(Agencies)
Updated: 2008-01-13 10:24

Deputy Prime Minister Barham Salih, the cabinet's senior Kurd, hinted at deeper political changes ahead. Boycotts by Sunnis and others had "undermined the government's ability to cope with challenges" and it was time for a shake-up, he told Reuters in an interview in the Kurdish city Sulaimaniya.

"Improvements in security will not last without a serious review of the makeup of the government," Salih said. "The Kurdish Alliance is calling for dramatic, serious reforms of the government. Otherwise the results could be catastrophic."

The Accountability and Justice bill replaces an existing law that Sunni leaders had complained amounted to collective punishment against their sect.

Thousands of Baath party members, many of them Sunni Arabs, were fired from government jobs after Saddam was toppled in the US-led invasion in 2003, fuelling a long-running insurgency against Iraq's new Shi'ite rulers and US forces.

Shi'ite and Kurdish leaders were reluctant to reward people they blamed for persecuting them under Saddam's regime.

The new law will allow thousands of former party members to apply for reinstatement in the civil service and military. A smaller group of more senior members will still be banned but can now receive their state pensions. Victims of repression under Saddam can sue Baath party members for compensation.

Some Shi'ite lawmakers said the new law was too lax and some Sunnis said it was still too severe, but a majority backed its main provisions in drawn-out, article-by-article voting.

Bush, who met his Iraq ambassador and top military commander during a visit to neighbouring Kuwait on Saturday, said a strategy of sending nearly 30,000 additional troops to the country in 2007 had proven a success.

"Iraq is now a different place from one year ago. Much hard work remains, but levels of violence are significantly reduced. Hope is returning to Baghdad, and hope is returning to towns and villages throughout the country," Bush said. He acknowledged that until last year "our strategy simply wasn't working".

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