Iraq’s oil-rich southern provinces are considering plans to set up an autonomous region - a move that reflects their growing frustration with the central government in Baghdad.

Members of the municipal council of Basra, Iraq’s second largest city, have been holding talks with officials from councils in two neighbouring provinces on establishing a federal region in the south, following the example of the Kurdish north. The three provinces - Basra, Missan and Dhiqar - account for more than 80 per cent of the proved oil reserves of the country’s 18 provinces and provide a large share of the national income.

The talks are a political challenge to the embattled interim Iraqi government which is fighting a fierce insurgency in Sunni Arab areas, continued unrest in an impoverished Shia suburb of Baghdad and militant gangs bent on disrupting the country’s reconstruction.

Diplomats familiar with the talks say the three provinces have felt marginalised in new government institutions, including the consultative assembly, and believe they are not receiving a fair share of economic resources. The cabinet led by Iyad Allawi, the prime minister, includes only one representative from the three provinces.~ The Financial Times, September 29, 2004