US Secretary of State Mr ColinPowell warned Syria of regional isolation and exclusion fromthe Iraqi market if it did not meet US demands that it crackdown on militant groups.
In an interview with the Israeli newspaper Maariv, releasedby the State Department today, Mr Powell said Syria could notyet expect better relations and cooperation with Washington.
"What we're not going to do is we are not going to doanything that would improve the relationship right now. Thereare things we would like to do with Syria and there are otherareas of cooperation that might be open to them," he said.
Mr Powell visited Damascus in May and asked Syrian PresidentBashar al-Assad to close down the offices of Palestinianmilitant groups, end their media operations and stop logisticalsupport to the Lebanese guerrilla group Hizbollah.
Mr Powell said Syria had taken some steps but added: "We madeit clear to them that this isn't enough."
"They need, frankly, a better relationship with us to, inturn, have a better relationship with Iraq, which is one ofSyria's largest trading partners, concessional oil andcommerce. It's not happening," he added.
When Iraqi President Saddam Hussein was in power, Syriaused to buy smuggled Iraqi oil at discount prices and make ahefty profit by selling oil on the world market.
But Syrian merchants and industrialists say that trade withIraq is reviving and that U.S. forces are turning a blind eyeto commercial traffic across the border.
They say they have been exporting food, plastics,generators and refrigerators, as well as once-banned itemsincluding large numbers of satellite dishes and receivers, toIraq for weeks, with relatively little trouble.
Mr Powell said he expected that a future Iraqi governmentwould support peace talks between Israelis and Palestinians.
"They (the Syrians) will be increasingly isolated as thepeace process moves forward without them, and as Iraq becomes ademocratic state that does not wish to work with states thatcontinue to sponsor terrorist activity," he added.