Iraq lawmakers pass key budget and amnesty laws

BAGHDAD (Reuters) - Iraqi lawmakers achieved a majorbreakthrough on Wednesday, passing the 2008 budget after weeksof delay and an amnesty law that could lead to the release ofthousands of prisoners from the country's jails.

Parliament also passed a provincial powers law that willdefine ties between Baghdad and local authorities. It allowsfor holding provincial elections by October 1 in which partieswho boycotted previous polls could win some local power.

U.S. officials, who have been urging Iraq's leaders tomatch gains in security with movement on the legislative front,were quick to applaud passage of the laws but said more worklay ahead.

"Literally in the last 24 hours these three big major lawswere passed, which I think is clearly a big deal, a big step,and made in great part possible by the security that they'vehad," Navy Admiral Mike Mullen, chairman of the U.S. JointChiefs of Staff, said in testimony to Congress in Washington.

The U.S. Embassy in Baghdad and the Multi-National Forcesin Iraq said in a joint statement: "There is still muchimportant work ahead for the people of Iraq and theirgovernment. There is also still more to learn about how thislegislation will be implemented."

Scores of lawmakers had stormed out of the Iraqilegislature on Tuesday evening, blocking a vote on the bills ina sign of the deep distrust between the country's Shi'ite,Sunni Arab and Kurdish politicians. Some MPs said parliamentshould be disbanded and new elections held.

But parliament convened again on Wednesday and despite awalkout by some lawmakers, managed to overcome a row overvoting procedures to pass the three measures as a package.

"We have proven today that Iraqis are just one bloc," saidparliament speaker Mahmoud Mashhadani, a Sunni Arab.

Washington has pressed Iraqi leaders to pass legislation tohelp heal sectarian divisions that have festered during a SunniArab insurgency against U.S. forces and savage violence betweenmajority Shi'ites and minority Sunnis.

The laws passed on Wednesday are not among several keybenchmarks sought by the United States, but the measures,especially the amnesty law, would still form an importantcomponent of reconciliation, U.S. officials have said.

The main Sunni Arab bloc, the Accordance Front, saidpassage of the amnesty law would help accelerate its return tothe Shi'ite-led government of Prime Minister Nuri al-Maliki.

The Front, which quit the government in August, has longdemanded the release of security detainees.

U.S. forces and Iraqi authorities each hold more than23,000 prisoners, many of them Sunni Arabs behind theinsurgency against the American-backed government that eruptedafter the overthrow of Saddam Hussein in 2003.

"We have no doubt that passing this law will have aremarkably positive effect in speeding up the return of theAccordance Front to the government," said Salim al-Jubouri, alawmaker and spokesman for the bloc.

BITTERNESS OVER BUDGET

The government has said prisoners under investigation, ontrial or convicted could be eligible to be freed. The pardonwould exclude those convicted of major crimes such as murder.It only applies to prisoners in Iraqi custody.

MPs said inmates who had spent longer than six months inprison without being charged would be freed. So would prisonerswho had been charged but not appeared before a judge for ayear.

Lawmakers had also spent weeks wrangling bitterly over thelevel of spending on the largely autonomous Kurdish region.

In recent days, leaders of the political blocs agreed tovote on all three measures as a package because of mutualsuspicion that if one was voted on separately and approved, thefaction that wanted that most would renege on the rest.

Parliament also passed a law last month that will allowformer members of Saddam's Baath party to regain their jobs inthe government and military, a key demand of Sunni Arabs whowere dominant under the former dictator.

But Maliki's government has struggled to make headway onother key laws, especially legislation that would equitablyshare the country's vast oil reserves.

In Basra, kidnappers who seized a CBS News journalist andinterpreter in Iraq this week have freed the interpreter,negotiators said. The journalist would hopefully be releasedwithin 24 hours, said Majid al-Abadi, a local judge involved intalks to free the journalist, who police say is British.

Police said the men were seized from a city hotel onSunday.

(Additional reporting by Mike Holden, Aws Qusay, Tim Cocksand Mohammed Abbas in Baghdad, and David Morgan in Washington;Writing by Dean Yates, Editing by Sean Maguire and Sami Aboudi)