Key players meet in Egypt to stabilise Iraq

SHARM EL-SHEIKH, Egypt, May 2 (Reuters) Countries bordering Iraq and those with a stake in its future meet in Egypt tomorrow and on Friday to discuss how to contain the conflict and prevent it sucking in Iraq's neighbours.

While diplomats are sceptical security can improve inside Iraq in the short term, some hope the meeting will increase pressure to end external support for different factions and instead emphasise programmes to help rebuild the country.

The highlight of the two days of talks would be a meeting on the sidelines between US Secretary of State Condoleezza Rice and Iranian Foreign Minister Manouchehr Mottaki, a first at this level since the Bush administration took office in 2001.

Iraqi Foreign Minister Hoshiyar Zebari told Reuters he expected Rice to have talks in the Egyptian resort of Sharm el-Sheikh with Mottaki and Syrian Foreign Minister Walid al-Moualem.

Such meetings would mark a reversal of policy by the Bush administration, which rejected last year a high-level commission's recommendation that it open a dialogue with the two governments to help ease the situation in Iraq.

''I believe there will be a bilateral meeting between the Iranians and the Americans,'' Zebari said.

The United States has ruled out what Rice called ''full-scale negotiations'' with Iran, widely regarded as the neighbouring country most able to influence events inside Iraq.

''I don't expect big things from this meeting. There should be a strong and sincere dialogue between the United States and Iran and Syria, but I don't have the impression that the current American administration is really willing to do that,'' said Hassan Nafaa, a political scientist at Cairo University.

IRAQI COMPACT Even the United States, which led the invasion that overthrew Saddam Hussein in 2003, is playing down chances of any diplomatic breakthrough.

''Let's not have overreaching expectations (about the meeting).

It will take some time to overcome suspicions in the region,'' Rice told reporters en route to Sharm el-Sheikh talks. Iran is at odds with the West over its nuclear programme.

US ambassador to Iraq Ryan Crocker said getting Iraq's neighbours in the same room at ministerial level was an important development in itself.

''I would not expect this to produce a specific result where we can say 'Wow, that really succeeded','' he told Washington reporters yesterday via a conference call from Baghdad.

The first day of talks will look at a project dubbed the Iraqi Compact -- a five-year plan offering Iraq financial, political and technical support in return for various reforms.

The key reforms, which US officials want passed soon, are a revenue-sharing oil law, a law to allow members of the old ruling Baath party back into public life, and a governorate elections law that will set a date for provincial polls.

The United States hopes these benchmarks will promote reconciliation and draw minority Sunni Arabs away from the insurgency and back into the political process.

The second day will bring together Iraq and its immediate neighbours -- Iran, Turkey, Syria, Jordan, Saudi Arabia and Kuwait, together with Egypt as host.

Previous meetings of the neighbours have focused on border security and the smuggling of arms and personnel into Iraq in support of the mainly Sunni Muslim insurgency led by al-Qaeda.

Analysts say there are limits to what the neighbours can do to reduce the violence in Iraq, which has a dynamic of its own, driven in part by indigenous Iraqi opposition to the US and British military presence in their country.

REUTERS RS RAI2103