Washington also wants control of Iraqi airspace below 29,000ft and the right to pursue its "war on terror" in Iraq, giving it the authority to arrest anybody it wants and to launch military campaigns without consultation.

According to the report, Iraq's Prime Minister Nouri al-Maliki is believed to be personally opposed to the terms of the new pact but feels his coalition government cannot stay in power without US backing.

Although Iraqi ministers said they would reject any agreement limiting Iraqi sovereignty, political observers in Baghdad suspect they would sign in the end and simply want to establish their credentials as defenders of Iraq's independence by a show of defiance now.

But the deal also threatens to provoke a political crisis in the United States.

US President George W. Bush wants to push it through by the end of next month so he can declare a military victory and claim his 2003 invasion has been justified.

But by perpetuating the US presence in Iraq, the long-term settlement would undercut pledges by the Democratic presidential nominee, Barack Obama, to withdraw US troops if he is elected president in November.

The timing of the agreement would also boost the Republican candidate John McCain, who has claimed the United States is on the verge of victory in Iraq a victory that he said Obama would throwaway by a premature military withdrawal, said the report.

Currently, the US has 151,000 troops in Iraq and, even after projected withdrawals next month, troop levels will stand at more than 142,000 – 10,000 more than when the military "surge" began in January 2007.

(Xinhua News Agency June 6, 2008)