Iraq proposes ambitious EU-style regional grouping

By Ross Colvin

WASHINGTON (Reuters) - With stability slowly returning to Iraq after near civil war, a more confident Baghdad on Tuesday proposed forming a European Union-style trading and security bloc with its neighbors.

Unveiling the plan at a conference in Washington, government spokesman Ali al-Dabbagh said Iraq was now ready to play a more assertive regional role.

"It is a time now for Iraq as well as its partners to think of a new era on the role of Iraq in the region after five hard years," Dabbagh said in an address to the United States Institute of Peace, greeted skeptically by the audience.

Its publication signaled that Iraq wants to put itself on a more equal footing with its neighbors, who until recently viewed it almost as a failed state.

Violence in Iraq is at a five-year low after a bitter insurgency and sectarian bloodletting between majority Shi'ite and Sunni Arabs killed tens of thousands and forced many more to flee their homes.

Dabbagh said the Iraq neighbors' group, set up to help stabilize the country after the U.S.-led invasion in 2003, was no longer useful. Neighboring states had shown "dwindling interest" in the project, which focused on improving security cooperation to help reduce violence in Iraq.

He proposed creating an "Regional Economic Partnership" which envisioned Iraq at the heart of a trading, security and energy bloc that would include Saudi Arabia, Iran, Kuwait, Jordan, Syria and Turkey and later perhaps Gulf states.

Dabbagh said informal discussions had been held with Kuwait, Syria and Turkey but did not report their reactions.