BAGHDAD Talks on an alliance between Iraq's two main Shi'ite Muslim blocs to form the next government appear to be nearing a conclusion, with the main sticking point being how to nominate a prime minister, officials said.
A hotly contested but inconclusive general election on March 7 brought Prime Minister Nuri al-Maliki's State of Law coalition 89 seats, two behind the cross-sectarian Iraqiya coalition headed by former Prime Minister Iyad Allawi.
The results must still be certified.
Allawi's group won broad backing from minority Sunnis who dominated Iraq under Saddam Hussein and whose resentment at their loss of influence helped fuel a violent insurgency and years of sectarian warfare after the 2003 U.S. invasion.
A Shi'ite alliance that deprived Allawi's supporters of a say in picking the next prime minister could reignite Sunni frustrations, just as Iraq emerges from the worst of the bloodshed and strikes multibillion-dollar deals with oil firms that could turn it into a top crude producer.
Maliki's State of Law alliance has been in merger talks with the other main Shi'ite grouping, the Iran-friendly Iraqi National Alliance (INA), which gained 70 seats. Together, the two could have a working majority in the 325-seat parliament.
"I think we are in the final stages of putting together the last touches before announcing this alliance," said Ali al-Adeeb, a close ally of Maliki. "I think within the next few days, we will announce this alliance."
But the party of anti-U.S. cleric Moqtada al-Sadr, which accounts for about 40 of INA's seats, has made it clear it does not want Maliki reappointed. Maliki sent Iraqi troops backed by U.S. firepower to crush Sadr's paramilitary Mehdi Army in 2008. Sadrist opposition has dimmed Maliki's chances of a second term.
The prospect of lengthy government-forming talks has been overshadowed by the threat of attacks from a stubborn Sunni Islamist insurgency that continues to kill dozens each month in suicide bombings and shootings.
Protracted coalition talks after the last election in December 2005 allowed the sectarian civil war to take hold.
JOINT COMMITTEE TO DECIDE
While the question of who will be prime minister was still up in the air, the INA and State of Law have moved close enough that representatives say a deal could come within days.
"In principle we ... have agreed on forming one coalition," Amar Tuma, a lawmaker from Fadhila, a party in the INA.
Tuma said a committee has been formed with equal representation from both State of Law and INA to "settle all disputes" and create a mechanism to select a prime minister.
Khalid al-Asadi, a State of Law leader, said Maliki remained its pick for prime minister, but a compromise was possible.
"An agreement could be made on Maliki himself or it could be on another candidate," Asadi said. "We ... will not impose on others the prime minister we nominate."
The next government will have its work cut out.
Iraq needs massive investment to rebuild infrastructure shattered by decades of war, sanctions and underinvestment.
Sadrists were more non-committal about prospects for a deal.
Talks were taking place "to create an initial understanding in preparation to form the cornerstone of a partnership government," said one of them, Qusay al-Suhail.
A lawmaker from Iraq's Kurdish minority, which could play a kingmaker role, said a Shi'ite alliance would speed the formation of a government.
"They were one bloc in the 2005 election. So merging together is possible," said Muhsin al-Sadoun.
Yahya al-Kubaisy, a researcher at the Iraq Institute for Strategic Studies, said the Shi'ite groups were moving toward a deal because they could not countenance the post of prime minister going to a non-Shi'ite.
"I don't think the Shi'ites are willing to lose the post of PM to another bloc," he said. "They are aware that there is no way to do that but to form an alliance."
(Writing by Nick Carey; Editing by Michael Christie; Editing by Jon Hemming)