The U.S. has insisted it can't comply with demands from Iraq's top Shi'ite cleric, Grand Ayatullah Ali al-Sistani, that the first post-Saddam government be established via nationwide direct elections. U.S. officials say that would be too difficult to pull off before the June 30 deadline for the transfer of power. Instead, the U.S. wants the new government to be chosen by local caucuses. Ahead of meetings in New York City this week with U.N. Secretary-General Kofi Annan, Paul Bremer, the U.S. civilian chief in Iraq, said, "We have doubts, as does the Secretary-General, that elections can in fact be called in the time frame of sovereignty to the Iraqi people on June 30."
Yet senior Iraqi sources tell TIME that a top U.N. election official, Carina Perelli, wrote an internal report last summer concluding that elections could be pulled off in just six months. U.N. spokesman Fred Eckhard confirms the substance of the report, saying its conclusions on "the technical aspects" are sound. But he says the U.N.'s concerns about direct elections are based on a lack of security in Iraq, which was made tragically apparent by the attack on U.N. headquarters in Baghdad last August. U.S. and U.N. officials privately say, however, the real concern is that Iraq's Sunnis, already a minority, are so poorly organized that direct elections would lead to a Shi'ite monopoly. That not only would stoke the flames of a potential Sunni rebellion but also could prompt Sunni states like Saudi Arabia and Egypt to refuse to recognize the new Iraq and pave the way for an anti-American alliance with Iran.
An aide to al-Sistani last week said he might issue a fatwa telling his followers not to recognize any government that has not been directly elected. Publicly, the U.S. is sticking to its guns, saying some compromise on the election issue is still possible. But privately, U.S. officials predict Washington will blink first. With time running out to get a handover started in Baghdad, a State Department source says, "they're going to realize the game's up and cave." --By Massimo Calabresi and Hassan Fatah