* Sistani wields immense influence among followers in Iraq
* Shi'ite clerics see insurgent onslaught as existential threat
* Thousands of men have responded to Sistani's call to arms
* Najaf clerics usually avoid direct role in politics
* Maliki under pressure to leave post as crisis mounts
By Alexander Dziadosz and Raheem Salman
NAJAF, Iraq, June 28 (Reuters) - Najaf is far from Baghdad's palaces and the battlefields of northern Iraq. Its mud-brick houses, dirt alleys and concrete office blocks project little in the way of strength or sway. But it is here, where Iraq's most influential clerics work from modest buildings in the shadow of a golden-domed shrine, that the country's future is being shaped.
Over his past three Friday sermons, Iraq's top cleric, Grand Ayatollah Ali al-Sistani, an ascetic 83-year-old of almost mythological stature to millions of followers in Iraq and beyond, has seized his most active role in politics in a decade.
From his spartan office in the holy city of Najaf, down an alleyway protected by armed guards, Sistani has asserted his dominance over public affairs, demanding politicians choose a new government without delay and potentially hastening the end of Prime Minister Nuri al-Maliki's eight-year tenure.
The cleric, a recluse who favours a behind-the-scenes role, kicked off his newly assertive stance on June 13 with a call for Iraqis to take up arms against a Sunni insurgency - the first fatwa of its kind in a century, clerics familiar with Sistani's thinking say, motivated by his fear the state faced collapse.
Tens of thousands of men have heeded the call, bolstering an army that at times seemed close to implosion. Sistani's appeal for an inclusive government has further been seen as an implicit rebuke of Maliki, even by some of the premier's supporters.
On Friday he called on political blocs to choose a prime minister, president and speaker of parliament by July 1, meaning Maliki could be replaced within days.
"Today, the roadmap is clear and there is a timetable. It's as if Sistani has put all the parties in a corner," a Shi'ite lawmaker said.
The fatwas also carry risks, both in the near and long term. Sunni leaders say Sistani's call to arms inflamed the conflict. And, more broadly, the fatwas revive an old question of what role Najaf's clerics, who traditionally keep their distance from politics, will play in affairs of state.
"He gave a fatwa the Shi'ites never had for 90 years or more. He will not retreat. He wants to have a role," said a Western diplomat with strong knowledge of the clerical establishment. "It would be seen as irresponsible for him to pull back after issuing such a fatwa."
The Shi'ite lawmaker, who has good relations with the clergy, put it succinctly: "Sistani is the driver now."
Shi'ites are required to choose a senior cleric, known as a "marjaa", to emulate, usually one who has attained the top rank of grand ayatollah after many decades of study at either of the two great seminaries, in Najaf, Iraq or Qom, Iran.
Sistani is chancellor of the thousand-year-old Najaf seminary, the most senior of its four grand ayatollahs, and the most widely emulated in Iraq. To the millions who follow him, his Islamic legal opinions, or fatwas, are beyond question.
Mohammad Hussein al-Hakim, whose father is another of Najaf's four top clerics, reaches deep into history to describe the threat Shi'ites now feel from the hardline Sunni Islamists spearheading the insurgency.
Two centuries ago, puritanical Sunnis rampaged through the holy city of Kerbala north of Najaf. Without the clerics' intervention, Hakim said, history might have repeated itself.
"Now the capabilities are bigger, the destructive forces are stronger, and the destructive ideas are greater," he said at the offices of a charity for orphans financed by his father.
He listed abuses and atrocities committed by the Islamic State in Iraq and the Levant (ISIL), the al Qaeda splinter group spearheading the insurgency: Tombs have been razed, Shi'ites murdered, mosques sacked. "They will leave no culture or values behind," Hakim said. "Their behaviour is monstrous."
During interviews with Reuters, clerics also invoked the 7th century assassination of Imam Ali - a central figure in Shi'ite history who is buried in Najaf's golden-domed shrine - and the British occupation of Iraq during World War One to illustrate the depth of their current fears. But most Shi'ites do not need to look back that far to recall severe persecution.
Former President Saddam Hussein, a Sunni ruling over a country with a Shi'ite majority, banned pilgrimages to Najaf and Kerbala, assassinated Shi'ite clerics and made sure the holy sites like Najaf languished in neglect and poverty.
Since the U.S. army toppled Saddam, Shi'ites have risen to power on the basis of their numbers. For all the corruption, waste and sloth of the post-Saddam state, many see attempts to undermine it as a threat to return Iraq to a dark past.
