Iraq Shi'ite ayatollah demands U.S. fire envoy

By Mariam Karouny

BAGHDAD, March 31 (Reuters) - A leading Iraqi Shi'ite cleric demanded on Friday that the United States sack its ambassador, accusing Zalmay Khalilzad of siding with his fellow Sunni Muslims in the sectarian conflict gripping the country.

In a sermon read out at mosques for Friday prayers, Ayatollah Mohammed al-Yacoubi said Washington had underestimated the bloody conflict between Shi'ites and the once dominant Sunni Arab minority, which many fear threatens to trigger a civil war.

"By this, they are either misled by reports, which lack objectivity and credibility, submitted to the United States by their sectarian ambassador to Iraq ... or they are denying this fact," Yacoubi said in the message, later issued as a statement.

"It (the United States) should not yield to terrorist blackmail and should not be deluded or misled by spiteful sectarians. It should replace its ambassador to Iraq if it wants to protect itself from further failures."

After the imam of Baghdad's Rahman mosque read that line, worshippers chanted "Allahu Akbar" -- God is Greatest.

Afghan-born Khalilzad, former envoy to Kabul and the most senior Muslim in the U.S. administration, has been in Iraq for 10 months and is spearheading Washington's increasingly urgent efforts to pressure Iraq's leaders into a unity government.

Yacoubi is the spiritual guide for the Fadhila party, one of the smaller but still influential components of the dominant Islamist Alliance bloc. He is not part of the senior clerical council around Grand Ayatollah Ali al-Sistani in Najaf.

Nonetheless, Shi'ite politicians said his comments reflected widespread disenchantment among them with the ambassador.

"It's a very good statement," one senior official in the Alliance, not from Fadhila, said of Yacoubi's sermon.

CRITICISM

Khalilzad has been criticised by Shi'ite leaders, who openly resent his championing of efforts to tempt Sunni Arabs away from armed revolt and into a coalition government.

Yacoubi said: "The American ambassador and the tyrants of the Arab states are giving political support to those parties who provide political cover for the terrorists."

Alliance leader Abdul Aziz al-Hakim accused him last month of provoking the bombing of a Shi'ite shrine by making remarks critical of "sectarian" tendencies among the Shi'ite leadership.

The shrine attack in Samarra sparked reprisals that killed hundreds and continues to poison the political atmosphere.

Prime Minister Ibrahim al-Jaafari has also criticised U.S. "interference" this week in Iraq's political process. Jaafari's nomination to a second term by the Alliance is a major sticking point in talks with Sunnis and ethnic Kurds on a government.

Shi'ite politicians say Khalilzad has delivered messages from U.S. President George W. Bush to both Hakim and Sistani in the past week urging them to drop Jaafari, whose nomination was secured with the support of Iranian-backed cleric and militia leader Moqtada al-Sadr.

U.S. diplomats deny taking sides in the issue.

Khalilzad is now planning talks with Iran, Washington's old enemy in the region, to try to ease the crisis in Iraq. The United States accuses Shi'ite Iran of fomenting violence.

Politicians have been debating how to form a new government since parliamentary elections in December, but appear to have made little real progress.

There is haggling over a Sunni demand for a security veto and the issue of who gets what job remains wide open.

(Additional reporting by Hiba Moussa, Seif Fouad, Terry Friel and Alastair Macdonald)