U.S. confirms talks with Iran on Iraq Sat. 25 Mar 2006

By Alastair Macdonald and Mariam Karouny

BAGHDAD (Reuters) - The United States will talk to Iran about Washington's accusations of Iranian destabilisation of Iraq, Secretary of State Condoleezza Rice said on Friday in the first public acceptance of an Iranian offer to meet.

Iran, responding to an overture by Washington last November, said last week it was open to talks on the issue with the American ambassador to Iraq, Zalmay Khalilzad, but until Rice's comments U.S. officials had given no firm reply.

"I'm quite certain that at some point they will meet," Rice told a Washington news conference, referring to the planned talks. She added that they would be "at an appropriate time."

Washington has charged Tehran with meddling in the sectarian strife in Iraq, an accusation denied by Iran, which blames the U.S.-led forces that invaded in 2003.

While U.S. talks with Iran are unusual because the two countries have no diplomatic ties, Rice noted Khalilzad -- in his former role as U.S. envoy to Afghanistan -- had held meetings with Iranian officials about that country.

Analysts say both the United States and Tehran are worried about worsening violence in Iraq, pushing them to agree to talks. Iraqi political sources have said they expected Khalilzad to meet Iran's representatives this week. Iran has not announced its team.

Khalilzad has renewed accusations Iran is backing Shi'ite violence in Iraq. Some analysts say Tehran is using Iraq to deflect U.S. pressure on Iran over its nuclear programme.

"Training and supplying, direct or indirect, takes place, and that there is also provision of financial resources to people, to militias, and that there is presence of people associated with Revolutionary Guard and with MOIS (Iranian intelligence)," Khalilzad told the Washington Post.

MEHDI ARMY

He said he was particularly concerned about the Mehdi Army militia of Iranian-backed cleric Moqtada al-Sadr, and said the political parties had to do more to curb their armed supporters.

Rice's confirmation of talks with Iran on neighbouring Iraq came as Iraqi leaders held their first formal talks in several days, with Washington keeping up pressure on them to form a national unity government.

Sectarian and insurgent violence saw 35 more people killed on Friday, with 20 deaths reported in Baghdad alone. In one attack, gunmen shot dead four workers in a bakery and left a booby trap package that killed a policeman when he opened it.

A bomb killed five worshippers and wounded 17 as they left weekly prayers at a Sunni Muslim mosque at Khalis, north of the capital, police said. Gunmen shot dead four people in a Shi'ite home in Mahmudiya, south of Baghdad, police said.

Two U.S. soldiers were killed on Thursday west of Baghdad, the military said in a statement.

U.S forces said they were conducting major sweeps against insurgents around Baghdad's western Abu Ghraib suburb -- near where three Western hostages were rescued on Thursday -- and in several villages in and around the northern city of Kirkuk.

Khalilzad, who has been a driving force in pressing for a unity government, said: "I am the one who's saying, 'The country is bleeding, you need to move'."

He told the Washington Post that despite a suicide car bombing on Thursday that killed at least 25 people at a police headquarters, more people died in death squad-style sectarian killings in recent weeks than in bombings.

The destruction of a Shi'ite shrine a month ago sparked a wave of reprisals that raised the prospect of pro-government Shi'ite militias launching Iraq into all-out civil war.

UNITY GOVERNMENT

The leaders of the main parliamentary parties elected in December attended the talks on forming a government. Further talks are due on Saturday.

At a news conference afterwards, the leaders again committed themselves to forming a unity government, but there was little sign of progress in breaking a logjam over who will lead it.

President Jalal Talabani said he was optimistic.

Prime Minister Ibrahim al-Jaafari told Arabiya television he would not step down and was confident of the continued backing of his Shi'ite Alliance bloc, despite opposition from other parties. Sources within the Alliance said internal pressure and reluctance from Washington may yet force Jaafari to stand aside.

"All options are up for discussion," one senior government source said, adding that even the principle the prime minister should come from the dominant Alliance was open to change.

Amid the violence in Iraq, a Pentagon report said on Friday, quoting captured Iraqi documents, that Russia's ambassador in Baghdad gave intelligence on U.S. military movements to Iraq's government in the opening days of the 2003 U.S.-led invasion.

The unclassified 210-page report by the U.S. military's Joint Forces Command cited an April 2, 2003, document from the Iraqi minister of foreign affairs to President Saddam Hussein as stating the Russian ambassador to Baghdad had funnelled strategic intelligence on U.S. plans to Saddam's government.

The document was written about two weeks after the invasion but before U.S. soldiers and Marines entered the capital.

(Additional reporting by Frances Kerry in Washington)

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