"The coming year will be pivotal for Iraq," said Gareth Stansfield, author of the report "Accepting Realities in Iraq" for the Chatham House research institute in London.

"The internecine fighting and continual struggle for power threatens the nation's very existence in its current form," he said.

The report said US-led coalition forces are struggling to promote security in a country torn apart by not just one civil war but several insurgencies involving different religious, ethnic and political groups.

Despite their recent "surge" to boost security in Baghdad, US forces appear to have "simply pushed insurgent activity to neighboring cities" and cannot create conditions that will resolve political differences among various groups.

"A political solution will require Sunni Arab representatives' participation in government, the recognition of (radical Shiite Muslim leader Moqtada al-Sadr as a legitimate political partner, and a positive response to Kurdish concerns," the report said.

"Within this warring society, the Iraqi government is only one among many 'state-like' actors, and is largely irrelevant in terms of ordering social, economic, and political life," the report said.

"It is now possible to argue that Iraq is on the verge of being a failed state which faces the distinct possibility of collapse and fragmentation," it added.

The report added that although the terror network al-Qaeda is challenged by local groups, there "is momentum behind its activity."

It added that Iraq's neighbours Iran, Saudi Arabia and Turkey all "have different reasons for seeing the instability in Iraq continue, and each uses different methods to influence developments."

Meanwhile, Iran talks about Iraq's security will begin in Iraq on May 28, Iran's foreign minister said yesterday.

Manouchehr Mottaki said the negotiations would be exclusively about Iraq and that a first meeting in the presence of Iraqi officials would try to set a more detailed agenda.

"Nothing but Iraq is on the agenda," he told reporters in Islamabad, where he has been attending a ministerial meeting of the Organisation of the Islamic Conference.

"The talks will strictly be focused on the security situation in Iraq," he added, saying the meeting would be held in the presence of Iraqi officials.

US Ambassador to Iraq Ryan Crocker is to lead the American side and Mottaki said Iran would send "one of its senior diplomats" at the level of ambassador as its chief negotiator.

Mottaki didn't detail what Iran wanted to discuss, but underlined Tehran's argument that the continued US military presence as well as terrorism in its western neighbour was part of the problem.