Moscow - In an effort to boost Moscow's clout in the Middle East, Russian President Vladimir Putin Tuesday held talks with his visiting Syrian counterpart, Bashar al-Assad, aimed at strengthening bilateral relations.

Putin warned that the situation in the Middle Eastern was deteriorating, saying in televised comments the region was moving "from one conflict to another."

Assad hailed what he called significant progress in bilateral relations, saying his talks at the Kremlin had been "successful, fruitful and constructive."

At a time when U.S. policy towards Syria and Iran is the subject of much debate, he warned against attempts to isolate his country.

Assad said Syria was ready for dialogue with both the U.S. and Israel, but added that the Israeli government was not interested in peace negotiations.

The recently released Iraq Study Group report urged the U.S. to seek to engage Syria and Iran, both considered terror-sponsoring states by the U.S. government, in attempts to calm the situation in Iraq.

The panel, co-chaired by former Secretary of State James Baker and former U.S. Congressman Lee Hamilton, also said Israel and Syria should hold "unconditional" peace talks.

It said Syria must stop trying to undermine the Lebanese government, stop helping Palestinian and Lebanese terrorist groups, and prevent terrorists from crossing from Syria into Iraq.

In return, Israel should "in the context of a full and secure peace agreement" return the Golan Heights, captured from Syria in 1967.

Many conservatives in the U.S. and Israel have repudiated the report's recommendations pertaining to the Arab-Israeli conflict, and are urging the Bush administration not to engage Syria or Iran.

Amid the ongoing debate, Russia continues to develop political and economic ties with both countries.

Syria clinched a deal with Moscow early last year, in which Russia wrote off more than 70 percent of a multi-billion dollar debt owed from the Cold War era, when Damascus was an ally and arms customer of the Soviet Union.

Syrian plans to buy new advanced weaponry from Russia caused a stir last year, when the U.S. and Israel decried an alleged deal to sell Igla SA-18 shoulder-held anti-aircraft missiles to the Syrians.

The U.S. worried the easily transported missiles could find their way into Iraq and be used against American troops there, while Israel was concerned that the missiles could end up in the hands of Palestinian terrorists.

On Tuesday, Assad refrained from discussing any Russian arms sales to Syria, saying that the details of bilateral military cooperation would be discussed by experts. He dismissed claims that Russian-origin weapons had been supplied by Syria to Hizballah terrorists in Lebanon.

Russia is a partner with the U.S. in the so-called Quartet, set up to mediate the Middle East conflict. Unlike the U.S., however, Moscow advocates dialogue with Hizballah and the Palestinian terror group, Hamas.

Syria isn't alone among regional players looking to Moscow for help.

Lebanon's embattled Prime Minister Fouad Siniora visited Moscow last week, hoping to find support in his battle with the Syrian-backed Hizballah, which is trying to bring down his government.

Putin told Siniora he hoped Lebanon would be able to solve its internal problems, and promised Russia would do everything it could to support the Lebanese people in rebuilding their economy and infrastructure in the aftermath of the summer war between Israel and Hizballah.

If Siniora was hoping Putin would use his influence with Assad to pressure the Syrian leader to stop interfering in Lebanon, there was no public sign of this Tuesday.

Assad only said Syria supported any move towards achieving a consensus in Lebanon.

Two years ago, the so-called "Cedar Revolution" drove Syrian troops out of Lebanon following the assassination of Rafik Hariri, who had called for an end to Syria's lengthy occupation of the Mediterranean country.

Last month, another anti-Syrian Lebanese politician, Pierre Gemayel, was assassinated. He had served in Siniora's government as industry minister.

U.N. investigators suspect top Syrian officials of involvement in Hariri's death, and anti-Syrian politicians in Lebanon have also accused Damascus of being behind Gemayel's assassination.