By Claudia Parsons BAGHDAD, Dec 20 (Reuters) - The holy city of Najaf, seat of Iraq's most powerful Shi'ite clerics and scene of an uprising against U.S. troops after Saddam Hussein's fall, will be officially handed over to Iraqi control on Wednesday. The province of Najaf is the third of Iraq's 18 provinces to be transferred from the U.S.-led occupying forces to Iraqi security forces. Whether it can remain calm will be a key test for the Iraqi government and for U.S. hopes of handing over the rest of the country and withdrawing. U.S. President George W. Bush is under pressure to withdraw troops amid rising U.S. and Iraqi casualties and growing public dissatisfaction with the war which contributed to his Republican party's defeat at congressional elections last month. Iraqi Prime Minister Nuri al-Maliki, who was due to attend Wednesday's ceremony, has pressed for a speedy handover. However, a recent U.N. report said the Iraqi police and army were deeply infiltrated by militias and other armed groups. With a few major exceptions, Najaf, home to Iraq's most senior cleric, Grand Ayatollah Ali al Sistani, has been spared much of the violence rocking Baghdad and other areas where Shi'ites, Sunni Arabs and ethnic Kurds live side by side. But it has not been immune to conflict between Shi'ite factions. Its status as a historic centre of Shi'ite scholarship, and consequently political influence, means it will be especially important for the handover to succeed. TUG-OF-WAR Najaf was the scene of a bloody three-week uprising by the Mehdi Army, a militia loyal to radical cleric Moqtada al-Sadr, against U.S. forces in August 2004. Today the Mehdi Army is one of several Shi'ite factions jostling for influence in the city. A report by the Brussels-based International Crisis Group warned on Tuesday of tensions between the Mehdi Army and the Badr Brigades, a militia loyal to the powerful Supreme Council for Islamic Revolution in Iraq. "Both Shi'ite paramilitary groups are engaged in a dangerous tug-of-war over the holy city of Najaf," the report said. In a report on Monday, the Pentagon said the Mehdi Army had replaced al Qaeda as the "most dangerous accelerant of potentially self-sustaining sectarian violence in Iraq". A counterbalance to both militias is Sistani, an elderly cleric who has often been a voice of moderation, while remaining largely aloof from politics in Baghdad. Naval Lieutenant Michael Marley, a spokesman for the U.S.-led multinational force handing over control, said all but a handful of the U.S. and other troops in the province had pulled back in September and Iraqis were already effectively in charge. "There's no violence there -- they all live in harmony and the Iraqis have proved that they can do it," he said. Hikma Habib, a 27-year-old policeman in Najaf, was sceptical of the handover, saying previous ceremonies handing over smaller areas of control had made little difference. "One time I raised the Iraqi flag and we had a ceremony with the governor of Najaf present ... and now they are handing over security again," Habib said. "I don't think this will be the last time, because the U.S. forces, when they want to arrest somebody, they take back control of security, and after the arrest they hand it back again to the Iraqis. It's just a game." British forces handed over Muthanna province in July and Dhi Qar in September, both in the relatively calm Shi'ite south of the country. Britain has said it hopes to hand the oil-rich Basra province back to Iraqi control in the first half of 2007. (Additional reporting by Khaled Farhan)
