UN Secretary-General Kofi Annan said Iran has a vested interest in a peaceful Iraq and should be part of discussions to resolve the conflict there. Annan's suggestion for regional talks came the same day his office released a report warning that the Iraq conflict was worsening and could lead the country into an "all-out civil war." "The situation in Iraq has further deteriorated in many parts of the country with a significant rise in sectarian violence, insurgent and terrorist attacks, and criminal activities," said the report, an updated version of a September study. "The prospects of all-out civil war and even a regional conflict have become much more real." Speaking to Human Rights Watch on Friday, Annan said all of Iraq's neighbors, but especially Iran, have a role to play and praised Tehran's past cooperation in discussions on Afghanistan.