The United States accused Syria and Iran on Wednesday of playing a negative role in Lebanon and said there is clear evidence of arms smuggling across the Syrian border to terrorist groups. US Ambassador Zalmay Khalilzad made the accusations after a closed Security Council meeting to discuss progress on a UN resolution that ended last summer's war between Israel and Hizbullah guerrillas backed by Syria and Iran. "We also made it clear that we condemn all efforts to destabilize Lebanon and expressed particular concern with regard to the arms transfers that are taking place particularly across the Syrian border," Khalilzad told reporters after the session. Syria's UN Ambassador Bashar Ja'afari dismissed allegations that arms were being smuggled across his country's border with neighboring Lebanon. "We denied it many times and we are still denying it," he told reporters after the meeting. A UN-appointed team that assessed the border reported late last month that security was too lax to prevent arms smuggling. UN Secretary-General Ban Ki-moon urged Syria and Iran to do more to prevent arms smuggling into Lebanon, citing Lebanese and Israeli government allegations of violations of the UN arms embargo. Khalilzad said there was clear evidence of "arms transfers to terrorist groups" inside Lebanon. "There is evidence of preparations by groups such as Fatah al-Islam, preparations by groups such as PFLP-General Command that is also carrying out some preparations for attacks. There are arms that are coming in for Hizbullah," he said. Ja'afari claimed the information about arms smuggling provided to the Security Council came only from Israeli intelligence and none of it was from Lebanese authorities. However, UN Mideast envoy Michael Williams said "virtually all" of the arms smuggling documented in the secretary-general's report to the Security Council last month came from the Lebanese government or Lebanese security agencies. "I think the situation is very serious," he told reporters. Syria dominated Lebanon for nearly three decades. But in 2005, it was forced to withdraw its tens of thousands of troops from the neighboring country amid an uproar over allegations that Damascus played a role in the assassination of former premier Rafik Hariri. Syria denied it. Williams lamented that the United Nations has not been able to secure the release of Ehud Goldwasser and Eldad Regev, the two IDF reservists who were kidnapped by Hizbullah in the incident that triggered the war one year ago. "I bitterly regret that. I regret also that we've not even been able to establish proof of life," he said. Asked whether he believed the two were still alive, he said he could not answer the question. He said the UN has had some 20 meetings with high-ranking Hizbullah figures on freeing the soldiers and although at times the talks seemed on the verge of collapse, it was notable that the group seemed interested in continuing them. He said talks had been held as recently as the last few days. "I would hope that Hizbullah would take note of today's proceedings and heed the call, at least as an interim step, to render proof of life of the soldiers," he said. Williams said he anticipated bigger challenges ahead for stabilizing Lebanon. He specifically mentioned the demarcation of the section of the Lebanese border around the disputed Shaba Farms and said Syria was not cooperating with UN requests to provide some historical records on that issue.