WASHINGTON, April 29 (UPI) -- Baghdad concurs with allegations by Washington that Iran is arming militants but sends a simultaneous message it wants to engage Tehran, officials say.

"We are worried about any escalation between the United States and Iran for a simple reason: We are the weakest party in this game," Sadiq Rikabi, an adviser to Iraqi Prime Minister Nouri al-Maliki, said.

Iranian influence both explains the ongoing violence in Basra and Baghdad and gives U.S. officials leverage to pressure Shiite cleric Moqtada Sadr and his Mehdi Army to honor a formal cease-fire, the Los Angeles Times said Tuesday.

U.S. officials have yet to produce concrete evidence beyond media statements of Iranian involvement. Iran took the initiative in a letter to the U.N. Security Council Monday to call the allegations "ridiculously false" on par with claims that Saddam Hussein had nuclear weapons.

Regardless, the Times said, many voices in Washington see the row as an opportunity to change U.S. policy from confrontation to engagement.

"You have a belligerent and isolated Iran extending its influence," U.S. Sen. Dianne Feinstein, D-Calif. told CNN Sunday. "We've had no meaningful dialogue with Iran for 30 years ... and I have a very hard time understanding why this administration does not try to do so."