Iraqi Prime Minister Nuri Al-Maliki acknowledged he was "part of the problem" holding up the formation of a new Iraq government but challenged allies and opponents to find a better candidate for the top job.

Five months after an election Iraqis hoped would underpin governance, Al-Maliki told Reuters Iraq's security was stable and said investor confidence had not been shaken by lengthy and so far fruitless talks for a coalition government.   

But he said that his opponents were attempting to weaken the premiership and said this could destabilise Iraq and bring back militants linked to Al Qaeda as well as the militias that were involved in Iraq's sectarian slaughter in 2006-07.

A March 7 parliamentary election produced no clear winner,  leaving the Shi'ite Al-Maliki and secularist ex-Prime Minister Iyad Allawi battling to form a majority coalition as Iraq tries to ramp up production from its world-class oil reserves and rebuild an economy ravaged by war.

"They are saying there is a broad objection to Maliki. But I know that there will be greater objections to (other) candidates," he told Reuters in an interview on Friday.
 "Yes, I am part of the problem but I didn't create the problem," he said. "I want to solve the problem." 

Al-Maliki's largely Shi'ite State of Law coalition won two seats fewer than Allawi's Sunni-backed, cross-sectarian Iraqiya in the vote but then merged with the third-place finisher, the Iran-friendly Iraqi National Alliance, to form a Shi'ite bloc.
   

But the Shi'ite allies have not been able to agree on a nominee for prime minister. INA said last week it was rejecting Maliki and halting talks until his bloc offers another candidate.
   

Al-Maliki said he was in "serious and strong talks" with rival Allawi's Iraqiya, the Kurdish bloc and smaller parties, but was open to a reunion with INA, his traditional ally.

"We don't want to exclude them from coalition formation.
They should come and take their share if we form the government," he said at the prime minister's residence.
   

Al-Maliki said the government impasse posed no risk to investors, citing projects to set up power generating capacity. "We don't have any problem," he said. "Investments were not affected and will not be affected."    

He rejected critics who suggest the drawn-out government formation talks -- which in a few days will be longer than those after the 2005 election, when sectarian violence exploded -- have opened the door to a renewed insurgency.

Iraq is plagued by bombings, assassinations and other attacks by Sunni insurgents and Shi'ite militias but Maliki lauded the work of Iraq's nascent security forces and said the attacks had not worsened during the impasse over a government.   

However, "I am convinced if there is a weak PM, someone who does not have the support of the political leadership and political blocs, the risks will be big for the unity of Iraq, for security," he said. "The militias will return, Al Qaeda will come back, there will be conflicts."    

With Washington planning to cut down to 50,000 troops by month's end from just under 65,000 now as it formally ends combat operations August 31, Al-Maliki said it was too early to talk about whether the US stay in Iraq should be extended. That would require a change in the negotiated security pact between the two countries, which says US troops should be gone by the end of next year. - Reuters