BAGHDAD, June 1 (Reuters) – Political tensions in Iraq are
running high with no new government in sight nearly three months
after a March 7 parliamentary election.

While progress has been made toward seating a new
parliament, the long delay could pour fuel on volatile sectarian
differences in Iraq as two large Shi’ite electoral blocs
negotiate the terms of a union, which could push a Sunni-backed
coalition that narrowly won the election to the sidelines.

CAIRO (Reuters) – President Hosni Mubarak told opponents calling for political change in Egypt they needed to offer more than slogans and promised to stand by workers, but showed no sign of ceding to demands to raise the minimum wage.

Mubarak, in his first address to a live audience since returning from surgery in Germany in March, said that investment and continuing economic growth would deliver a better standard of living as complaints from workers multiply.

BAGHDAD, May 4 (Reuters) – Political tensions in Iraq are rising as Shi’ite groups try to ensure that a Sunni-backed alliance which came first in a contested election does not get a chance to form the next government.

Those efforts could pour fuel on volatile sectarian differences at a critical time, and could delay by many months the formation of a coalition government after the March 7 vote. That may thwart U.S. plans to end combat operations in August.

Iraq, which has the world’s third largest oil reserves, has signed contracts with energy majors such as Royal Dutch Shell <RDSa.L> and Lukoil <LKOH.MM> that could more than quadruple oil output over the next few years, but it needs to broaden investment to create jobs and battle a still stubborn insurgency.

Investors, understandably, are wary.

Iraq remains largely isolated from world financial markets. Only a short while ago, local banks were so cut off the only way to transfer money across borders was in cash-stuffed bags.

Today, Iraq has little credit. Only a few dozen companies are listed on the local stock market. The Iraqi dinar <IQD=> is lightly traded. One place to take a punt from afar on Iraq’s future is its Eurobond <IQ024029557=> <XS0240295575=R>.

Below are some of the major risks facing Iraq seven years after U.S. troops toppled Saddam Hussein.



POLITICAL SQUABBLING, POWER VACUUM

Because no single bloc won a majority in Iraq’s 325-member parliament, coalition talks are key to forming a government.

The Iraqiya bloc led by former Prime Minister Iyad Allawi, a secular Shi’ite with wide support among the Sunni minority, took 91 seats in the election, two more than Prime Minister Nuri al-Maliki’s State of Law bloc, according to preliminary results.

Maliki, a Shi’ite who built his reputation on his claim to have rescued Iraq from civil war, formally challenged the results and a special review panel ordered a recount of 2.5 million votes in the capital which has the potential to overturn Iraqiya’s lead.

In addition, the review panel is considering the fate of votes cast for candidates accused of having links to Saddam Hussein’s outlawed Baath party. Most are from Iraqiya.

The Iraqi National Alliance, a Shi’ite bloc which includes anti-American cleric Moqtada al-Sadr, took 70 seats, while a Kurdish alliance picked up 43.

Sadr’s faction, which wants U.S. troops to leave faster and questions the oil deals, is well-placed to join a government.

A major delay in forming a government could undermine security and create a dangerous power vacuum, while marginalising Iraqiya could anger Sunnis, just as U.S. troops accelerate their departure.

U.S. President Barack Obama, focused on a growing conflict in Afghanistan, plans to cut U.S. troop numbers in Iraq to 50,000 by August ahead of a full pullout by the end of 2011.

What to watch:

— Sectarian or political violence flares, as it did during the five months it took to form a government after 2005 parliamentary polls. While this may not derail oil investment, it could scare away potential investors in other sectors.

— Parliament, which cannot function without a government, fails to pass investment legislation already delayed by years of political squabbling, sending a poor signal to firms interested in Iraq but worried about legal risks and an opaque bureaucracy.



A RETURN TO MAJOR VIOLENCE

Iraq is far less violent than when sectarian killings peaked in 2006-07. Maliki takes credit for security gains, but a U.S. troop rise and Sunni militia cooperation also played a big part.

