A secret deal has been agreed between Syria and Iraq for the supply of military equipment to Baghdad, according to Middle East intelligence sources.

Relations between the two countries have been improving significantly in recent months, with agreements already signed to develop both political and economic co-operation.

Now, after a new deal between the Syrian and Iraqi intelligence services, military equipment valued at about œ60 million is to be shipped across the border, the intelligence sources said.

Since the 1991 Gulf War, President Saddam Hussein has faced a severe shortage of spare parts for his army because of the international arms embargo. Under the Damascus agreement, Syrian spare parts for military equipment would be converted for use by the Iraqi Army, the sources said. The parts would include engines for Russian-made tanks and tracks for armoured fighting vehicles.

Syria is also expected to supply spares for anti-aircraft radar facilities – hit by recent American and British bombing – lorries, aircraft and helicopters, and ammunition.