BAGHDAD, Feb 20: Iraq's top Shia religious leader hinted in an interview published on Friday that he would allow a delay to elections in line with a UN verdict that ruled out polls before the end of US-led occupation in June.

But Ayatollah Ali al Sistani, widely seen as holding the key to Iraq's political future, said any delay should be brief and any interim government should have limited authority.

UN Secretary-General Kofi Annan has sided with the United States, saying elections in Iraq before the political transfer of power on June 30 were not feasible. He also said the date for restoring sovereignty that Washington wants "must be respected".

Ayatollah Sistani told Germany's Der Spiegel that an interim government should be charged only with running the day-to-day affairs of the state in the run-up to quick elections.

"This institution should not be able to take political decisions which affect the future of our country," Ayatollah Sistani told the magazine. "Such decisions should only be taken by a government formed from free elections."

Asked how long polls should be delayed, he said: "It should not last long." Ayatollah Sistani usually does not grant face to face interviews but his office presents his answers to written questions. It was not clear when the interview was conducted.

Hamid al-Khaffaf, a Lebanon-based senior aide to Ayatollah Sistani, said he would declare his final position after Annan presents a report soon, giving a time frame for future elections.

Khaffaf said one of the ideas being looked at was transferring power to an appointed body, such as the US-appointed Governing Council, with limited authority to prepare for elections before the end of the year.

"The condition attached to this would be a Security Council resolution that would cover these points," Khaffaf told Reuters by telephone.

MIXED REACTION: Original US plans for the handover, involving regional caucuses choosing an assembly that would select a government, were derailed after Ayatollah Sistani demanded early direct elections.

The Bush administration, which is trying to re-engage the United Nations in efforts to stabilise the country, had asked the world body to come up with proposals for Iraq's political future before and after the June 30 transfer of power.

Mr Annan is prepared to send his top adviser, Lakhdar Brahimi, back to Baghdad to help form an interim government if Iraqi leaders could not agree how to do it, UN officials said. But he did not give any proposals for a caretaker government to take power in June, saying Iraqis should determine its shape before the world body steps in.

"We have absolutely no preferred options," Mr Annan told reporters. "We need to have the Iraqis discuss it. They must take ownership, discuss it amongst themselves, and we will try and work with them to find a consensus."

Ordinary Iraqis appeared sceptical Iraq's US occupiers wanted democracy in the oil-rich country it invaded last March. "This occupation will never end. All this talk about elections and sovereignty and the Governing Council is designed to keep Iraqis quiet," said Hussein Ali, 28, one of the many unemployed Iraqis.

But not all Iraqis appeared ready to give up on the idea of early election. A representative of firebrand Shi'ite cleric Moqtada al-Sadr rejected Mr Annan's assessment.

"The people's first and last demand is to have... free, democratic and honest elections in Iraq," Sheikh Nasser al-Saedi told thousands of worshippers in Baghdad's mainly Shi'ite suburb of Sadr city. "This demand remains the only one, whether the United Nations did or didn't say that elections are not possible. We demand elections, and insist on this demand."

Another issue still on the table is the interim constitution, due to be concluded on February 28. It was supposed to include provisions for a new interim government. -Reuters

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