US-Iran relations warm as Rice says talks 'not ruled out'

The US and Iranian foreign ministers could hold rare high-level direct talks next week, in a possible sign that both countries want to reduce tensions over Iraq and Tehran's suspected nuclear weapons ambitions.

The meeting would take place at the regional conference on Iraq set to begin in Egypt on Thursday, co-chaired by the United Nations Secretary General Ban Ki-moon and Nouri al- Maliki, the Iraqi prime minister.

"I will not rule out that we may encounter one another," Condoleezza Rice, the Secretary of State, said on the CBS' Face the Nation programme, referring to her Iranian opposite number Manouchehr Mottaki, who after some hesitation also plans to end.

However, she spelt out US expectations bluntly: "But what do we need to do? It's quite obvious. Stop the flow of arms to foreign fighters. Stop the flow of foreign fighters across the borders."

Ms Rice, who has been subpoenaed by the Democratic Congress to testify about the administration's pre-war claims about Iraq's alleged pursuit of nuclear weapons, was speaking 48 hours before President Bush vetoes a $124.2bn (£62bn) war spending bill that includes a timeline for withdrawing US forces from Iraq.

She also signalled the White House will oppose an emerging second version of the measure, that would punish the Maliki government if it failed to meet various benchmarks, on allocating oil resources, amending the constitution and expanding democratic participation.

Such "so-called consequences" would tie the hands of US commanders on the ground, Ms Rice said. "To say 'We must do this if they don't do that' doesn't allow us the flexibility and creativity that we need to move this forward."