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Elections for a new Iraqi government would be possible by January 2005 -- but only if preparations begin immediately, the United Nations (search) said in a report released Monday.

Lakhdar Brahimi (search), the U.N. secretary-general's envoy to Iraq, warned of increased violence and ethnic strife unless Iraq's leaders and the U.S.-led coalition get Iraqis' acceptance for a way forward.

On Tuesday, Secretary-General Kofi Annan (search) said a "more secure environment" in Iraq is necessary for the United Nations to play a full role in helping set up an interim government and elections.

In a speech to Japan's Parliament, Annan also urged Iraqis and others to recognize the distinct identity of the U.N. and not confuse it with the country's various power-brokers.

"The people of Iraq and others must see us for what we are: an impartial, independent world body with no other agenda than to help their country in this time of need," Annan added.

Brahimi's report followed a weeklong mission earlier this month by a team of U.N. experts who were essentially asked to resolve a dispute between the United States and Iraqi clerics on the best way to restore sovereignty to Iraq.

The team said there wasn't enough time for national elections by a June 30 deadline. Iraqis led by cleric Grand Ayatollah Ali al-Husseini al-Sistani had wanted a direct vote as soon as possible.

The preferred U.S. option of holding a series of national caucuses to elect a transitional legislature would be too easy to manipulate to be credible, the team said. Under intense opposition from Iraqis, the United States has since backed away from that idea.

The report said that if preparations began immediately, Iraq would need until May 2004 to create the necessary legal and political framework for elections. It would then need another eight months to prepare for the elections on the ground -- meaning elections could by held by January 2005.

Brahimi's report underscores that Iraqis and the U.S.-led coalition must find a solution they both believe in, or the election process could backfire and turn simmering ethnic tensions into outright sectarian violence.

"We have made very clear with Mr. Brahimi that everybody has to buy into this process if the process is to be stable," said Carina Perelli, a U.N. expert on the mission to Iraq. "It's not just a game for a few actors, it's a game for all the Iraqi citizens."

Brahimi noted the daunting task Iraq faces because it has no viable recent census, only one from 1997 that was widely believed to be manipulated, and Iraqi law is even unclear on what it means to be a citizen. But in a note of optimism, he said there is strong will among Iraqis for healthy political system and says Iraq is "a dynamic place, full of ideas and political arguments."

L. Paul Bremer, the lead U.S. administrator in Iraq, welcomed the report, calling it "a constructive contribution" toward the transition to Iraqi sovereignty, according to a statement released in Baghdad. He reaffirmed the June 30 deadline would be met.

The report leaves open the question of how to turn over power to Iraqis by that date, however.

The Bush administration has been hoping that the United Nations would endorse the idea of extending and expanding the U.S.-picked Iraqi Governing Council so it can take interim control of the country on June 30.

The report lists that as one of several options, but Brahimi's spokesman Ahmad Fawzi made clear the report was not the forum for making such a recommendation. Instead, he said, the United Nations was ready to help the party's decide how to put a transitional government in place by June 30.

"We were not asked to give an opinion on the framework of the body that sovereignty would be transferred to," Fawzi said. "That's another issue. If they want us to help with that, the report says we would be willing to do so."

The U.N. report now goes to Iraqi authorities and the Coalition Provisional Authority for their feedback.

One U.N. official, speaking on condition of anonymity Monday, said Brahimi would probably head to Iraq next month to help come up with a solution if Iraqis and the coalition can't find one.

Brahimi notes in the report that if the United Nations is to play a large role, the coalition and Iraq's Governing Council would need to act more quickly on providing security for a return of U.N. workers. Annan pulled all non-Iraqi U.N. workers out of the country last year after devastating suicide bombings at the Baghdad U.N. headquarters.

Also Monday, members of the Iraqi Governing Council said U.S. and Iraqi officials will delay an agreement on the status of U.S. military forces in the country until after power is handed over to an Iraqi government. The status of forces agreement was due to be reached by the end of March, defining the role of U.S. troops in the country after the U.S.-led occupation comes to an end and the Iraqis take sovereignty.

But council member Adnan Pachachi said the U.S.-picked 25-member council, which serves as a temporary Iraqi administration, "is not considered sufficiently representative" to make the decision.