prominent member of Baghdad´s governing council said yesterday.

Former Iraqi Foreign Minister Adnan Pachachi said his country may drop its decades-old opposition to the existence of the Jewish state if Israel gives the Palestinians control of 95 percent of the West Bank and Gaza, Israeli opposition leader Shimon Peres said yesterday.

Pachachi, who is being promoted by some U.S. officials as a possible leader of a caretaker government in Baghdad, told Peres of the new Iraqi position at a conference in Rome over the weekend.

Even with the departure of Saddam Hussein - who launched Scud missiles at Israel in the 1991 Gulf War - Iraq´s ties with Israel remain unclear.

Iraqi newspaper articles have claimed that Jews have bought up property in Baghdad and other Iraqi cities since Saddam´s fall.

Meanwhile, Israeli Prime Minister Ariel Sharon said rogue Jewish settlements will come down, but said that with tough negotiations ahead, "dealing with [the matter] now will only cause harm." With Post Wire Services (Copyright 2003 NYP Holdings, Inc. 07/22/03)