* Iraq may buy Mirage jets from Dassault

* U.N. sanctions barred arms sales to Baghdad

BAGHDAD, Feb 11 (Reuters) - Iraq is seeking the return of 651 million euros ($898 million) paid by Saddam Hussein’s government for French Mirage fighters that were never delivered because of sanctions, a government spokesman said on Thursday.

Ali al-Dabbagh said talks with France's Dassault Aviation AVMD.PA and the French defence ministry for the return of the funds were positive, and Iraq was separately eyeing a possible purchase of an unspecified number of Mirage jets from Dassault.

“We want these funds returned. Simultaneously, we are in negotiations with the French for (the purchase of) Mirage F1s,” Dabbagh said, adding that Iraq had not yet decided whether to buy jets from France or the United States.

An Iraqi committee was formed two months ago to negotiate the return of the deposit for jets ordered under Saddam, and Iraq expects the issue to be resolved this year, Dabbagh said.

Sanctions imposed on Iraq shortly after its invasion of Kuwait in 1990 prohibited arms sales to Baghdad, forcing the abandonment of its deal with Dassault for the fighter jets. (Reporting by Mohammed Abbas: editing by Tim Pearce)