The Iraq issue dominated a ministerial-level U.S.-European Union dialogue in Washington Thursday, with Secretary of State Colin Powell demanding that Saddam Hussein either disarm immediately or step aside.

Mr. Powell made it clear he believes the Iraqi leader is only interested in indefinitely "stringing out" the weapons inspections process, even if he complies with a demand to destroy his arsenal of al-Samoud missiles found to have exceeded U.N. range limitations.

At a news conference with top EU officials, Mr. Powell said he told Arab League Secretary-General Amr Moussa in a telephone talk earlier Thursday that Arab leaders, at their weekend summit in Egypt, should demand that Saddam Hussein either fully comply with inspectors or depart.

"I would encourage them to issue the strongest possible statement to Saddam Hussein that he must comply," he said. "And time is running out in which he can comply. He's frankly running out of time. Or suggest to him that perhaps to avoid what might flow in terms of serious consequences, it might in his best interest to step down and get out of the way, and let some responsible leadership take over in Baghdad."

Appearing with Mr. Powell in his capacity as EU President, Greek Foreign Minister George Papandreou said the European Union and the Bush administration have a "common purpose" in seeing that Iraq disarms in accordance with U.N. resolutions.

But Mr. Papandreou also said the EU does not believe that all possibilities for resolve the matter peacefully have yet been exhausted.

"We don't exclude the use of force. But we need to use all possible diplomatic means, every window of opportunity, in trying to resolve this crisis, even at the last moment, peacefully," he said.

Mr. Papandreou said he did not think relations have been weakened by the differences between the United States and some European countries over Iraq, saying that democratic debate is, in the end, the strength of the trans-Atlantic partnership.

The participants did express a shared deep concern about North Korea's recent nuclear moves, agreed on the need for early progress toward an Israeli-Palestinian peace accord, and also agreed that there is an "extraordinary opportunity" through efforts by U.N. Secretary-General Kofi Annan to reach a settlement of the Cyprus issue.

In a joint statement here, the United States and European Union said they were imposing travel sanctions against leaders of the separatist Transdniestr region of Moldova to try to force them to negotiate with the government of the east European state.

Officials said the travel ban effects 17 officials of the breakaway region including its self-styled president, Igor Smirnov, key associates and members of his family.

The statement said the Transdniestr conflict, underway for more than a decade, poses a serious risk for stability and security in the region.

It accused the leadership in the mainly Russian-speaking area of Moldova of "obstructionism" and of impeding meaningful negotiations aimed at restoring the unity of predominately Romanian-speaking Moldova.