The scheduled vote had been held up by a stalemate over oil in the Kirkuk region. A delay could have set back withdrawal of U.S. troops.
BAGHDAD - After weeks of political stalemate, Iraq on Sunday approved a law to administer a critical national election in January, a significant milestone for its fragile democracy and a step that is expected to allow the rapid withdrawal of U.S. combat forces early next year.
The election, just the second national vote since the fall of Saddam Hussein, will be a crucial step toward popular sovereignty and stability in Iraq. But the election law had been stymied by a political battle over the northern province of Kirkuk -- claimed by Kurds, Arabs and Turkmens, each of whom hoped that electoral power would give them control of the region's oil wealth.
The compromise reached Sunday, which satisfied all three groups, was hailed by Iraqi and U.S. leaders as a triumph for the country's emerging democracy and a demonstration of parliament's ability to resolve sticky sectarian disputes.
"Accomplishing this law is not a victory for anyone in particular, but a victory for the entire Iraqi people," said Faryad Raundozi, a member of parliament's Kurdish Alliance.
The United States had said that a delay of the election could set back the scheduled withdrawal of U.S. combat troops.
On Sunday, President Obama called the parliament's action "a significant breakthrough" that will "allow for the orderly and responsible transition of American combat troops out of Iraq by next September."
U.S. military commanders have said that, after the election, they intend to begin a rapid withdrawal of the 120,000 U.S. troops still in Iraq.
The United States has pledged to withdraw all combat forces from the country by the end of August, leaving about 50,000 troops in advisory and support roles. All U.S. troops are scheduled to leave Iraq by the end of 2011.
After the vote, the U.S. ambassador to Iraq, Christopher Hill, said that the withdrawal would proceed as planned. "What is important is that, with the election law, we are very much on schedule for the drawdown," he said.
For weeks, the legislature had wrestled with how to determine voter eligibility in Kirkuk, which sits atop billions of barrels of oil.
The agreement reached Sunday, which was brokered by the United States and the United Nations, will use voter lists from 2009, but if the number of eligible voters in a particular area is deemed by members of parliament to be suspiciously high, a committee overseen by the United Nations will be formed to determine whether fraud has occurred, according to a draft of the law.
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