Baghdad - A senior US diplomat said the United States had shown "arrogance" and "stupidity" in Iraq but was now ready to talk with any group except Al-Qaida in Iraq to facilitate national reconciliation.

In an interview with Al-Jazeera television aired late Saturday, Alberto Fernandez, director of public diplomacy in the Bureau of Near Eastern Affairs at the State Department offered an unusually candid assessment of America's war in Iraq.

"We tried to do our best but I think there is much room for criticism because, undoubtedly, there was arrogance and there was stupidity from the United States in Iraq," he said.

"We are open to dialogue because we all know that, at the end of the day, the solution to the hell and the killings in Iraq is linked to an effective Iraqi national reconciliation," he said, speaking in Arabic from Washington. "The Iraqi government is convinced of this."

The question of negotiations between the United States and insurgency factions has repeatedly surfaced over the past two years, but details have been sketchy. One issue that was often raised in connection with such negotiations was the extent of amnesty the United States and its Iraqi allies were willing to offer to the insurgents if they disarmed and joined the political process.

Fernandez spoke to the Qatar-based Al-Jazeera after a man claiming to speak for Saddam Hussein's outlawed Baath Party told the network the United States was seeking a face-saving exodus from Iraq and that insurgents were ready to negotiate but won't lay down arms.

"Abu Mohammed", a pseudonym for the man, appeared to set near impossible conditions for the start of any talks with the Americans, including the return to service of Saddam's armed forces, the annulment of every law adopted since Saddam's ouster, the recognition of insurgent groups as the sole representatives of the Iraqi people and a timetable for a gradual, unconditional withdrawal of US and other foreign troops in Iraq.

"The occupier has started to search for a face-saving way out. The resistance, with all its factions, is determined to continue fighting until the enemy is brought down to his knees and sits on the negotiating table or is dealt, with God's help, a humiliating defeat," he said. The man wore a suit and appeared to be in his 40s but his face was concealed.

"There is an element of the farcical in that statement," Fernandez said of Abu Mohammed's comments. "They are very removed from reality."

Still Fernandez warned that failure to pacify the widening sectarian strife in Iraq as well as an enduring insurgency would damage the entire Middle East.

"We are witnessing failure in Iraq and that's not the failure of the United States alone but it is a disaster for the region. Failure in Iraq will be a failure for the United States but a disaster for the region."

Although the actual identity of Abu Mohammed remains unknown, the interview adds to growing indications that Iraq's Sunni insurgents sense the tide may be turning against the United States and the Iraqi government it backs.

Fernandez's comments, on the other hand, join a series of sobering remarks by President Bush and the US military in recent days.

Bush this week conceded that "right now it's tough" for US forces in Iraq and on Saturday met with his top military and security advisers to study new tactics to curb the staggering violence in Iraq. Three US Marines were killed also Saturday, making October the deadliest month for American forces in Iraq this year.

US military spokesman Maj. Gen. William B. Caldwell said attacks in Baghdad were up 22 percent in the first three weeks of the holy Muslim month of Ramadan despite a two-month old US-Iraqi drive to crush violence in the Iraqi capital.

On Wednesday, and again on Friday, Sunni insurgents believed to belong to al-Qaida in Iraq, staged military-like parades in the heart of five towns in the vast and mainly desert province of Anbar, including the provincial capital Ramadi. Some of these parades, in which hooded gunmen paraded with their weapons, took place within striking distance of US forces stationed in nearby bases.

The parades proved to be a propaganda success, with TV footage of Wednesday's parade shown in many parts of the world, a likely embarrassment for the US military as well as the embattled Iraqi government.