(Adds comment from U.S. State Department, paragraphs 8-9)
DAMASCUS, March 12 (Reuters) - A senior U.S. diplomat held talks on Monday with a Syrian official on how Damascus was coping with a flood of Iraqi refugees, the first such talks in the Syrian capital for more than two years.
Assistant Secretary of State Ellen Sauerbrey is the first U.S. official to hold high-level talks with Damascus since January 2005 when then Deputy Secretary of State Richard Armitage met Syria’s president.
Washington has led a campaign to isolate Syria since but signs have emerged recently that an end to its diplomatic isolation is near.
Syria took part along with the United States and other nations in a meeting about Iraq in Baghdad last week and European Union foreign policy chief Javier Solana will visit Damascus on Wednesday.
"The way Syria has dealt with the refugee crisis has left a positive impression on the U.S. side, but all the problems in the region are related," Syrian Deputy Foreign Minister Fayssal Mekdad told reporters after his talks with Sauerbrey.
"We explained our view about the general situation and how it was necessary to have a serious dialogue with the United States about all these issues," he said.
Sauerbrey did not speak to reporters after the talks and headed for meetings with Damascus-based U.N. humanitarian officials.
In Washington, State Department spokesman Tom Casey said the two sides had a "useful exchange of views" and that Sauerbrey had urged Damascus to continue providing protection and assistance to Iraqi refugees.
"The Syrians expressed their willingness to continue hosting displaced Iraqis although noting the burden that this does place on them and their system," said Casey.
Sauerbrey’s visit to Syria comes after Washington was criticized for ignoring the plight of Iraqi refugees and doing little to help them settle in the United States.
Syria, which opposed the 2003 invasion of Iraq, hosts around one million Iraqi refugees, despite massive costs to its subsidies system and strains on its infrastructure and public services.
Thousands more Iraqi refugees cross into Syria every week, prompting questions whether Syria, which faces economic problems of its own, can afford to keep the border open.
The United States accuses Damascus and its ally Iran of helping insurgents in Iraq. Syria denies this and has said it is willing to work on stabilizing Iraq. But it says a timetable for the withdrawal of U.S. troops is needed to achieve peace.
The United States said last month it aimed to settle up to 7,000 Iraqi refugees by the end of September compared with only 202 it took in last year.
Washington, which stopped direct aid to Syria decades ago, also pledged $18 million to the United Nations refugee agency, the main international organization dealing with the crisis. (Additional reporting by Sue Pleming in Washington)