Iraq has been without a government since March 7 elections for the 325-member Council of Representatives. None of the leading coalitions won the majority needed to form a government alone and lawmakers are divided over candidates for president, speaker of parliament and prime minister.
U.N. Secretary-General Ban Ki-moon wrote to the U.N. Security Council in his latest report on Iraq that the political situation was a mounting concern.
"Not only does this risk undermining confidence in the political process but elements opposed to Iraq's democratic transition may try to exploit the situation," he wrote.
Violence in Iraq is down from the height of the war in 2007. Al-Qaida in Iraq, however, reportedly planted its flag at the site of several attacks near the capital city.
The Iraqiya slate, which won the election by two seats, said it has the constitutional authority to form a new government first despite lacking a majority. U.S. lawmakers, meanwhile, were unable to broker a power-sharing agreement during a visit to Baghdad in July.
Ad Melkert, the U.N. special envoy to Iraq, told the Security Council in his report that there were glimmers of hope in the political process.
"I believe that at this stage, government formation could benefit from the adherence to a specific time frame as well as a collective process through which a resolution could be reached," he said.
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