(Corrects General McCaffrey's rank in final paragraph of story that ran Dec. 13.)

Dec. 13 (Bloomberg) -- President George W. Bush's strategy for transforming Iraq is threatened by the growth of sectarian militias that are undercutting Iraq's nascent national army and fueling ethnic violence, according to analysts and former U.S. officials.

The Defense Department's intelligence agency says there are dozens of loosely organized Shiite armies in southern Iraq, Kurdish militias in the north that function like a regular army, and that Sunnis dominate the violent insurgency that includes as many as 20,000 fighters in Iraq's four central provinces.

Bush insisted yesterday that Iraq was moving steadily toward political unity even amid violence and turmoil. Fears ``that Iraq could break apart and fall into civil war'' are unjustified, he said during a speech in Philadelphia.

Some analysts don't share his optimism. ``The situation continues to deteriorate,'' said Anthony Cordesman of the Washington-based Center for Strategic and International Studies. ``It's a matter of the militias, new political organizations, Shiite groups'' and Iraqi security forces becoming ``forces for revenge or reprisal.''

Bush yesterday acknowledged recent examples of such violence, including a Sunni political party that said its offices were bombed and at least 10 members killed after the party announced it was fielding candidates for the Dec. 15 vote; and the discovery of Iraqi prisons where, Bush said, Sunnis ``appeared to have been tortured and beaten.''

First Allegiance

Leslie Gelb, former assistant secretary of state and former president of the New York-based Council on Foreign Relations, said most of the militias pay first allegiance to their ethnic or tribal group.

``It's not an Iraqi army,'' said Gelb, who visited Iraq for 10 days earlier this year. Kurds are loyal to Kurds, Shiite militias resembling ``mafia operations'' run the south, ``the central region has the insurgency, and Baghdad is all mixed up,'' he said.

Patrick Lang, former chief analyst for the Middle East at the Defense Intelligence Agency, said Iraq's different ethnic groups ``will not serve together'' in national army units.

``They tried it and it didn't work, and now they're going back to ethnically pure units,'' he said, citing Defense Department officials he declined to identify. Lang, a retired colonel in the Army's Green Berets, is now president of Global Resources Group, a Washington-based consulting firm.

`Tribal Issues'

Army Lieutenant Colonel Fred Wellman, a spokesman for the U.S. training command in Iraq, said the U.S. is building an army ``that represents all of Iraq'' and that ``there are no ethnically pure divisions, nor do we seek ethnically pure divisions.''

``Clearly there are real challenges with sectarianism and tribal issues'' in the Iraqi forces, Wellman said in a telephone interview from Baghdad. ``Every Iraqi has mixed loyalties, and they are overcoming it.''

Bush's speech yesterday was the third of four planned for delivery in advance of the Dec. 15 parliamentary election in Iraq to defend his strategy and outline what's ahead.

The parliament that will emerge from the election -- chosen from more than 200 political parties -- is supposed to select a prime minister, president and cabinet by year-end to negotiate difficult differences over the constitution: disputes over oil revenue, which entities have the right to tax, the role of Islam in the state, and the protection of civil liberties.

Federalism

The most contentious issue involves federalism. The constitution establishes Iraq as a federal parliamentary republic while leaving open the question of how much power the regional governments will have.

Shiites make up 60 percent of the population and dominate oil-rich areas in the South. Kurds, who represent 15 to 20 percent, seek to control the oil resources in the north and have been semi-autonomous since the 1991 Persian Gulf War. Both were repressed under the Sunni-led dictatorship of Saddam Hussein, and both oppose a powerful federal government.

``The most important force in Iraq for breaking up the country and preventing a strong central government isn't the insurgency, it's the Kurds, and the second most important force is the Shiites,'' said James Dobbins, director of the International Security and Defense Policy Center at the Rand Corp., a Santa Monica, California-based policy research group.

``The Kurds are the main proponent of a weak central government, and the Shiites are tending toward the Kurd view of strong regions and weak central governments,'' Dobbins said. ``The Kurdish Pesh Merga is the biggest militia in the country, and the second-biggest are Shiites, and they are in control of the parties that are going to win the election. If Iraq begins to divide, the insurgents themselves would comprise a third, Sunni militia.''

Outlaw Militias?

Jon Alterman, head of Middle East studies at the Center for Strategic and International Studies in Washington, said one issue for constitutional negotiators is whether sectarian militias can lawfully exist.

``A strong set of militias in Iraq reminds everyone of Beirut, where the militias became proxies for warlords and you didn't have any kind of effective political structure,'' Alterman said.

Iraq will probably hold a referendum on the revised constitution about four months after the new government is formed, Alterman said. The Dec. 15 vote just moves Iraq ``from one period of uncertainly to another,'' he said.

On the Home Front

In the U.S., public approval of Bush's handling of the 32- month conflict has dwindled -- at 39 percent in a USA Today/CNN/Gallup Organization poll released yesterday, down from 42 percent in January and a high this year of 50 percent in February.

Congress is increasingly restive. Several Democratic lawmakers have called on Bush to begin withdrawing U.S. troops or set a timeline for withdrawal, and lawmakers in the president's own party question his strategy.

``We're in a race against time largely because we lost the support of the American people,'' said retired General Barry McCaffrey. ``We aren't going to reinforce U.S. troops whether it's needed or not.''

To contact the reporter on this story: Jeff St.Onge in Washington jstonge@bloomberg.net

Last Updated: December 14, 2005 14:09 EST