BAGHDAD, Iraq, Aug. 31 - Talks to disarm hundreds of insurgents in the roiling Sadr City ghetto in Baghdad collapsed Tuesday, after a tentative peace pact was abruptly canceled by Prime Minister Ayad Allawi.

Leaders of the Mahdi Army, the rebel force led by the Shiite cleric Moktada al-Sadr, and two well-placed Iraqi sources said an agreement had been reached late Monday that called for the disarming of the rebel force and a halt in American military operations in Sadr City.

Mahdi Army commanders and other Iraqi sources said Tuesday that Dr. Allawi backed out of the agreement on Tuesday morning.

The failure of negotiations raised the prospect of more violence from Mr. Sadr's Shiite insurgency, meaning the Iraqi government may not be able to direct its full political and military resources to quelling the continuing Sunni insurgency in other parts of the country.

Also on Tuesday, a militant Islamic group announced a mass killing in Iraq, showing pictures of 12 dead Nepalese laborers for a Jordanian company. [Page A9.]

The agreement on Monday on Sadr City, reached after several days of negotiations, had come on the heels of the withdrawal of Mr. Sadr's forces from Najaf last week after the intervention of Grand Ayatollah Ali al-Sistani, the country's most powerful religious leader.

"Last night there was a deal," said Yusef al-Nasiri, the leader of the Mahdi Army in Sadr City. "This morning there was supposed to be a press conference. But then Allawi surprised us, and he has taken us back to zero."

Simultaneous news conferences scheduled by Dr. Allawi and the Mahdi Army to announce their earlier deal were called off.

Mr. Nasiri said he had been told by one of the government's negotiators, Qassim Daoud, the minister of state, that Dr. Allawi had objected to the restrictions placed on Americans soldiers operating in the area. Under the agreement, the Americans would be limited to performing reconstruction work; anything more aggressive than that would require the permission of the Iraqi government.

Aides to Mr. Sadr acknowledged that the agreement to disarm the militia forces had been left vague, which may also have given Dr. Allawi pause. He could not be reached for comment.

An American diplomat, speaking on the condition of anonymity, said American officials were unaware of such an agreement between the Iraqi government and Mr. Sadr.

But an Iraqi source said Dr. Allawi had decided to take a harsher approach toward Mr. Sadr and the Mahdi Army, possibly including the use of military force. The source said Dr. Allawi appeared to be motivated by disappointment with the agreement in Najaf, which ended the bloodshed there but left the Mahdi Army intact and made Mr. Sadr stronger than ever, in the eyes of many Iraqis.

In addition, the Iraqi source said, Dr. Allawi had recently come under intense pressure from Shiite political parties that fear that the entry of Mr. Sadr into the political mainstream could diminish their own potential success at the polls.

The groups include the Supreme Council for the Islamic Revolution in Iraq, which was long based in Iran and which has close ties to Ayatollah Sistani, and Dawa, a prominent religious movement. Such established organizations tend to see Mr. Sadr as an upstart.

The Iraqi source said it was possible that Dr. Allawi's intention was to kill or capture Mr. Sadr, in hopes of striking a death blow to his increasingly popular movement, which has the support of many poor Shiites and of 150 imams around the country. He wants to humiliate Moktada," the source said of Dr. Allawi. "He needs a victory."

Another Iraqi political leader echoed those remarks, saying that the prime minister appeared to be reverting to his roots as a former member of Saddam Hussein's Baath Party, where political dissent was often silenced with the gun.

"Allawi is a Baathist at heart, and he inherited all of his thoughts and behavior from them," said a senior leader of an Iraqi political party. "He is like Saddam; he has a smile on his face, but a gun in his hand to shoot you with - and he will use it."

It was the second time this month that Dr. Allawi had backed out of a tentative peace deal struck by his negotiators, who are led by his national security adviser, Mowaffak al-Rubaie, a Shiite political leader who is close to Ayatollah Sistani. Earlier this month, with the fighting raging in Najaf, Dr. Rubaie announced that he had struck a deal with Mr. Sadr, only to see Dr. Allawi renounce it.

Indeed, the abrupt cancellation of the agreement seemed to reveal a split within Iraq's Shiite political leadership, and even inside Dr. Allawi's government, over how to deal with the threat posed by Mr. Sadr and his legions of armed men. Several Iraqi newspapers reported this week that Dr. Rubaie intends to resign over differences with Dr. Allawi, who is a Shiite as well. Both Dr. Rubaie and Dr. Allawi have denied the strains.

The differences between the two are reflected in the larger Shiite community, which has been divided on the issue of dealing with the challenge posed by the Mahdi Army. Mr. Sadr, a 30-year-old street cleric, is disliked by Iraq's Shiite religious establishment, which has felt increasingly threatened by his growing popularity.

Some Iraqi leaders, especially the Shiite ones, have quietly raised the prospect of killing or arresting Mr. Sadr as a way of eliminating him as a threat.

Other Shiite leaders advocate a more diplomatic approach to Mr. Sadr, based on the notion that aggressive action would only inflame his large following.

"Were someone to try to kill Moktada, it would disturb the peace," said Adnan Ali, a leader of the Dawa Party, one of the largest Shiite parties. "Moktada has a lot of sympathizers in Iraq, and it would be incorrect to ignore them."

Some Shiite leaders say a debate has been raging inside Mr. Sadr's movement in recent weeks about the possibility of ending the armed struggle and entering democratic politics. Mr. Nasiri, the Mahdi Army leader, echoed that Tuesday.

"We have a clear political plan," Mr. Nasiri said, "for a new Iraq, for democracy, for human rights."

In the past, though, such declarations by Mr. Sadr and his lieutenants have proved empty. Mr. Sadr has promised repeatedly to lay down his weapons and stop fighting, but he has repeatedly broken that promise.

One of the unanswered questions in the negotiations has been the role of the American government, which has provided most of the armed forces deployed against Mr. Sadr. American diplomats have said that in confrontations like the one in Najaf, they would follow Dr. Allawi's lead.

A Western diplomat expressed skepticism about Mr. Sadr's latest promises to renounce violence, suggesting that they were no more sincere than those that came before. "He has given no indication that he would give up his weapons," the diplomat said, speaking of Mr. Sadr.

The diplomat suggested that Mr. Sadr, who has not taken part in the negotiations himself, is probably trying to buy time as he replenishes his ranks. The appropriate response, the diplomat suggested, was to keep up the pressure.

"We have seen no evidence that Moktada is prepared to forswear violence and enter the political process," the diplomat said. "The movement has suffered damage and wants a timeout. We can't figure out why that is in our interest."



Copyright 2004 The New York Times Company

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