Iraq's war against al Qaeda in final stage-minister

BAGHDAD (Reuters) - Iraq's war against al Qaeda and sectarian militants is nearly over but elections due next year will be the crucial test of the country's stability, Foreign Minister Hoshiyar Zebari said on Thursday.

While the crack of car bombs still rips across many Iraqi cities almost daily, bloodshed between once dominant Sunni Arabs previously allied to al Qaeda and majority Shi'ites now in power has fallen to lows not seen since the 2003 U.S. invasion.

"It's not over until it's over," Zebari said in an interview. "But I think the war over al Qaeda has reached its final stages. I would say they have been dealt a severe blow, they are on the retreat."

An air of normality has begun to emerge among the blast walls, road blocks and barricaded neighborhoods of Baghdad.

More and more shops are daring to stack their goods on dusty pavements, work crews have begun to repair cracked streets and families once again venture out near dusk to stroll along the banks of the Tigris river.

An infusion of extra U.S. troops, a decision by Sunni tribal chiefs to turn on al Qaeda, the growing professionalism of Iraqi security forces and a crackdown on renegade militias that had established fiefdoms all contributed, Zebari said.

"But Iraq will continue to face threats of terrorism, of intervention, of violence because really what Iraq has been through was revolutionary in a way," Zebari said. "We need to be patient, things are moving in the right direction."

Zebari, an ethnic Kurd, said there were still fundamental differences between Iraq's fractious groups about the future -- whether Iraq would be secular or religious, federal or centralized, and how majority Shi'ites will interact with minority Sunni Arabs and Kurds.

Some political factions worry about the ambitions of Shi'ite Prime Minister Nuri al-Maliki, who managed on Thursday to have parliament approve a landmark security pact with Washington that will see the last U.S. soldier leave by the end of 2011.

Sunnis, who dominated Iraq under Saddam Hussein, are concerned about how much influence they will be allowed in Maliki's Shi'ite-led Iraq.

Kurds, who enjoy autonomy in the north, are concerned about their say in government and about the oil city of Kirkuk, which lies outside Kurdistan but is claimed by Kurds as their ancestral home.

"I would say there have been serious concerns by many parties about the way it's going, this country, about the future," Zebari said. "But I think the constitution of the new Iraq ... will not allow further appeals of any strongman."

Zebari said provincial elections set for January 31, 2009, and a general election due to be held before the end of next year will determine the future of Iraq.

"It will be the key year," he said.

"That's one reason we wanted this (U.S. security) agreement to cover us for this critical year. It is a possibility, with a lack of security, with the fall of Iraqi consensus, that we will be back to square one."

(Editing by Dominic Evans)