Iraqi President Jalal Talabani met President Bashar al- Assad in Damascus, first high-level visit since diplomatic relations reestablished November 2006. U.S. President Bush again accused Syria of allowing terrorists and insurgents to move in and out of Iraq, while U.S. Treasury imposed financial restrictions on 3 Syrian government entities allegedly involved in developing “non-conventional weapons and the missiles to deliver them”. Israeli newspapers reported unofficial peace talks between Israel and Syria between 2004 and 2006.

International delegations, including U.S. senators, visited Damascus urging greater Syrian role in helping to solve region’s problems. Israeli PM Olmert rejected suggestion of bilateral negotiations with Damascus.

Damascus was focus of regional and international attention: Israeli officials claimed Syria actively preparing for war “next summer”; assassination of Lebanese industry minister Pierre Gemayel blamed on Syria and led to U.S. accusations of Syrian plot to overthrow Siniora government; and UN published allegations connecting Syria, Somali Salafists and Hizbollah. Controversial UN tribunal empowered to prosecute Hariri case likely to be continued source of tension between Damascus, Beirut and the West. Leader of Al-Tawheed Wal Jihad militant group blew himself up near Syrian-Lebanese border 29 November after being chased by security forces.

President Assad re-stated desire for peace and readiness to engage in new round of discussions with Israel; rejected by Israeli PM Olmert. Signs of new Western policy of engagement with Syria, as senior adviser to UK PM Tony Blair visited Damascus for private discussions with Assad, while Spanish FM Moratinos announced would visit Damascus mid-November.

President Assad reportedly told 3 Israeli Arab politicians Damascus ready to establish peace with Israel based on Arab League’s 2002 plan: Israeli retreat to 1967 borders, multilateral solution for refugees, recognition of and diplomatic ties with Israel. Israeli PM Olmert rejected peace overture, accusing Damascus of harbouring Palestinian terrorists. Assad maintained rejection of UN peacekeepers along Syria/Lebanon border but asked for EU advice and assistance: EU technical assistance for Lebanese side already agreed. Syrian security guards foiled attack on U.S. embassy in Damascus 12 September, intercepting 4 militants after their car bomb failed to explode; 3 killed in gunfight. UN report into February 2005 assassination of former Lebanese PM Hariri deemed cooperation with investigation “generally satisfactory”.

President Assad welcomed Hizbollah’s “victory” and “emergence of new Middle East”; rejected Israel’s suggestion UN troops patrol Lebanese-Syrian border to stop smuggling of arms to Hizbollah, saying move would be seen as “hostile act”. UNSG Annan met Assad 1 September to push Syria to fulfil obligations under resolution 1701 – including end of illegal arms traffic. Israeli FM Livni announced formation of ministerial working group on Syria “to raise all issues and interests of Syria…and make a diplomatic assessment”: seen as possible first step towards renewal of peace talks, stalled for 6 years.

Israel-Hizbollah conflict put Syria on collision course with Israel and U.S., who accuse Damascus and Tehran of support for Hizbollah. Deputy FM Mekdad said ready for dialogue with U.S. and could “facilitate communication to end conflict” suggesting possible end to Syrian isolation. U.S. declined offer, calling on Syria to pressure Hizbollah to release Israeli soldiers. Iranian FM Mottaki visited Syria 17 July and discussed ceasefire and prisoner-swap proposal for crisis.

4 gunmen and security guard killed in clashes between suspected jihadi militants and army in Damascus 2 June: officials said “terrorist” attack halted near offices of state television and radio. President Assad claimed security operations on armed militant groups have caused many to flee to Lebanon. Israeli warplanes flew over Assad’s residence in apparent warning against Syrian support for Hamas’ Damascus-based political chief, Khaled Meshaal, suspected of authorising kidnapping of Israeli soldier.

UN Security Council called on Syria to delineate common border, establish full diplomatic relations with and reduce arms flow into Lebanon. EU issued statement against harassment of human rights defenders after 9 reportedly detained for calling for better relations with Lebanon. U.S. extended sanctions citing support for terrorism, interference in Lebanon, pursuit of weapons of mass destruction and missile programs, and undermining Iraq reconstruction.

Lebanon's PM Siniora, in address to UN Security Council, challenged Syria to demarcate borders and establish normal diplomatic relations; Syria said would mark borders only after Israeli withdrawal from Shebaa Farms area. U.S. ordered freeze on assets of those, including top Syrian officials, linked to murder of former Lebanese PM Hariri.