"In the discussions that we have been carrying out with the United States, we have recorded good progress so far. We are at a point quite close to an agreement," Turkish Foreign Minister Yasar Yakis told NTV television on Friday, February 21.

"If there is a will, this could be finalized by working on Saturday and Sunday," Yakis added.

Turkish Prime Minister Abdullah Gul also sought to water down the tension, which has threatened to poison ties between the two NATO allies and hamper U.S. war plans, Agence France-Presse (AFP) reported.

He hinted that a parliamentary vote would soon be held to decide whether U.S. troops could be deployed in Turkey for possible war on Iraq.

"Undoubtedly the United States is our strategic partner. We understand their concerns and they understand ours and a result will be achieved in the coming days... Of course, parliament will make the final decision," Gul told a gathering of businessmen.

Turkey is insisting on guaranteed financial aid from Washington and a written pledge that the Kurds in northern Iraq would not be allowed to break away from Baghdad.

Also digging in its heels over the size and terms of a multi-billion-dollar aid package it is seeking from Washington in swap for supporting the war on neighboring Iraq, Ankara fears that the downfall of the Iraqi regime would encourage Iraqi Kurds to move towards independence, which in turn would fuel separatist ambitions among its own Kurds.

Washington was waiting to hear whether Turkey would allow the deployment of its troops in return for a financial package amounting to some 26 billion dollars (24 billion euros) in grants and loans.

Agreement without Guarantees Possible

Faced with a staunchly anti-war public opinion, the Turkish government said it will not request a parliamentary vote on U.S. troop deployment without obtaining guarantees from the U.S. on economic compensation and the post-war unity of Iraq.

Ankara's anxiety stems from the 1991 Gulf war, in the wake of which it suffered substantial economic damage despite having backed the U.S.

It also argued that it lost up to 40 billion dollars in trade because of U.N. embargo on Iraq and has accused Washington of reneging on its pledge for compensation.

U.S. and British warplanes already use a Turkish air base to patrol a no-fly zone over northern Iraq that has kept the Kurdish enclave out of Baghdad's control since the 1991 war.

But Ankara says the no-fly zone has boosted independence aspirations among local Kurds and provided Turkish Kurdish rebels with a safe haven and a springboard for attacks on Turkey.

In cooperation with the U.S., Turkey wants to deploy troops in northern Iraq to keep the area under control.

In return for its support, Washington has offered Ankara a grant of six billion dollars, part of which could be used to obtain long-term commercial loans of up to 24 billion dollars, to offset the damage of a war on the already crisis-hit Turkish economy.

Ankara says the money is insufficient and is fuming at U.S. proposals that the loans be put under the scrutiny of the International Monetary Fund.

U.S. Secretary of State Colin Powell said Thursday, February 20, that Washington was not intending to increase its offer but added: "There may be some other creative things we can do."

The head of Turkey's ruling party Justice and Development Party, Recep Tayyip Erdogan, accused Washington of disregarding Ankara's concerns.

"Friendship cannot go with a mentality like 'you do what I want'," Erdogan told ATV television late Thursday.

"We give more weight to political and military issues," he said, dismissing reports that the only problem in the talks concerned financial aid.

Earlier this month, Turkey agreed to allow the United States to upgrade its air bases and sea ports for use in any war.