The British-based watchdog said the international observers had simply become witnesses to murder in Syria, following an escalation in violence.
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"We call on the international observers to work for the immediate implementation of the Kofi Annan plan and ceasefire in order to stop the killings in Syria – or to return to their home countries," the Observatory said.
The comments come as the UN observer force blamed both sides in the conflict for hampering its peace mission in Syria, the Associated Press reported.
Speaking in the capital, Damascus, the mission’s Chief Military Observer, Major General Robert Mood, said a spike in violence over the past 10 days had limited the UN's ability to verify reports, and do its job.
He accused both the Syrian military and rebel forces of willingly participating in the violence.
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Meanwhile, reports coming in overnight Friday said seven people died in Damascus as Syrian troops shelled a rebel area of the city’s north.
Activists said that earlier, at least 36 people were killed in violence Friday, including four demonstrators in the northern city of Aleppo, AFP reported.