Secretary-General Kofi Annan, who chaired the talks, is expected to brief the Security Council on the substance of his meetings tomorrow, a UN spokesman said.

Arriving at UN Headquarters this morning, Mr. Annan told reporters that the Security Council must ultimately decide how to proceed with Iraq. "There are lots of discussions going on in capitals and within the Council, and I'm sure that the Council members will need to work together on this and come to some consensus on how to proceed," he said.

"I would not want to prejudge or pre-empt what the Council members may do, but obviously as you know there's lots of reflection and discussions going on and I hope that out of all this will come something constructive," he added.

The Secretary-General said that after the talks conclude, he would brief the Security Council "and the Council will factor into its own discussions and decision-making my discussions with the Iraqis - but the decision will be up to them" as to how to proceed.

When he spoke to the press this morning, the Secretary-General said the talks were being conducted "in a good atmosphere."

The Secretary-General said it was too early to divulge the substance of the talks, which began yesterday with a Baghdad delegation headed by the Iraqi Foreign Minister, Mohamed Said Al-Sahaf. Prior to the opening of this morning's meetings, the two met privately - their second one-on-one meeting since the Baghdad delegation arrived.

Asked about comments by the United States regarding "smart sanctions" for Iraq, Mr. Annan said he was not surprised by them, noting that when he met with US Secretary of State Colin Powell "he did hint at it without going into details, emphasizing the fact that the objective of the sanctions was not to hurt the Iraqi people and they were not the targets, and one has to find a way of strengthening the disarmament regime and giving relief to the Iraqi people."