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NAJAF - A firebrand Shi'ite cleric has defied demands from Iraq's interim government that his militia pull out of Najaf and threats from his fighters forced a halt to oil output in the south.
Despite a brief lull to evacuate casualties, there was no sign that fighting would ease after days of fierce clashes with US marines who claim to have killed 360 of his fighters.
Citing the deterioration of security, the Polish-led multinational division that had been responsible for security in Najaf officially handed command of the area to American forces.
Moqtada al-Sadr's men hit the oil industry for the first time, raising fears about a sector already plagued by sabotage and helping push world oil prices to record highs.
"Pumping from the southern oilfields to storage tanks at Basra was stopped today after threats made by al-Sadr," said an Iraqi oil official. "It will remain stopped until the threat is over," the official told Reuters.
The official said Sadr's militiamen had threatened to sabotage production by the state Southern Oil Company.
He said storage at the Gulf Basra terminal was sufficient to keep exports running for about two days. Iraq has been exporting about 1.9 million barrels a day.
Battles in several cities tested the interim government of Prime Minister Iyad Allawi, which has vowed to bring stability and lead an economic recovery that would depend on oil exports.
Iraq's political establishment was rocked on another front when a judge issued arrest warrants against former Pentagon darling Ahmad Chalabi and his nephew Salem Chalabi, the U.S.-appointed lawyer supervising Saddam Hussein's trial.
Both dismissed the charges as politically motivated.
The fresh Shi'ite uprising poses the most serious test for Allawi since he took over from US-led occupiers on June 28.
Heavily armed marines tightened their noose around Najaf in heavy battles on Monday, but a senior US military official denied coalition forces were hunting the young cleric Sadr.
Sadr thundered defiance during a news conference at Najaf's holiest shrine, the Imam Ali mosque.
"The Mehdi Army and I will keep resisting. I will stay in holy Najaf and will never leave," Sadr said. "I will stay here until my last drop of blood."
The US military official said marines had killed at least 360 loyalists from Sadr's Mehdi Army militia since the uprising in Najaf erupted on Thursday. Sadr's men contest that figure.
Fighting in other cities has killed dozens in recent days.
In the southern city of Basra, British troops fought street battles with Mehdi Army militiamen, who set fire to two British military Land Rovers.
A spokesman in London said a British soldier died in the Basra area, but it was not immediately clear whether the soldier who was killed was among five soldiers earlier reported wounded.
A military spokeswoman said Iraq's second largest city and southern oil production centre was "extremely tense".
Fighting also spread to the southern city of Diwaniya, where witnesses said Sadr's brazen fighters surrounded the governorate and police station and fighting inflicted several casualties.
Fresh clashes also broke out in Baghdad's Sadr City. The government imposed an overnight curfew in the sprawling slum, home to two million people, but many people ignored the order.
Explosions and gunfire echoed from the heart of Najaf, Iraq's holiest Shi'ite city 160 km (100 miles) south of Baghdad.
Allawi visited the shell-scarred city on Sunday and demanded Sadr's militia back down. Sadr rejected the order.
"In the presence of occupation, there are no politics," he said. "You can't twin democracy and occupation, you can't twin freedom and occupation."
Zuhair al-Maliki, the U.S.-appointed chief investigative judge of the Central Criminal Court of Iraq, said an arrest warrant had been issued against Ahmad Chalabi in connection with counterfeiting money and against Salem on a murder charge.
Both men are outside the country.
Salem Chalabi, a 41-year-old lawyer leading the work of the Iraqi Special Tribunal which will try Saddam, said the charge alleged that he had threatened someone who was later killed.
Speaking to Reuters in London, he described the charges as "ludicrous" and said the judge who issued the arrest warrant had criticised the procedures established for Saddam's tribunal.
"There appears to be a political element to the allegations and that worries me about the future of Iraq," he said.
"If it looks like the Iraqi judiciary is not behaving fairly, as is evident because of what happened to me, it puts into question the issue of the tribunal and that worries me because I really want this to succeed," he said.
Ahmad Chalabi was once touted as a potential leader of Iraq but has since been spurned by Washington and many in Allawi's government. He told Reuters from Iran, where he is on holiday, that he would return to fight the charges.
While Najaf saw the worst clashes a Health Ministry official said 16 people were killed in the past 24 hours elsewhere.
A suicide car bomb north of Baghdad killing seven people and wounding 17. At least four Iraqis were killed when a bus was caught in a blast west of Baghdad, and in the capital insurgents fired mortar rounds government targets on Monday after a night of intermittent mortar and rocket fire, witnesses said.
While around 20 foreigners remain in the hands of kidnappers in Iraq, a Syrian, two Jordanians and two Lebanese have been released, their families said on Monday.
- REUTERS
Herald Feature: Iraq
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