Since March, Iraqi forces backed by U.S. troops have scored major victories against local al Qaeda groups, including the killings on April 18 of al Qaeda’s leader in Iraq, Abu Ayyub al-Masri, and Abu Omar al-Baghdadi, the purported head of its affiliate, the Islamic State of Iraq.

Yet Sunni Islamist insurgents, who the government says are in cahoots with Saddam’s Baath party, can still stage devastating attacks on government ministries and public buildings.

Political feuds, Sunni discontent or an attack on a holy site or a clerical leader could all spark renewed violence, as could any Israeli strike on Iran’s nuclear facilities. Such an attack might prompt mostly dormant Shi’ite militias to retaliate against U.S. forces in Iraq.

Any major violence will push up prices on global oil markets <CLc1>, especially if it appears set to persist.

What to watch:

— Attacks on oil facilities or staff. Iraq’s efforts to secure investment could be derailed by attacks on foreigners.

— Signs that U.S. forces are changing withdrawal plans.

— Iraqi security forces are vulnerable to infiltration and some key ministries are still politicised. Iraq’s military still relies on U.S. troops for air support, logistics and forensic investigation.



KURD-ARAB CONFLICT

Tensions between Arabs and minority Kurds, who have enjoyed virtual autonomy in their northern enclave for almost 20 years, are festering. Kurds suffered massacres in Saddam’s era, but have gained unprecedented influence since 2003 and hope to reclaim areas they deem historically Kurdish.

Others in disputed areas complain Kurds have exploited their newfound prominence at the expense of Arabs and Turkmen. At the centre of the impasse is Kirkuk, the northern province that sits on an estimated 4 percent of world oil reserves.

What to watch:

— Confrontation between the Iraqi army and Kurdish Peshmerga forces.

— Any breakthrough on oil. Iraqi Kurdistan, which estimates its oil reserves at 45 billion barrels, has signed deals with foreign firms that the Iraqi Oil Ministry labels illegal.

— Any resumed exports from Kurdish fields, halted because of that dispute, would be positive. Officials in Kurdistan and Baghdad hint at detente.

— Passage of modern oil legislation, held up for years because of the Kurd-Arab feud.

The delay has not deterred oil majors from signing deals, but potential investors in other sectors view the legislation as an indicator of Iraq’s stability and friendliness to business.



A NEW AUTHORITARIANISM

Iraq’s democratic experiment is important in a region where leaders often lose power only in a "coffin or coup".

The attempt to overturn Iraqiya’s lead after the vote suggest that a democratic culture is still only skindeep.

Many Iraqis believe their country needs a strong ruler. Western powers would be unlikely to stand by if a military coup installed a leader hostile to their interests.

What to watch:

— Any clearly illegal attempt to change the election result. So far all the steps have followed what on the surface appear to be legal procedures.

— Any constitutional changes that would allow leaders to amass power or remain in office. (Editing by Samia Nakhoul)

KHARTOUM, April 10 (Reuters) – Activists warned on Saturday on the eve of Sudan’s historic elections of widespread misdeeds threatening to mar a vote that had been hoped would give Sudan new democratic legitimacy and help end decades of conflict.

"Violations of human rights – particularly restrictions on freedom of assembly and freedom of the press – are threatening prospects for a free, fair and credible vote across Sudan," said Georgette Gagnon, Africa Director of Human Rights Watch.

"Sudanese authorities are clearly failing to uphold international standards," said Gagnon, one of a broad group of international activists who warned of renewed violence.

Much is at stake in the country’s first multi-party vote in a quarter-century, as Sudan struggles to find stability after decades of internal violence, combats deep poverty and seeks to re-establish itself as a credible player on the world stage.

Yet the three-day polls are widely expected to cement the power of President Omar Hassan al-Bashir, who in 2009, 20 years after taking power in a coup, became the first sitting world leader to be indicted by the International Criminal Court, for allegedly plotting war crimes in Sudan’s western Darfur region.

Bashir has promised the elections, which begin on Sunday, will be "free and fair". His party officials criticise the opposition, much of which has pulled out of the poll, saying it is trying to cover up its inability to win votes.

