NATO Summit

"If Russia respects the six-point plan, and this appears to be the case, then we should resume dialogue with Russia," he told reporters at informal NATO defense talks in the Hungarian capital Budapest.

"That means the NATO-Russia Council should resume its work," he said.

The western alliance froze such high level talks with Russia in September, insisting that it could not do "business as usual" following Moscow's military operation in Georgia.

Russia sent troops into the former Soviet republic in early August, after Georgia tried to recover its breakaway region of South Ossetia which, along with rebel Abkhazia, Moscow has since recognized as independent.

Jung said he would like to see a "perspective" for the meetings to resume surface during the next round of talks with his NATO counterparts, which is scheduled for February in Cracow, Poland.

The European Union, whose French presidency brokered the six-point Russia-Georgia ceasefire agreement, is the institution which must decide whether Moscow is respecting the accord.

But the bloc remained divided Friday over whether that was the case, even after it appeared that Russia had withdrawn its forces from the two buffer zones in line with the agreement.

Russia sent troops into the former Soviet republic in early August, amid a dispute over the breakaway region of South Ossetia which, along with rebel Abkhazia, Moscow has since recognized as independent.

Russian forces were still controlling two areas under Georgian control prior to the conflict, the Akhalgori district in South Ossetia and the Kodori Gorge in Abkhazia.

Tbilisi insists the Russians must leave the two areas to fully comply.

Georgian efforts to become part of NATO have infuriated Russia, which objects to the prospect of its old Cold War foe extending to its borders.

Russian President Dmitry Medvedev has even accused NATO of provoking the Georgia conflict.

NATO chief rules out high level talks

NATO Secretary General Jaap de Hoop Scheffer ruled out resuming high-level talks with Russia after the alliance froze the meetings last month insisting that it could not do "business as usual with Russia" since its attack on Georgia in August.

"It is encouraging that Russia seems to withdrawing its forces back to the pre-conflict lines," Scheffer told reporters, after a first ever meeting of the NATO-Georgia Commission at ministerial level. "But we are not in a situation where we go back to business as usual," he said.

"It seems premature now to conclude that there will be a NATO-Russia Council meeting in Krakow," Scheffer said. "That requires a discussion. We are not at that stage yet.""

US backs NATO line on Russian relations

A senior official from the United States, which has staunchly backed Georgia since the start, also agreed that it was too early to change NATO's approach, as Russia still had to leave outstanding areas.

"There are clearly things that are going to have to be discussed," he said, and warned: "We need to make sure that we don't create a risky environment."

Scheffer said that the ministers did not discuss Georgia's NATO aspirations, and that the topic would be taken up by alliance foreign ministers when they meet in Brussels in December.

Georgia's military needs and reform efforts were addressed, but he insisted that NATO would not supply Tbilisi with any weapons

As the NATO chief spoke, French Foreign Minister Bernard Kouchner, whose country holds the European Union's rotating presidency, announced that Russia had withdrawn from Georgian buffer zones but "a long road" lay ahead to resolve other issues.

The European Union, whose French presidency brokered the six-point Russia-Georgia ceasefire agreement, is the institution which must decide whether Moscow is respecting the accord.

Alliance agrees to target Afghan drug lords

In other developments at the meeting in Budapest, NATO defense ministers agreed to target drugs traffickers and opium laboratories in Afghanistan as part of the alliance's efforts to undermine the Taliban insurgency.

But under a compromise hammered out in Budapest, member states participating in NATO's International Security Assistance Force (ISAF) in Afghanistan will be free to opt in or out of any anti-narcotics operations.

NATO Secretary General Jaap de Hoop Scheffer said ministers had agreed that the "ISAF can, in concert with Afghan authorities, act against facilities or facilitators supporting the insurgency."

However, any action would be "subject to the authorization of specific nations," the NATO chief said.

That was a concession to countries like Germany, Spain and Italy, who argue that the fight against drugs should be left to the Afghan police. These countries had also expressed concern that any NATO raids on laboratories would kill civilians and undermine the alliance's popularity among ordinary Afghans.

In an effort to address such reservations, ministers also agreed to ensure that civilian casualties be minimized, and that the anti-narcotics fight be conducted mainly in the southern provinces of Afghanistan, where cultivations and the insurgency both thrive.

Jung said he was "very satisfied with the compromise" and added that the deal would allow German soldiers to "continue to support the training of the Afghan security forces" and to limit its role to providing assistance to Afghan-led operations through logistical, intelligence and medical support.

Opium proceeds funding Taliban resurgeance

NATO officials said the plan was "consistent with the appropriate UN Security Council resolutions" and with the ISAF's existing operational plan. Friday's compromise would be reviewed in February, when defense ministers next meet in Poland.

The deal clinched in Budapest follows a specific request from Afghan Defense Minister Abdel Rahim Wardak, who on Thursday had asked his NATO colleagues to help his government target drugs laboratories and seize imports of the chemicals that are needed to turn opium into heroin.

"We have asked NATO to support our efforts to destroy the laboratories and to interdict the chemical precursors which are coming from outside the country," Wardak said.

NATO military commanders acknowledge that more needs to be done to fight the opium and heroin trade. US Defense Secretary Robert Gates believes that the Taliban pocket between 60 and 80 million dollars per year from the sale of drugs.

"It is not only corrosive to good governance, it also directly funds the people that are killing Afghans, Americans and all our coalition partners," Gates said in Budapest on Thursday.

Poppy cultivations have fallen by 19 per cent since last year, but Afghan heroin still accounts for more than 90 per cent of the heroin circulating in Europe.