A U.N. envoy left Baghdad on Wednesday saying Iraq-U.N. relations had not reached a crisis despite his failure to persuade the government to allow resumption of weapons inspections.

"I still think that a lot of discussion, negotiations and bilateral talks can take place," Prakash Shah, the envoy to U.N. Secretary-General Kofi Annan, said before leaving for New York.Shah's departure came a day after he announced he had failed to persuade Iraqi officials to back down from the decision earlier this month to cut off relations with the inspectors charged with finding Iraq's weapons of mass destruction.

Iraq said it refused cooperation because the inspectors were not really working toward lifting U.N. sanctions on Iraq that prevent the free export of oil, its most valuable commodity.

Under U.N. resolutions, the inspectors must declare Iraq has eliminated its lethal weapons before the sanctions, imposed after Iraq's 1990 invasion of Kuwait, can be canceled.

Shah was to arrive Thursday in New York and would later brief Annan on his talks with Iraq's deputy prime minister, Tariq Aziz.

Before leaving Wednesday, Shah said he still hoped a solution could be found to allow resumption of inspections.

"I will not say it is a crisis," he said.