He had hoped credible elections, in which voters will select a new president, a leader of the largely autonomous southern region, parliaments, and leaders of 25 states, would enhance his world standing as he defies the ICC ruling.



LAST-MINUTE WITHDRAWAL

That looks less likely after leading parties’ last-minute withdrawal, including the powerful Sudan People’s Liberation Movement (SPLM), over allegations that Bashir has manipulated voter rolls and packing the electoral commission with loyalists.

The government denies all such charges.

"These elections were born not as something that could strengthen democracy," Yasir Arman, the SPLM candidate who had been Bashir’s chief rival, said at a news conference on Friday in which he and other boycotting politicians levelled a long list of fraud charges against Bashir’s government.

"We can say that these elections will be still-born," he said.

As the elections draw near, such analysis is becoming more widespread. On Friday, the Obama administration said conditions in Sudan, including U.N. reports of restrictions on free speech and association, harassment of the press and limits on access to polling stations, particularly in Darfur, were "disturbing".

Contradicting comments by its Sudan envoy in Khartoum, it said it would consider supporting a brief delay to the elections — even though Sudanese election officials have repeatedly said this is out of the question.

The European Union has pulled its observers out of Darfur, where the United Nations estimates 300,000 people have died since 2003 in a humanitarian crisis that has been labelled genocide by Washington. Arman called on the Carter Center, which has sent observers, including former U.S. President Jimmy Carter, across Sudan, to do the same.

Opposition politicians have joined external activists in warning that human rights violations could worsen if the elections begin as planned on April 11.

"If elections are to take place in such compromised environment, conflicts about the legitimacy of the results might spark violence," the African Centre for Justice and Peace Studies said in a statement.

Polarization ahead of the polls may bode poorly for longevity of the 2005 peace deal that ended a Sudan’s long north-south civil war. A key part of the deal is a referendum, planned for January 2011, which would give voters in south Sudan the chance to decide if they desire independence.

If the referendum is delayed, the south could secede anyway and risk destabilizing the rest of east Africa.

"The re-election of Mr Bashir is going to deepen the governance crisis of the country and it is going to threaten the unity of the country," said Mubarak al-Fadil, leader of the opposition Umma Reform and Renewal breakaway party, also boycotting the vote. (Editing by Giles Elgood)

BAGHDAD (Reuters) – In Baghdad’s Sunni district of Adhamiya, you would never guess that anyone from Iraq’s Shi’ite majority was running for parliament in Sunday’s election.

Posters of Shi’ite Islamist candidates that festoon the rest of the Iraqi capital suddenly disappear when you drive into the upscale Adhamiya neighborhood on the east bank of the Tigris.

BAGHDAD (Reuters) – Iraqis vote on Sunday in a parliamentary election that will help to determine whether their shaky democracy can end sectarian conflict and defeat insurgents who are trying to plunge Iraq back into broader bloodshed.

Iraq’s political course will be decisive for President Barack Obama’s plans to halve U.S. troop levels over the next five months and withdraw entirely by end-2011. It will also be watched closely by energy companies that have committed themselves to investing billions in Iraq’s vast oilfields.

BAGHDAD (Reuters) – A year ago, Iraqi Prime Minister Nuri al-Maliki looked unstoppable as a dramatic security turnaround and slowly improving services proved a formidable weapon for winning votes in January 2009 local polls.

Now, people are asking if Maliki has turned that weapon on himself, as persistent violence, lingering sectarian tensions and growing impatience for public services and growth sow doubts about the Shi’ite leader’s chances of winning a second term.

TAZA, Iraq, Feb 26 (Reuters) – One summer day last year,
insurgents drove a truck packed with explosives into a crowded
market area in the small Iraqi town of Taza, unleashing a blast
that killed 88 people and flattened dozens of clay brick homes.

The horrific attack brought millions of dollars in state aid
and private donations, fuelling a wave of construction around
the blast site that would be the envy of other hardscrabble
towns in a province where desperately needed investment and
development is obstructed by a bitter, decades-long ethnic feud.

KIRKUK, Iraq, Jan 26 (Reuters) – Iraqi Kurd Kamal Aga’s face lights up when he recalls his childhood on a farm in Daquq, south of Kirkuk, where wheat and cotton fields stretched to the horizon and farmers of different ethnicities lived side by side.

