The Bush administration's Iraq policy suffered two major setbacks Friday when Prime Minister Nouri al-Maliki publicly rejected key U.S. terms for an ongoing military presence and anti-American Shiite cleric Moqtada al-Sadr called for a new militia offensive against U.S. forces.  

During a visit to Jordan, Maliki said negotiations over initial U.S. proposals for bilateral political and military agreements had "reached a dead end." While he said talks would continue, his comments fueled doubts that the pacts could be reached this year, before the Dec. 31 expiration of a United Nations mandate sanctioning the U.S. role in Iraq.  

The moves by two of Iraq's most powerful Shiite leaders underscore how the presence of U.S. troops has become a central issue for Iraqi politicians as they position themselves for provincial elections later this year. Iraqis across the political spectrum have grown intolerant of the U.S. presence, but the dominant Shiite parties - including Maliki's Dawa party - are especially fearful of an electoral challenge from new, grass-roots groups.  

Key Iraqi Leaders Deliver Setbacks To US 

meanwhile ….. 

Iraq's hardline Shiite leader Moqtada al-Sadr announced on Friday that he plans to form a new armed group to fight US forces in Iraq. 

In a statement issued to his nearly 60,000 strong Mahdi Army militia, the anti-American cleric said the fight against US forces will now be waged only by the new group. 

"The resistance will be carried out exclusively by a special group which I will announce later," Sadr said in a statement which was read out at a mosque in the holy Shiite town of Kufa. 

"We will keep resisting the occupier until the liberation (of Iraq) or (our) martrydom." 

Iraq's Sadr Plans New Armed Group To Fight US Forces