Annan also said any assault on the Shi'a holy city of Al-Najaf, where other Iraqi insurgents are hiding, would have "unimaginable consequences."
At the same time, Annan defended the U.S.-led coalition's move to reduce the number of unauthorized armed forces in Iraq. "I think it is normal for the occupying power to want to have a cohesive security and law-and-order forces," he said. "You cannot have an army, a police. or lots of militia operating in the same territory. So the effort to disband the militia I think is a good objective.
U.S. officials have stressed their recent actions against positions in Al-Fallujah were defensive responses and that they were moving cautiously. U.S. President George W. Bush said today that the situation in most of Al-Fallujah is normal and U.S. forces are moving against a few pockets of resistance.
A chief coalition official, U.S. Army Brigadier General Mark Kimmitt, said earlier today the coalition has not abandoned other approaches to ending the standoff. "Even though sometimes it may not look like it from the media reports, there is still a determined aspiration on the part of the coalition to maintain a ceasefire and solve the situation in Fallujah by peaceful means," he said.
Annan said he hopes the formal end of the U.S.-led military occupation will lessen some of the resistance in Iraq.
The secretary-general's envoy Lakhdar Brahimi is recommending the formation of a caretaker Iraqi government by the end of next month to give time to negotiate issues of sovereignty with U.S. officials. Brahimi will return to Iraq soon to work with local leaders on shaping an interim governing plan.
Separately, Annan also defended the United Nations against continued charges of abuse of the "oil-for-food" program. Annan recently appointed a panel headed by former U.S. Federal Reserve System Chairman Paul Volcker to explore all issues.
Annan said his office would act to discipline any UN staff found guilty of wrongdoing. But he said some of the recent comments about UN culpability were "outrageous and exaggerated." "These allegations are doing damage and we need to face it sternly and do whatever we can to correct it and we are beginning to put out quite a lot of information which I hope will correct some of the misinformation that has been put out," Annan said.
Annan said the regime of Saddam Hussein was to blame for many of the abuses. He said the UN Secretariat had no power to stop the smuggling of oil from Iraq.
Annan also denied allegations that his son, Kojo, was involved in review of contracts in the program. Kojo Annan worked for Cotecna, a company assigned by the UN to review humanitarian contracts.