The Minister for Finance, Mr McCreevy, has said that all countries consider economic factors such as foreign investment when they formulate foreign policy on such issues as the Iraq crisis.

Mr McCreevy declined to speculate on the possible impact on US investment to Ireland of the Government opposing Washington's policy towards Iraq.

But he suggested that it was legitimate to take such considerations into account when making foreign policy.

"There is nothing wrong with that. I think that's what all countries do in any event," he said.

Asked if he was concerned about the economic consequences for Ireland of a diplomatic conflict with the US over Iraq, Mr McCreevy said he was more concerned about the consequences of a prolonged war.

"Ministers for finance are always concerned about anything that might dampen economic activity and I would be particularly concerned at anything that would impact on economic activity in Ireland. But the main thing that would impact on Ireland would be a long, drawn-out war which would have a dampening effect on economic conditions," he said.

Mr McCreevy said that forecasts for economic growth for 2003 and 2004, which are already modest, could appear optimistic in the event of a prolonged conflict in Iraq. As one of the most open economies in the world, Ireland would be especially sensitive to any downturn elsewhere in the world.

"In the event of a long, drawn- out war, who is to know the consequences of it. It could not be a good thing for economic conditions in the world and that would mean it would not be good for Ireland," he said.

"Hopefully there won't be a war but the uncertainty is not helping anything," he said.

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