Inspectors expose Iraq's violations, but leave the world unsure which way to turn

Hans Blix, the chief weapons inspector, delivered a harsh but inconclusive report on the disarmament of Iraq before the United Nations Security Council yesterday. Filled with red flags suggesting grave violations but devoid of concrete evidence to prove guilt, it left a worried world unsure which way it should fall – towards war or peace.

The report did nothing to lower the stakes for George Bush and Tony Blair as the two ponder their options: allowing the still inconclusive inspections process to continue for weeks, and maybe even months, or to move towards a military onslaught in the Gulf.

There was no sparing of Iraq in two reports given to the Security Council by Mr Blix and his counterpart at the International Atomic Energy Agency, Mohamed al-Baradei. "Iraq appears not to have come to a genuine acceptance, not even today, of the disarmament that was demanded of it," Mr Blix said.

While giving no green light for war, the twin reports may at best only delay the onslaught of war for a short while. The grave mood was reflected in world markets last night, which slumped amid fears of the economic impact of war. In London, the FTSE 100 index fell by more than 3 per cent, wiping almost £30bn off the value of leading UK companies.

While Mr Baradei said his teams had found nothing to suggest a clandestine nuclear weapons programme in Iraq, Mr Blix offered a series of reasons to suspect evasion and lying on the part of Saddam Hussein. He worried out loud about anthrax and VX gas. About the 6,000 chemical weapons Iraq has not accounted for. About its blocking U-2 spy plane flights. About difficulties in interviewing scientists.

At the same time, neither man could offer the Council a "smoking gun" or anything by way of proof that would help resolve the dilemma facing the international community. If anything, with their reports the two men may have provided still more fuel to the arguments that have already divided the allies and placed Britain in an unparalleled diplomatic quandary.

Each of them expressed the desire – Mr Baradei more bluntly than Mr Blix – that their teams be given more time to pursue inspections. That represented an oblique appeal to Washington to slow down its momentum towards war.

America instantly insisted last night that the reports further demonstrated that Iraq is defying the UN. It remains possible that America will decide very soon to punish Iraq and unleash a new Gulf war. And it may use Mr Blix's report, full of guesswork and supposition as it is, to justify the step.

"There is nothing in either presentation that would give us hope Iraq has ever intended to to fully comply with Resolution 1441 [adopted in November] or any of the 16 resolutions that preceded it over the last 12 years," America's ambassador, John Negroponte, told other Council members in consultations after Mr Blix and Mr Baradei had spoken.

But Washington faces extreme pressure from other Council members to wait before abandoning the inspections and opting for force. A majority of ambassadors publicly took such a position. Mr Blix is expected to be invited back to give another report on 14 February.

Opposition to the military option also surfaced on Capitol Hill. Mr Bush needed "to produce proof, like the photos President Kennedy make public in the Cuban missile crisis," Tom Daschle, the Democratic Senate minority leader, said last night.

The value of continuing inspections appeared to win endorsement from the British ambassador, Sir Jeremy Greenstock. "Most members of the Security Council, if not all members, regard this as a part of an ongoing process," he said.

China's deputy UN ambassador, Zhang Yishan, said: "The job has not been completed. We share the view of many that this process has not been completed and more time is needed."

The Russian ambassador, Sergey Lavrov, said his country strongly supported calls "for inspections to continue."

And the UN secretary general, Kofi Annan, also entered the fray on behalf of the inspectors. "They should be given the time to do their work and all of us, the Council and the assembly, must realise time will be necessary, a reasonable amount of time; I'm not saying forever but they do need time to get their work done" he said.

For the US, however, it may seem like foot-dragging and wishful thinking about what inspections might produce. The White House spokesman, Ari Fleischer, said: "The more time they get, the more time they get the run-around. Iraq is giving the inspectors the run-around."

But Mr Baradei said: "With our verification system now in place, barring exceptional circumstances and provided there is sustained proactive co-operation by Iraq, we should be able within the next few months to provide credible assurance that Iraq has no nuclear weapons programme.

"These few months would be a valuable investment in peace – it could help avoid a war."