CAIRO, Egypt —  Syria has made no final decision about restricting Palestinian militant groups operating on its soil, President Bashar Assad (search)  said in an interview.

Assad's remarks, made in an interview with Newsweek magazine posted on its Web site Saturday, indicated that Syria had not closed the militants' offices in Damascus. Assad suggested that any crackdown on the groups was linked to progress on resuming peace talks with Israel.

After meeting Assad on May 3, Secretary of State Colin Powell (search) said Syria told him it had closed the offices of several Palestinian groups. U.S. officials accompanying him named the groups as Hamas (search), Islamic Jihad and the Popular Front for the Liberation of Palestine — General Command, considered by the United States and Israel as terrorist organizations.

In the Newsweek interview, Assad said he discussed with Powell stopping the activities of Palestinian groups, "not closures."

"These are not offices really. They are houses where these groups do media activities," Assad was quoted as saying. "But restricting them is related to the Golan — to resuming the peace talks on the Syrian track."

The president was asked if he gave Powell an assurance there would be some restrictions on these groups.

"We talked about all these issues, but no final decision was made. We are still talking," Assad replied.

Assad said he could not stop the flow of funds to the Palestinian groups. "All the Arabs support the Palestinians and send them money. You cannot stop that. No one in our area calls it terrorism. They are talking about freedom."

Assad confirmed that Powell had raised the issue of Hezbollah, the militant Lebanese group that battled Israeli troops occupying southern Lebanon.

"They do not get arms via Syria. We give them political support because they want to get back their lands," Assad said, referring to a tiny parcel of border territory still occupied by Israel after it pulled most of its troops from the country.

Asked if he would consider stopping political support for Hezbollah, Assad replied: "As long as they don't do any terrorist acts, we are supporting them."

Assad sounded pessimistic about the chances of peace under the current Israeli leadership.

"We don't trust (Israeli Prime Minister Ariel) Sharon because he definitely doesn't want to make peace," he said.

Assad also said Syria barred entry to members of Saddam Hussein's government who tried to flee Iraq during the war. Pressed on this, he said: "Somebody came before (the war)."

He acknowledged that Iraqi oil had flowed into Syria, but denied any Iraqi weapons or mass destruction or conventional weapons were allowed across the border.

Some "arms were smuggled into Iraq by individuals; the government had nothing to do with it."