From the Associated Press

Tuesday May 14, 2002 5:30 PM

REYKJAVIK, Iceland (AP) - NATO and Russia worked out a broad outline for a landmark agreement Tuesday to fight terrorism and other dangers together as part of the Western alliance's transformation to tackle post-Sept. 11 security threats.

British Foreign Secretary Jack Straw called the agreement ``the funeral of the Cold War.''

``It marks a profound, historical change,'' he told reporters. ``With this, Russia comes out of the cold as a partner, ally and friend of NATO.''

After five-months of negotiations, diplomats worked out the final details of the text late Monday as NATO foreign ministers were arriving in the Iceland's capital for two days of talks.

The foreign ministers welcomed the agreement as ``a historic step towards the alliance's long-standing goal of building a secure, cooperative and democratic Euro-Atlantic area.''

Russian Foreign Minister Igor Ivanov was scheduled to meet his U.S. counterpart, Secretary of State Colin Powell, and other NATO ministers later Tuesday to seal the agreement. It will set up a new council where Russia will sit alongside the 19 NATO nations to formulate joint policy on terrorism and other shared threats, including biological and chemical weapons and civil defense planning.

``This initiative is quite simply historic, and even revolutionary,'' said NATO Secretary-General Lord Robertson as he opened the NATO meeting.

Not everything went smoothly, though.

Belgian Foreign Minister Louis Michel suddenly fell to the ground during a photo shot with the other NATO foreign ministers following the first session. Michel, 54, briefly tried to get up before collapsing again.

Powell and other NATO foreign ministers rushed to his aid. With an oxygen mask covering his face, Michel, who never lost consciousness, was immediately taken to a hospital. Initial results showed Michel was suffering from dehydration caused by an intestinal infection, a Belgian diplomat said.

The NATO meeting reviewed the alliance's plans to invite new members from eastern Europe later this year. The ministers added Croatia to the list of nine candidates, but did not indicate which were favored for membership.

The foreign ministers also agreed to develop new capabilities to modernize and refocus the alliance to confront the threat from terrorism and close the gap between U.S. military might and Europe's outdated armed forces, a key Washington demand.

While specifics will be left to defense ministers, increasing NATO's ability to move troops into conflict areas quickly and improve strike capabilities are seen as essential to deal with the new dangers revealed by the attacks on New York and Washington.

``The terrorist attacks on the United States were a ... wake-up call,'' Robertson said. He warned the ministers that neither their citizens ``nor history will judge us kindly if we do not take bold steps to protect them from these new threats.''

Under the agreement with Moscow, a new NATO-Russia Council will set joint policy on a fixed range of issues including counterterrorism, controlling the spread of nuclear, chemical and biological weapons, missile defense, peacekeeping and management of regional crises, civil defense, search-and-rescue at sea, promoting military cooperation and arms control.

The deal springs from Russian President Vladimir Putin's support for the West since the Sept. 11 terrorist attacks.

The first meeting of the new council will take place May 28 at an Italian air force base outside Rome, when Putin will sit down alongside President Bush and other NATO leaders.

``Countries that spent four decades glowering at each other across the wall of hatred and fear now have the opportunity to transform the future of Euro-Atlantic security for the better,'' Robertson said.

Ahead of the Rome meeting, Bush and Putin are to sign a new U.S.-Russian nuclear arms treaty to cut their arsenals by two-thirds - a deal that Bush said Monday will ``put behind us the Cold War once and for all.''

The agreement was welcomed by European ministers arriving for the talks here. ``This is a new stage that would have been unimaginable a few years ago,'' said Spanish Foreign Minister Josep Pique. ``We are in a completely new world.''

NATO officials say that the agreement will not affect the alliance's core mutual defense role and that safeguards are built in to ensure Moscow will not be able to veto NATO decisions if relations sour.

After meeting with Ivanov, the NATO foreign ministers are scheduled to receive other counterparts from the former communist bloc, including the nine candidates for membership in the alliance.

While the applicants' preparation will be discussed, no decision on who will be invited is expected until November, when NATO holds a special summit in Prague, the Czech capital.

Powell told European allies they should be prepared to invest in their military to narrow the so-called ``capabilities gap'' with the United States.

Straw said there was a recognition by European governments that more needed to be done, but said it would be difficult to secure public support for increased military spending.

U.S. officials hope the Prague summit will produce a commitment from the Europeans to focus defense budgets on big military transport planes, special forces, precision weapons and other priority areas.