BAGHDAD, 11 May 2006 — A dispute over who should head the Oil Ministry held up yesterday the formation of a unity government the United States hopes can end rampant bloodshed and allow it to start withdrawing troops from Iraq. Political sources said lack of agreement within the dominant Shiite Alliance on the powerful post was the main remaining obstacle to the oil-rich country’s first full-term government since US-led forces toppled Saddam Hussein in 2003.

Parliament met for only its second session of normal business since December’s elections, which were followed by five months of political stalemate as sectarian violence worsened. And political parties continued negotiations on building a government encompassing rival Shiites, Sunni Arabs and Kurds — Iraq’s three main religious and ethnic groups.

Prime Minister-designate Nuri Al-Maliki, a tough-talking Shiite who has won grudging Sunni respect, said on Tuesday he was close to completing the Cabinet.

Though seen as a Shiite hawk when named last month, Maliki insisted he was ready to reach out to Sunni rebels who laid down their arms and joined the US-backed political process. He suggested the Cabinet lineup could be announced yesterday after rival blocs agreed to fill the sensitive ministries of interior and defense with figures free of ties with militias accused of running death squads.

But a senior negotiating source told Reuters yesterday: “We are still not done yet, most of the work has been done, but the government is not ready. I do not think it will be ready now, we still need a few days.” Party sources said the Oil Ministry post would be nominated by the Shiite Alliance bloc, which won near-majority in December’s polls, but that it had so far failed to agree on a joint candidate.

The job is crucial for efforts to rebuild the country of around 27 million people ruined by decades of mismanagement, sanctions and war. Iraq boasts the world’s third largest oil reserves but the sector has been crippled by insurgent attacks, corruption and smuggling.

Leading contenders for oil minister includes technocrat and secular former minister Thamir Ghadhban and Hussain Al-Shahristani, a leading Shiite politician.