Panetta warns clashes between Syria and Turkey may escalate LIMA, Peru - The continued exchange of artillery fire between Syria and Turkey raises additional concerns that the conflict may escalate and spread to neighboring countries, Defense Secretary Leon Panetta said Saturday. Panetta said the U.S. is using its diplomatic channels to relay worries about the fighting in the hopes that it will not broaden. His comments came on the heels of warnings from Turkey's prime minister that his country is not far from war with Syria. Turkish and Syria traded artillery fire Saturday as rebels clashed with President Bashar Assad's forces near the border, heightening the fears that the crisis could erupt into a regional conflict. Turkish Prime Minister Recep Tayyip Erdogan on Friday cautioned Damascus not to test Turkey's "limits and determination" and said Ankara was not bluffing in saying it won't tolerate such acts. In other comments during a press conference with Peru's Defense Minister, Pedro Cateriano, Panetta warned that the international community is ready to impose more sanctions against Iran if the country does not begin to address concerns about its nuclear program. The economic sanctions are having a damaging effect on Iran, as inflation and unemployment rise, and the value of the currency drops, increasing prices. Iran, said Panetta, has to engage seriously with the international community to resolve issues with its nuclear program and if it doesn't, "make no mistake, the international community will continue to impose additional sanctions." Panetta's comments came after meetings Saturday with Peruvian President Ollanta Humala, and the country's defense ministry -- dubbed the Pentagonito -- to continue meetings with Cateriano. After his meeting with Humala, Panetta said the U.S. is increasing efforts to build partnerships in the region and said America will do whatever it can to provide assistance to Peru to meet the challenges of terrorism, illicit trafficking and humanitarian needs. Later, he and Cateriano, during a joint press conference, said that they are negotiating an update in the defense cooperation agreement between their two countries. Noting that the last agreement was sealed in 1952, Panetta said the U.S. is committed to improving its ability to conduct joint military exercises, training and education exchanges with Peru. Cateriano said updating the agreement will help his country modernize its military. Panetta also said that the U.S. wants to work with Peru to confront the drug trafficking, calling it "one of the most serious threats we face in the hemisphere." He said he listened to the concerns of the Peru officials, and will determine if there is any additional help the U.S. can provide. Panetta is leaving Peru and will fly to Uruguay Saturday afternoon to attend a regional meeting of defense ministers from the Americas.