By Wisam Mohammed and Ahmed Rasheed
BAGHDAD (Reuters) - A compromise on the main sticking point holding up Iraq's 2008 budget appears possible but it and several other key reconciliation laws face potentially long delays, lawmakers and ministers said on Wednesday.
Iraqi lawmakers are set to vote on Thursday on the budget as well as laws governing the distribution of power between Baghdad and Iraq's 18 provinces and another that would free thousands of mainly Sunni Arab detainees from Iraqi jails.
Lawmakers have so far refused to ratify the $48 billion budget because of arguments over allocations between the provinces, particularly the largely autonomous northern region of Kurdistan.
The current draft of the law has allocated 17 percent of budget funds to Kurdistan, based on population estimates.
Shi'ite and Sunni Arab lawmakers say Kurdistan should receive about 13 percent because that is a more accurate reflection of the Kurdish population in the absence of any recent census.
Planning Minister Ali Baban, a Kurdish independent, said he would deliver on Thursday a report from his department with a compromise figure that showed Kurds made up about 14.5 percent of Iraq's estimated population of 27.5 million.
He said the figure was based on statistics available to his department, including the most recent national census in 1987.
Despite that estimate, Baban said he expected the budget to pass with an allocation for Kurdistan of 17 percent.
"I expect the budget for the region will be 17 percent because normally we give more than the percentage of the population to secure provinces to encourage these provinces to implements projects," Baban told Reuters.
Iraqi officials have said that failure to pass the budget would hold up vital spending at a time when Washington is urging the government to jumpstart the economy.
U.S. officials have praised the 2008 budget as well as this month's passage of a law allowing former members of Saddam Hussein's Baath party to rejoin the government. Washington introduced "de-Baathification" under U.S. administrators in Iraq after the 2003 invasion but acknowledged it went too far.
A U.S. embassy official said that matters of "political will" were holding up the budget. He said the fact that lawmakers would not be able to take their winter recess before the budget was passed might hasten the process.
"The parliamentarians are desperate to go on holidays ... that's adding to the dynamic and increasing their willingness to compromise," the embassy official told Reuters.
Lawmakers on both sides appeared unwilling to give ground.
"We consider the demands to lower our share of the budget below 17 percent are a political conspiracy against the Kurds and our rights," Kurdish lawmaker Mahama Khalil told Reuters.
Usama al-Nujaifi of the secular Shi'ite Iraqi National List said 14.5 percent was the most likely point for compromise.
"If the Kurds insist on 17 percent then many blocs will reject the budget in its current form," he said.
"It will be very difficult to pass the budget on Thursday."
Freeing prisoners has been one of the preconditions for the Accordance Front, the main Sunni Arab bloc, to return to cabinet after it quit last August over a number of differences with Prime Minister Nuri al-Maliki's Shi'ite-led government.
The amnesty law to be voted on would exclude those sentenced to death or convicted of killings, terrorism, kidnapping, drugs offences or corruption and would cover more than 23,000 prisoners held by Iraq but not detainees in U.S. custody.
(Additional reporting by Waleed Ibrahim and Paul Tait in Baghdad; Writing by Paul Tait; Editing by Elizabeth Piper)