By Nicolas Pelham in Baghdad

The US-led occupation authority in Baghdad has warned Iraq’s interim government not to carry out its threat of declaring martial law, insisting that only the US-led coalition has the right to adopt emergency powers after the June 30 handover of sovereignty.

Senior American officials say Iraq’s authorities are bound by human rights clauses in the interim constitution, known as the Transitional Administrative Law, prohibiting administrative detention.

But they say the recent United Nations Security Council resolution 1546 sanctions the use by foreign forces in Iraq of "all necessary measures" to provide security.

A senior coalition official in Baghdad said: "Under the UN resolution, the multinational force will have the power to take all actions traditionally associated with martial law." He said they had raised their legal objections with Iyad Allawi, Iraq’s prime minister.

Mr Allawi on Tuesday appeared to back away from remarks made on Sunday that the government would assume emergency powers after the handover.

"No, I didn’t specifically say martial law meaning martial law," he said, adding that the government was developing a "public safety law" which would allow it to implement curfews, searches, and "apprehend the enemies of Iraq".

The coalition’s warning highlights growing tension between the US-led multinational force and Iraq’s appointed government over how to handle counter-insurgency after the handover.

US advisers are concerned about the security powers sought by Mr Allawi, a one-time Baath party member, and are struggling to check the ambitions of his ministers to rebuild and re-arm Iraq’s forces.

"Iraq will have a lightly-armed standing army and no heavy field artillery," says Jacinta Caroll, director of defence policy for the Coalition Provisional Authority. If tanks and attack aircraft were needed, Iraq would have to rely on US-led forces, she said.

Frustrated Iraqi officials say reliance on US-led forces will undermine public confidence in the restoration of sovereignty and re-ignite claims that they are lackeys of the occupying forces.

To curb Iraq’s access to heavy weapons, observers say the occupation authorities have signed a $259m contract with US company Anham Joint Venture to be sole supplier of arms to Iraq’s armed forces for the next two years.

Alarmed that the deal could leave Iraq’s forces outgunned by an enemy with mortars and rockets, Mr Allawi this week vowed to refurbish the old Iraq army’s arsenal, and appealed to neighbouring states to provide military hardware.

All but 20 per cent of the defence ministry’s 2004 $1.5bn budget stems from US funds, say coalition officials, and Iraq’s share is earmarked for the payment of salaries, not equipment. In addition, the coalition has impounded Iraq’s remaining heavy weapons and is hampering the issue of end-user certificates for fresh supplies, say western security experts.

An American defence adviser in Baghdad this week said that Iraq also remained under "a partial UN weapons embargo".

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