Iraqi PM to hold rare meeting with Kurd president

* U.S. military says the issue is "number one driver of instabilities"

By Shamal Aqrawi

ARBIL, Iraq (Reuters) - Iraqi Prime Minister Nuri al-Maliki is due to meet Kurdish President Masoud Barzani next week, a rare encounter between two leaders whose standoff over territory, power and oil threatens renewed bloodshed in Iraq.

The meeting is likely the first between the two men in more than a year, during which time Barzani, leader of Iraq's largely autonomous Kurdistan region, has accused Maliki of acting like a tyrant and marginalizing the interests of minority Kurds.

Maliki's Shi'ite Arab-led government has labeled oil deals made independently by the Kurds as illegal, and rejects Kurdish claims of control of the oil-producing region of Kirkuk.

"A definite meeting between Barzani and Maliki will take place during Maliki's visit to Kurdistan," said Mahmoud Mohammed, a senior Kurdish official and Barzani aide.

Iraqi officials say Maliki will visit Kurdistan next week, on the heels of Kurdistan's parliamentary and presidential polls on Saturday, which sealed Barzani's re-election and kept his allies in control of the regional parliament.

Maliki may also meet with Barham Salih, a Kurd who is Iraq's deputy prime minister, who Kurdish officials say is set to become Kurdistan's new prime minister.

CLOCK TICKING

Maliki phoned Barzani on Wednesday to congratulate him, a possible olive branch before talks on a row the U.S. military sees as the "number one driver of instabilities" in Iraq.

U.S. Defense Secretary Robert Gates, in Kurdistan on Wednesday as part of a two-day trip to Iraq, said the clock was ticking on the U.S. presence in the country and urged an end to the Kurd-Arab feud before U.S. troops withdraw by 2012.

U.S. troops have defused several standoffs between Iraqi forces and Kurdish Peshmerga troops in disputed areas.

Should Iraq fend off renewed violence, there could be a "modest acceleration" in the gradual U.S. troop withdrawal scheduled to be completed by 2012, Gates said.

But it will be hard for Barzani to back down. On Wednesday, the Kurdish leader told reporters the dispute over Kirkuk, which has a mixed population of Kurds, Arabs and Turkmen, could be solved by sticking to a plan laid out in Iraq's 2005 constitution to hold a referendum and census on the city's fate.

The plan is rejected by Baghdad, and the United Nations fears it could destabilize the situation even further.

Kurds claim Kirkuk as their ancient capital, and hope it and other disputed territories can be annexed by the Kurdistan Regional Government. Arabs and Turkmen there fear Kurdish rule.

Saddam Hussein brutally oppressed Iraq's Kurds, and packed Kirkuk with Arabs to strengthen his influence.

(Additional reporting by Khalid al-Ansary; Writing by Mohammed Abbas; Editing by Jon Hemming)