BAGHDAD: Iraq's interim government, which assumed sovereignty on Monday, promises a bold strategy of toughness and reconciliation to halt bloodshed and heal the wounds of US-led occupation.

Success will require tightrope skills from Prime Minister Iyad Allawi, 58, who once plotted against Saddam Hussein from exile with dissident Baathists, army officers and Western spies. A US-led multinational force of more than 160,000 troops is staying on despite the official end of occupation.

But Allawi must convince Iraqis they are no longer under foreign occupiers - as almost all Iraqis now view the US and British troops who rid them of Saddam's brutal rule last year.

Washington and London, which went to war on a fruitless quest for Iraqi weapons of mass destruction, tout Saddam's overthrow and a plan for democratic rule as their main gains.

For Iraqis, relief at Saddam's demise has long given way to dismay at the insecurity, lawlessness and bloodshed gripping their land. Most blame the Americans for the havoc.

The Abu Ghraib prisoner abuse scandal, symbol of the humiliation of occupation, shredded US credibility in the minds of many Iraqis who already suspected US motives for the war and shared Arab anger at Washington's support for Israel.

Now they are desperate for security, fearful of civil war and eager for jobs, functioning services and a better life. As for democracy and human rights, those may have to wait.

Allawi, whose government's UN-mandated task is to prepare for elections due by January, says the polls might have to be put off for a month or two if insecurity still prevails.

He has talked of imposing emergency law in parts of Iraq, though given the weakness of Iraq's fledgling security forces and the human rights safeguards in an interim constitution, enforcing this may fall to the multinational force. This has UN authority to take "all necessary measures" for security. But anti-US insurgents, foreign Muslim militants and armed criminals have defied the US military for months and only a political strategy can defuse the violence.

Allawi has the beginnings of one. He wants to unite Iraqis against foreign Muslim militants and Al Qaeda allies like Abu Musab al-Zarqawi who have filtered into Iraq since the war to pursue an anti-American jihad.

Even Iraqis who once shrugged off suicide car bombings as an inevitable part of the struggle against occupation are now enraged by the toll they inflict on Iraqi police and civilians.

Allawi will offer an amnesty for Iraqis who fought the occupation out of righteous anger, a category the US military has never distinguished from other "anti-Iraq forces".

"The government will make a clear distinction between those Iraqis who have acted against the occupation out of a sense of desperation, and those foreign terrorist fundamentalists and criminals whose sole objective is to kill and maim innocent people and to see Iraq fail," Allawi has stated.

The Bush administration, keen to staunch the flow of bad news from Iraq before the November presidential election and eventually to extract US troops, is unlikely to object.

It has also swallowed Allawi's criticism of last year's US decision to disband Saddam's military and security apparatus, and has endorsed his plans to recruit more former Baathist officers to join the forces now being rebuilt.

"The honour of decent Iraqi ex-officials, including military and police, should be restored, excluding of course those who committed heinous crimes against the nation," Allawi has said.

His words reflect another goal - to persuade Iraq's once-dominant Sunni minority that it need not feel excluded or resort to violence to achieve influence in the future.

At the same time, Allawi cannot afford to alienate his own majority Shia community, long oppressed by Saddam and now anxious to match its numerical strength with political power.

He must appeal to Iraqi, rather than Arab, nationalism if he is not to upset the Kurds, bent on consolidating their autonomous region in the north and even expanding it to include the volatile, oil-rich and ethnically mixed city of Kirkuk.

Allawi can enhance his credibility with Iraqis by showing he is no American puppet, but this is no easy task while Iraq still needs US forces and $18 billion of promised US aid.

He is also constrained by a host of hard-to-alter decrees, new institutions and long-term appointments reflecting an effort by outgoing US administrator Paul Bremer to implant ideals of liberal economics, governance and checks on central authority. -Reuters