Under the plan the Bush administration wants 50 military bases, control of Iraqi airspace and legal immunity for all American soldiers and contractors.

The paper said that the terms of the impending deal, details of which have been leaked to The Independent, are likely to have an explosive political effect in Iraq. Iraqi officials fear that the accord, under which US troops would occupy permanent bases, conduct military operations, arrest Iraqis and enjoy immunity from Iraqi law, will destabilize Iraq's position in the Middle East and lay the basis for unending conflict in their country.

But the accord also threatens to provoke a political crisis in the US. President Bush wants to push it through by the end of next month so he can declare a military victory and claim his 2003 invasion has been vindicated, the paper said. But by perpetuating the US presence in Iraq, the long-term settlement would undercut pledges by the Democratic presidential nominee, Barack Obama, to withdraw US troops if he is elected president in November, according to Independent.