BAGHDAD, April 18: Iraqis on Monday accused their leaders of fabricating a hostage crisis for political ends and urged them instead to focus on tackling relentless violence and unemployment after two years of turmoil. Shia officials said on Saturday that Sunni guerrillas were holding 150 Shia hostages in Madaen, about 45kms south of Baghdad, and were threatening to kill them unless Shias left the area.

Caretaker Prime Minister Iyad Allawi vowed to punish the “terrorist” kidnappers he linked with Al Qaeda’s wing in Iraq. But raids by Iraqi forces backed by US troops have yielded no kidnappers or hostages.

People on a central Baghdad street frustrated by suicide bombings and economic hardship drew their own conclusions.

“It is all lies. Instead of fighting terrorism the government is just making things up. What we need are jobs,” said Abu Zahra, a 35-year-old labourer standing with other workers hoping to get menial jobs for about five dollars a day.

The murky drama has raised fears that a major conflict between Shias and Sunnis could erupt.

Shia-Sunni towns like Madaen are especially volatile because they have a delicate sectarian and tribal mix. Iraqi officials say tit-for-tat kidnappings have fuelled tensions there.

Whether or not the kidnappings took place, the episode threatens to intensify distrust in a country trying to adjust to a new political landscape after decades of iron-fisted rule.

GROWING CYNICISM: Doubts about what actually happened in Madaen added to the growing cynicism of Iraqis.

“There is no way it is true. It was probably a problem with one person in Madaen and people with their own interests blew it up,” said Jasmine Daghaghni, waiting to cross a busy street.

A cameraman who visited Suwayra and spoke to police and residents and toured the hospital said he found no evidence of the bodies.

Popular scepticism about what happened in Madaen also fed off growing frustration about Iraq’s power vacuum 11 weeks after the Jan 30 elections.

A president and prime minister have been named but Shia, Kurdish and Sunni politicians have been wrangling over control of key ministries amid a resurgence in bloodshed.

Conflicting reports from Madaen generated conspiracy theories that thrive on Iraq’s uncertainty.

Some people said US forces made up the story for an excuse to raid Madaen after guerilla attacks on US convoys. Others suspected Iran, which was home to Shia exiles during Saddam’s rule who are now Iraq’s new leaders.

“Do you really think men can just enter a town and take 150 people hostages just like that? Agents of Iran spread these lies,” said Dhia Sadiq, a merchant.