By Jack Kimball
ARBIL, Iraq (Reuters) - Tensions between Iraq's Kurds and Arabs may one day lead to armed conflict but, after an election in March, Arab parties will be vying with each other to court Kurdish allies expected to emerge as powerful kingmakers.
Brutally suppressed under dictator Saddam Hussein, Kurds became one of the nation's most cohesive political forces after the 2003 U.S.-led invasion, strengthened by U.S. support and by having made their own peace after a civil war during the 1990s.
Since the last national vote in 2005 and the years of sectarian carnage that followed, the central government in Baghdad has strengthened its hand, violence has fallen and political coalitions have become more cross-sectarian.
Yet none of Iraq's major Shi'ite or Sunni Arab parties is expected to win enough parliamentary seats on March 7 to be able to form a government on its own, making Kurdish support possibly the key for any coalition wanting to take power.
"No one can be a prime minister without the backing of the Kurds, because it will be either the Sunni Arabs or the Shi'ite Arabs, and they don't support each other, so we will be the critical factor in this balance," said Shoresh Haji of the Kurdish opposition party Change.
The semi-autonomous Kurds are likely to exact a high price for their support, analysts say, ranging from a solution over the city of Kirkuk, which they claim as their ancestral home, to acceptance of oil contracts signed independently with oil firms.
"The Kurds have serious demands which the Arab parties will have a hard time satisfying," said Joost Hiltermann, deputy Middle East director at the International Crisis Group (ICG).
"I think it will take some very hard bargaining, but I don't think the Arab parties are ready to let the Kurds go into opposition ... that is too dangerous."
Spats between Arabs and Kurds over land, resources and power are seen as one the most fundamental threats to Iraq's future stability as it tries to shake off years of stagnation and boost exports from its economic crown jewel, the oil sector.
The more ethnically homogenous Kurdistan has seen little of the bloodshed that has plagued the rest of Iraq since Saddam was ousted, although Kurds and Shi'ites bore the brunt of Saddam's wrath during his decades in power.
What the region has seen, however, is rising tensions with Baghdad as Shi'ite Arab Prime Minister Nuri al-Maliki sought to extend the central government's authority across the country.
While confrontations so far have been confined to angry rhetoric, Iraqi troops have come close to blows with Kurdish peshmerga fighters in several disputed areas.
"The performance of the Iraqi government ... like disrespect for the constitution and for agreements between both sides, are all indications that Baghdad is moving back toward an individualist or one-party dictatorship," Kurdistan Deputy Prime Minister Azad Barwari said in Kurdistan's capital, Arbil.
"If the situation goes like it is now, Iraq will go to an unknown fate."
Some political analysts say the Kurds may be more realistic in their demands from Arab parties, and the Kurdish bloc would most likely back Maliki's main challenger for the Shi'ite vote, the Supreme Islamic Iraqi Council (ISCI).
Yet the Kurdish vote will not be as united as it has been in the past, potentially weakening their bargaining power.
A coalition between the two main Kurdish parties will face an internal challenge from the Change, or Goran, party that won nearly a quarter of seats in a regional vote last year.
IHS Global Insight Middle East analyst Gala Riani said that Kurds' resolve to come together on issues affecting their enclave should not be discounted.
"Although they are running on different lists, when it comes to issues that have to do with the federal government, the Kurds have always managed to rally together and display a sense of unity that perhaps internally they don't really have," she said.
(Additional reporting by Shamal Aqrawi; Editing by Michael Christie and Matthew Jones)