Interim Iraqi Prime Minister Iyad Allawi told Aljazeera that there was no conflict of interest with the Kurds and denied Kurdish leaders had threatened to withdraw from the transitional government.

However, he admitted that Kurds were "angered" by the "failure of the latest UN resolution on Iraq to account for Kurdish autonomy and concerns".

"We have worked to resolve and are continuing to resolve the issues based on agreements we had with our Kurdish brethren prior to the UN resolution," Allawi told Aljazeera.

Meanwhile, a Kurdish Democratic Party official said that the Kurdish parliament would issue a statement outlining its position regarding the UN resolution.

The statement is expected by Sunday.

Veto rejected

Tensions had been heightened earlier when Grand Ayat Allah Ali al-Sistani called the interim constitution - drawn up in March - null and void now that the Iraq Governing council had dissolved itself.

He also rejected the constitution's clause giving Kurds the power of vetoing a final constitution.

Hoping to defuse the situation, Allawi pledged that the interim constitution would be upheld.

Boycott threat 

Kurdish officials had threatened on Tuesday to withdraw from any transitional government if their political aspirations were not acknowledged in the UN resolution.

Al-Sistani rejects one faction to
have veto power over another

"In case the law is not applied or is suppressed, there will not be any choice for the Kurdistan government but to stop participating in the central government and its institutions, to boycott elections and forbid members of the central government from entering Kurdistan," Kurdish leaders Masoud Barzani and Jalal Talabani wrote in a letter addressed to President Bush.

But interim Iraqi President Ghazi al-Yawir told reporters in Washington - where he was meeting Senate leaders - that Kurds were "patriots" and vital to Iraq's national future.

"They are experienced, they are patriots. We benefited a
lot from their experience in self-rule for 12 years," al-Yawir said.