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BAGHDAD (Reuters) - Iraqi lawmakers passed a long-delayed election law on Sunday to pave the way for a January poll, after parliament sidestepped a potentially explosive row over the oil-producing city of Kirkuk.
Prolonged wrangling over the law had thrown the election date into doubt, and U.S. officials had feared the row would hit plans to draw down U.S. troops next year.
"Tough challenges remain and I am sure there will be difficult days to come but this agreement advances the political progress that can bring lasting peace and unity to Iraq, and allow for an orderly and responsible transition of American combat troops out of Iraq by next September," U.S. President Barack Obama said.
The parliamentary election is seen as a crucial test for the world's 11th largest crude oil producer as it emerges from carnage unleashed by the U.S. invasion in 2003.
After weeks of deadlock, a compromise over the conduct of the poll in Kirkuk was approved by 141 out of 196 lawmakers, in a rowdy session broadcast live on state television.
Kurds consider Kirkuk their ancient capital, want to make it part of their northern region and sought to use up-to-date voter rolls to reflect an increase since 2003 in their numbers there.
Arabs and Turkmen say the city should remain under central government authority and believe Kurds have stacked Kirkuk to tip the demographic balance.
The law ended up using current voter registrations but made the election result subject to a review if there was an unusual increase in registered voters in the last five years. The consequences of a possible review were left ambiguous.
The actual date of the election will be decided by Iraq's electoral commission, which said it would not be on January 16, as originally scheduled.
"We will work even during our holidays," said the head of the commission, Faraj al-Haidari, vowing to prepare swiftly.
The legislation allows for the vote to be held between January 16 and 31. U.S. Ambassador Chris Hill said he expected it to be on January 23.
Analysts said lawmakers had done nothing to resolve the longer-term status of Kirkuk, whose crude fields contain about 13 percent of Iraq's proven oil reserves.
"The Kirkuk situation is still on hold. It's like a bomb waiting to be activated. There's no agreement at all on that," said political analyst Hazim al-Nuaimi.
Kirkuk is one of several flashpoints that could lead to clashes between Baghdad's Arab-led government and Kurds who have enjoyed a large degree of independence since the 1991 Gulf War.
U.S. officials, fearful Kurd-Arab tensions might be the seed of Iraq's next war, said they welcomed parliament's solution.
"The whole trick was to make people understand that this election, these election rules, these voter rules, cannot be used to try to get a leg up in the Kirkuk negotiations," said U.S. envoy Hill. "So we tried to very clearly fence it off."
Lawmakers began the Sunday session by voting article-by-article, but quickly moved to pass the entire bill once the sticky issue of Kirkuk reared its head.
The poll law also gave voters the right to choose individual candidates -- known as an open list system -- as opposed to the legislation in the previous national election that only allowed the electorate to choose a party.
Political analysts say the open list system is likely to benefit Shi'ite Muslim Prime Minister Nuri al-Maliki, who will seek credit from voters for Iraq's fall in violence.
"Being able to hold the elections on time ... is a victory of the will of the Iraqi people and a hard response to the terrorists and former regime members who want to unsettle security and blow up the political process," Maliki said.