HIGHLIGHTS: Annan's Position Apparently Closes Door on Diplomatic Solution||Iraq Wants Talks to Lead to End of Sanctions, End of U.S. Threats of 'Regime Change' and End on 'No-fly Zones'||UN Chief Wants Return of UN Inspectors First|| STORY: U.N. Secretary-General Kofi Annan threw the ball back into Iraq's court on whether to have further talks on arms inspectors, but Baghdad said on Wednesday any agreement needed to include an end to U.S. threats against the country. (Read photo caption)

After three rounds of talks this year with Iraqi Foreign Minister Naji Sabri, Annan told U.N. Security Council members bluntly on Tuesday that until Baghdad officials indicated they were prepared to allow the arms inspectors back into the country there would be no further talks at his level.

The last round of talks were on July 5-6 in Vienna, Austria. The inspectors left Iraq in December 1998 on the eve of a U.S.-British bombing campaign. Accounting for Iraq's weapons of mass destruction is key to suspending U.N. sanctions, imposed when Iraq invaded Kuwait in August 1990.

As the world's top diplomat, Annan usually engages in talks without preconditions. Sarah Emerson, director of Washington-based Energy Security Analysis Inc., who follows Iraqi developments, said Annan's position showed there was little hope of the problem being solved diplomatically.

"If he is discouraged that is a fairly strong signal that this is something that won't be resolved diplomatically," she said. "To me it is worrisome that there is no optimism."

Sabri, in several interviews after the Vienna talks, including one on Wednesday, said Iraq had demonstrated "enough flexibility" in the discussions. He expected any agreement to include a route toward lifting sanctions, ending the U.S. threats of a "regime change" and an end to the U.S.-British no-flight zones over parts of the country.

ANNAN WANTS RETURN OF INSPECTORS FIRST

"Should the inspectors return without a new solid basis, then they will operate for one, two or three months and the clash occurs again. They leave and then missiles and shells rain on Iraq," Sabri told the London-based Al-Hayat newspaper.

But Annan is not empowered to talk about any issue but the return of the weapons inspectors, without permission from Security Council members.

Annan told council members at a Tuesday lunch with council members he would wait until there was some sign Baghdad was moving on the inspectors before participating in arms talks.

Later, he told CNN that Iraqi officials needed to "come back to me with an indication that they are prepared to allow the inspectors, and then we can resume discussions.

In Vienna, Annan deliberately avoided setting a date for future talks but said "technical" discussions were possible. At the time a close aide told Reuters: "He drew the line after three meetings but he didn't pull the plug on the process."

PHOTO CAPTION

U.N. Secretary-General Kofi Annan told Security Council members July 23 that until Baghdad officials indicated they were prepared to allow the arms inspectors back into the country there would be no further talks, but Baghdad said July 24, 2002 any agreement needed to include an end to U.S. aggression against the country. Annan is seen speaking during a conference at U.N. headquarters in New York on June 18. Photo by Mike Segar/Reuters