“You can talk about an embargo generation, a generation of the refrigerator, you can talk about a lost generation,” he said in an interview with AFP. “The schools you go to show an appalling picture.”

Von Sponeck, who is to leave his post on Wednesday, said the school drop-out rate had reached between 15 and 20 per cent, compared to almost zero before the embargo.

The literacy rate has also slumped from 90 to 66 per cent, said von Sponeck, who paid a farewell call on President Saddam Hussein on Sunday.

“The international community is playing a very dangerous game,” said the veteran U.N. diplomat, warning of the damage to Iraq's children and their future outlook on the world.

“It could translate into an anti-Western mentality, it could translate into violence within Iraq, it could have all kinds of negative implications,” he said.

The 60-year-old German stressed that ordinary Iraqis were paying the price for the battle of wills between Saddam and Washington, the strongest opponent of an end to the sanctions.

“If then somebody comes and says the president is building palaces and a lot of money goes into this, this is regrettable, no one here can force him to change. Is that justification to continue depriving the young from their rights?” he said.

Von Sponeck also dismissed charges by the United States, which had called for his resignation, of having turned soft on the Iraqi regime.

“I am not a `useful idiot' for the Iraqis. I have my own position, my own concerns, I do not always see eye-to-eye with the Iraqis. On the education budget, for example, I negotiated hard to increase the funding.”