Iraq Shi'ite party urges deal on federalism

BAGHDAD (Reuters) - A powerful Shi'ite political party on Sunday urged Iraq's other blocs to reach agreement on forming federal regions, saying failure to do so would lead to "dangerous" consequences for the country.

The Supreme Islamic Iraqi Council (SIIC) says the country suffered too much under Saddam Hussein's highly centralized rule and wants more power devolved to various regions.

But the issue of forming autonomous areas is highly emotive, with minority Sunni Arab leaders fearing it might tear Iraq apart. Some Shi'ites are also opposed.

Parliament passed a law in late 2006 allowing for federal regions to be established, but Shi'ite and Sunni leaders agreed at the time to put off implementation for at least 18 months given the sensitivity of the issue.

Adel Abdul-Mahdi, a senior SIIC leader and who is also one of Iraq's two vice presidents, said many of Iraq's woes such as friction between the central and provincial authorities were caused because the federalism law had not been implemented.

"We have a few months to reach final drafts," he told a news conference, referring to the mechanics for implementing the law.

"Without the federal system, Iraq will not be able to move forward. Therefore, the Supreme Council urges all political powers to work hard to reach a final agreement in forming regions to stabilize the political situation, otherwise we will face dangerous possibilities," he said without elaborating.

SIIC leader Abdul Aziz al-Hakim was also at the news conference. Hakim recently returned from Iran, where he had received medical treatment for cancer, saying he had been cured.

SIIC has proposed merging nine of Iraq's 18 provinces into one autonomous region in the Shi'ite south, where most of Iraq's proven oil reserves are located.

Sunni Arabs, dominant under Saddam, fear a federal Iraq would hand northern and southern oilfields to ethnic Kurds and Shi'ites respectively, and would leave them trapped in a poor, desert rump state in central and western Iraq.

The influential bloc loyal to Shi'ite cleric Moqtada al-Sadr has also rejected the concept of federalism, underscoring the deep rivalry between Iraq's two biggest Shi'ite entities.

The two Shi'ite factions are vying for control of the towns and cities in Iraq's predominantly Shi'ite south.

The biggest supporter of SIIC's federalism push is Iraq's Kurds, who already enjoy a large measure of autonomy in the north of the country.

Iraq's constitution describes Iraq as a republican, parliamentarian, democratic and federal state but it does not define specifically the degree or nature of the federalism.

(Writing by Dean Yates and Mariam Karouny)