That chapter of his life ended in his 20s when the lands of his prominent tribal family were seized in the 1970s, first in agrarian reform and then in the Baath party’s push to move fellow Arabs into areas home to Kurds and other minorities.

Today, Aga lives in the disputed city of Kirkuk, working in a dingy office where he heads a commission seeking to settle some of the approximately 41,000 property claims like his own.

Only 7 percent of the claims have been resolved since the 2003 invasion, reflecting the challenges Iraq faces as it heads toward a March election which could help ease Kurd-Arab tensions over areas like Kirkuk or thrust Iraq back into open war.

The dispute over Kirkuk and other areas, which pits Iraq’s Arab-led government against the largely autonomous Kurdish region in the north, has festered since Saddam’s ouster in 2003.

It is now seen as the chief threat to Iraq’s fragile security as U.S. forces prepare to end combat operations in August ahead of a full withdrawal by the end of 2011.

Kurds, who want to fold the region U.S. officials say may contain 3-4 percent of world oil reserves into their enclave, are likely to end up as kingmakers after the March 7 vote.

They may extract concessions for helping other factions form the next government, a prospect that frightens Kirkuk’s Turkmen and Arabs, who say Kurds have treated them unfairly in their effort since 2003 to reverse Saddam Hussein’s "Arabization".

Many Kirkukis say tensions stem from national politics and not from the realities on the ground.

"This is a feud among political powers treating Kirkuk like a cow that gives milk," said Waleed Saman, an Arab businessman.

"My brothers and I should be the decision makers. Close the door and give us 24 hours, and we’ll come out with a solution."



LANGUAGE BARRIER

Yet changes forced on the city since 2003 do not promise a future in which Arabs and Kurds will mix easily.

The Kirkuk Central School, a well-regarded boys school where Iraqi President Jalal Talabani, a Kurd, studied more than 50 years ago, is one example of the city’s historic diversity.

All students at the school study Arabic and Kurdish, and can pursue other languages if they choose.

"We don’t raise students to discriminate. We teach them to be brothers," said school official Mahmoud Majdab al-Rafaii.

But in Kirkuk’s segregated neighbourhoods where more recent arrivals live, schools teaching at least partially in minority languages like Kurdish or Turkman have taken root since 2003.

Some 460 schools, of a total of about 1,390 across the province, are funded by the government of northern Kurdistan, using its curriculum and books and teaching entirely in Kurdish.

The aim was to give minorities a chance to study in their own language. Yet the schools are producing future generations unable to communicate fluently with their Arab countrymen — and Kurds brought up to believe disputed areas are theirs by right.

Kurdish textbooks identify Kirkuk as "the most rich oil-producing area in Kurdistan. Most residents are Kurds but Arabs, Turkmen, Assyrians and Chaldeans also live there" — a controversial claim in an area whose ethnic feuds have held up a national census and where no reliable demographic figures exist.

Fawzia Abdullah Awanees, a top education official, supports the language experiment but warns it could widen social gaps.

"We need integrated schools, which offer different languages, so people can live alongside one another," she said.

At the Kirkuk Property Disputes Commission, the process of sifting through thousands of complex, multigenerational and often overlapping property claims proceeds at a glacial pace.

Beyond the 41,000 claims the board is working through dating from 1968-2003, many more have sprung up after 2003, when Iraqis fleeing violence became squatters and Arabs brought into Kirkuk under Saddam fled in fear of Kurdish retaliation.

U.N. officials are trying to facilitate settlement as a step in building consensus needed to reach a solution on Kirkuk.

This week, parliament approved changes to expedite the slow claims process. Until the reforms take effect, Aga’s hopes of reclaiming at least part of the family lands, occupied by Kurdish squatters after Arab families fled in 2003, are on hold.

"We still don’t have one metre of land there," he said. (Additional reporting in Kirkuk by Mustafa Mahmoud and in Arbil by Shamal Aqrawi; Editing by Michael Christie and Charles Dick)