The European Union (EU) on Saturday welcomed the formation of a new Iraqi government and promised financial support for Baghdad.

"The appointment of the new Iraqi government is very good news, " said Benita Ferrero-Waldner, European commissioner for external relations.

"This will be a powerful instrument to help overcome sectarianism, and prevent violence hampering Iraqi development," said Ferrero-Waldner.

The EU promised help for the rebuilding of the war-torn country.

"The Iraqis will not be alone in their next steps toward rebuilding their country. The European Commission will remain actively supportive of Iraqi efforts to build a prosperous and peaceful future," said Ferrero-Waldner.

She said the EU will soon discuss with the new government an aid package worth 200 million euros (254 million U.S. dollars) for 2006.

The EU is ready to start negotiations to establish contractual relations with Iraq and that the European Commission, the executive body of the EU, will open an office in Baghdad, said Ferrero-Waldner.

Source: Xinhua