In a speech to the nation, Saddam said Iran ``is still holding thousands of Iraqi prisoners,'' and has refused to return military and civilian aircraft which Baghdad sent to Iran for safety during the 1991 Gulf War. ``Iran's conduct is unprecedented,'' he said, charging Tehran with refusing to make peace despite Iraq's repeated ``peace initiatives''.

Iraq, Saddam said, had freed all Iranian prisoners from the 1980-1988 conflict, which left hundreds of thousands dead.

Baghdad had ``always sought to make reason prevail'' but Iraq ``does not hesitate to use force when it becomes the only way to show the righteousness of its cause or when reason fails to convince those who are wrong,'' the Iraqi President warned.