AP reports:

Iraqi political parties have run into major obstacles in talks on a new national unity government, officials said Sunday, raising the possibility of a major delay that would be a setback to U.S. hopes for a significant reduction in troop levels this year. U.S. officials hope a new government that includes representatives of all Iraq's religious and ethnic communities can help calm violence by luring the Sunni Arab minority away from the Sunni-dominated insurgency so that U.S. and other foreign troops can begin to head home.

But prospects for a broad-based coalition taking power soon appeared in doubt after officials from the Shiite and Kurdish blocs told The Associated Press that talks between the two groups had revealed major policy differences. The political parties have decided to negotiate a program for the new government before dividing up Cabinet posts - a step that itself is also bound to prove contentious and time-consuming. Leaders from Iraq's Shiite majority oppose a Kurdish proposal to set up a council to oversee government operations, the officials said. Shiites also reject a Kurdish proposal for major government decisions to be made by consensus among the major parties rather than a majority vote in the Cabinet. "If the position of the Shiite alliance is final, then things will be more complicated and the formation of the government might face delays," Kurdish negotiator Mahmoud Othman said.

Shiites believe the Kurdish proposals would dilute the power that Shiites feel they earned by winning the biggest number of seats in Dec. 15 parliamentary elections. But while Shiite parties control 130 of the 275 seats, that is not enough to govern without partners. "Some parties are trying to undermine efforts to form a new government," Shiite politician Ammar Toamah said. "These blocs should not necessarily participate in government."

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