New York  - The UN military observer mission in Ethiopia and Eritrea began Thursday to liquidate its headquarters in the capital cities of both countries, one day after the UN Security Council terminated its mandate.

The council's decision stemmed from the failure of both countries to accept a compromise solution over their border dispute. The two- year war between Ethiopia and Eritrea ended in 2000 with a ceasefire that was to be monitored by the UN mission. The UN said the war claimed at least 70,000 lives on both sides.

Both sides rejected international efforts to re-demarcate the border.

The UN Mission in Ethiopia and Eritrea (UNMEE) said 46 countries contributed thousands of military and civilian personnel to the mission during the past seven and a half years.

It had already pulled out of Eritrea and the remaining 320 military observers currently in Ethiopia will be sent home by the end of August.

"The peacekeepers have done their best and the UN will continue to offer its good offices to any efforts that Ethiopia and Eritrea make to resolve their differences," UNMEE's acting special envoy Azouz Ennifar said in Addis Ababa.

The pull-out decision was prompted by the situation in Eritrea, which last year withheld diesel supply for the mission, grounding UN surface and aerial transportation and shutting down electricity to 32 UN observer posts inside a temporary security zone stretching from Djibouti to Sudan.

UN Secretary General Ban Ki-moon said on Wednesday he regretted the decision by both countries for a follow-up UN presence. But he welcomed the council's decision to end the mission's mandate, which originally was to police a ceasefire agreement and monitor the zone.

Ban said in a statement that he hopes the two countries would be able "to break the current stalemate and create conditions necessary for the normalization of their relations, which is key to peace and stability in the region." (dpa)