Key players meet in Egypt to stabilise war-torn Iraq

SHARM EL-SHEIKH, Egypt, May 2 (Reuters) - Leaders from countries bordering Iraq and with a stake in its future meet in Egypt Thursday and Friday in an attempt to contain the conflict in Iraq and prevent the violence sucking in its neighbours.

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

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

Arab diplomatic sources said Rice would definitely have talks with Syrian Foreign Minister Walid al-Moualem, another first, but the United States has not confirmed that.

Those 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 for the sake of relief in Iraq.

But the United States has ruled out what Rice called "full-scale negotiations" with Iran, widely seen as the neighbouring country most able to influence events inside Iraq, where scores of people a day die in political violence.

"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. Even the United States, which has tended to pin high hopes on what Iraq's neighbours can do to help Washington with its predicament in Iraq, is playing down expectations.

"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.

IRAQI COMPACT

Asked what would make for success, U.S. 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 on Tuesday via a conference call from Baghdad.

A senior Arab diplomat agreed, saying the most the world should anticipate from the meetings is a series of messages, such as a message to Iraqi leaders that they must amend the constitution for the sake of national reconciliation.

"There will also be a message that the international community is ready to help Iraq, but what may matter most is the discussions on the side," added the diplomat.

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 U.S. 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 that 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.

But 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 U.S. and British military presence in their country.

Iraqi Deputy Prime Minister Barham Saleh told Reuters in an interview that the neighbours should remember that instability in Iraq will damage them as well as Iraq.

"The time has come for our neighbours to be more serious and more effective in helping the government of Iraq and people of Iraq to take on the extremists and to take on the al-Qaeda organisation," he said. (Additional reporting by Sue Pleming in Washington and Jonathan Wright in Cairo)