Faction war fears in Iraq city after convoy attack

BAGHDAD (Reuters) - Residents of the southern Iraqi city of Diwaniya said on Sunday they feared all-out war among rival Shi'ite factions after the governor and police chief were assassinated.

Diwaniya governor Khalil Jalil Hamza and police chief Major-General Khaled Hassan were killed on Saturday when their convoy was struck by a roadside bomb.

Retired civil servant Akram Adel said residents were worried that fighting could quickly escalate and spread.

"The fear is of an open armed conflict," he said.

"This could burn down the city completely. It will not be limited to Diwaniya but would extend to all of Iraq, becoming a Shi'ite-Shi'ite war, and God knows when it would end."

Police said on Sunday they had arrested two men, a commander of a force that protects infrastructure in the town and his deputy, who were believed to have been near the site of the attack.

Hamza was a member of the powerful Supreme Islamic Iraqi Council (SIIC), the biggest Shi'ite party in Iraq. Its followers have frequently clashed with supporters of Shi'ite cleric Moqtada al-Sadr in the town.

The flag-draped coffins of Hamza and Hassan were carried through the streets of the city on Sunday. Soldiers followed carrying Iraqi flags and a military band played a dirge.

The bodies were later brought to the Shi'ite holy city of Najaf for burial. The provincial council declared five days of mourning and vowed to find the killers.

Many residents said they believed the men were victims of factional fighting.

Shop owner Muttar Mohammed, 42, said SIIC and Sadr's supporters were targeting each other in an "armed conflict mainly through assassinations". SIIC's armed wing, the Badr Organisation, controls the police who fight Sadr's Mehdi Army militia.

The Shi'ite-dominated south has become increasingly restless as factions vie for control of the oil-rich region, often pitting police loyal to one bloc against militiamen of others.

U.S. forces have been pursuing what they describe as rogue elements of Sadr's Mehdi Army, who are accused of bringing in weapons and receiving training from Iran. There were fierce clashes in mid-April when U.S. and Iraqi forces fought to wrest control of the city back from the Mehdi Army.

Prime Minister Nuri al-Maliki called the assassination a "seditious act", and the two top U.S. officials in Iraq, General David Petraeus and ambassador Ryan Crocker, issued a joint statement condemning it.