Thaer al-Khateeb, a 56-year-old fabric seller who works down the street from the Imam Ali shrine, said Sistani's fatwa had saved the nation.
The charge that Sunnis were marginalised was exaggerated, he said, by those who wanted "to turn the wheel back".
"They don't let you live - the remnants of the old regime and those whose interests were hurt with the new regime," Khateeb said. "They are saying, 'We have ruled for 1,400 years and now you are coming to rule us? Impossible'."
PREMIER UNDER PRESSURE
The most immediate consequence of Sistani's involvement may be to speed up the formation of a new government - a process that took about nine months the last time it was attempted in 2010 - potentially hastening the end of Maliki's premiership.
Sistani's call on Friday for politicians to choose a prime minister by July 1 left no doubt the crisis had compelled him to take his most active stance since the early days of the U.S. occupation, when he successfully pushed in 2004 for early elections and a constitutional referendum.
The move piles pressure on Maliki, who many Iraqi and Western officials blame for alienating Kurds and Sunnis and failing to forestall the insurgency.
In his second sermon after the crisis erupted, Sistani called for an inclusive government, which some figures across the political spectrum saw as a signal the prime minister should go. "The door was closed on Maliki," the Shi'ite lawmaker said.
Another official from Maliki's ruling alliance acknowledged Sistani's statements implied criticism of the prime minister's policies, but said the top cleric was not trying to oust him.
"Sistani doesn't want to get involved in who is the next prime minister, but there has to be progress," he said.
There is also a chance that even the censure of Sistani, the United States and Iran may not be enough to unseat Maliki, a masterful player of Iraq's political game, said Hayder al-Khoie, an associate fellow at the Chatham House think tank.
"Maliki can still pull more levers than any other politician in Iraq," Khoie said. "If he wants to be stubborn, I think he can be stubborn."
NAJAF'S CEMETERY GROWS
Such vagaries are one reason clerics have been reluctant to wade directly into the untidy business of politics in Iraq. On past form, Sistani probably wants to preserve that distance in the longer-term.
Farhan al-Saadi, a Najaf cleric and professor, recalled a scene from Don Quixote when describing the attitude of the top clerics toward the state: A ruler, the knight in the Cervantes novel tells his squire, should not make too many decrees, and those he does should be well-considered.
"If the marjaa as a group or any religious figure intervened in every crisis - about energy, about borders - they would turn into mere politicians," he said.
Yet the situation now is urgent, clerics say. Bodies of soldiers killed by insurgents regularly arrive in Najaf, expanding a vast cemetery where tombs are plastered with images of men who died in the sectarian warfare of 2006 and 2007.
During that earlier conflict and the entire period of U.S. occupation Sistani called for restraint, while relatively junior but more radical clerics, like Moqtada al-Sadr, rallied Shi'ites to fight at times mocking the caution of their elders.
Ali al-Najafi, son of another of Najaf's grand ayatollahs, said the difference is that ISIL now poses an existential threat to Iraq's Shi'ites - better-armed than previous insurgents and with allies among members of Saddam's old regime.
If Sistani's fatwa had not reinvigorated Iraq's army during the anxious days when it seemed the insurrection might sweep to Baghdad, "then we would not be meeting here today," Najafi said.
He would not object to U.S. air strikes, he said, nor would he oppose Shi'ite militias joining the fight to eradicate ISIL - as long as it were done legally.
"This is a threat to Iraq's existence.... And it is a threat to our people, to the Shi'ites generally, and non-Shi'ites too."
"SISTANI, THAT LION"
The greatest risk of Sistani's activism, Sunni critics say, is that it may sharpen the sectarian edge of the conflict.
"Sistani now is ordering them to wear fatigues and fight Sunnis," Sunni cleric Ahmed al-Kubaisi told Saudi Arabia-owned Al Arabiya television this week.
Rifa al-Rifaie, a senior Sunni cleric, condemned the fatwa, comparing it mockingly to Sistani's earlier restraint. "Sistani, that lion, where was he when the Americans occupied Iraq?" he said. "We have been treated unjustly, we have been attacked, our blood has been shed and our women have been raped."
Supporters say Sistani's call to arms was carefully phrased to refer to all Iraqis, not just Shi'ites, and that it is ISIL that wants to make this an issue of sect.
Hakim argued the fatwa actually reduced the chance of a bloodbath by encouraging people to fight within a state-guided framework, rather than take matters into their own hands.
Nevertheless, critics say the fatwa has provided legitimacy to extra-legal Shi'ite militias.
Hayder Nazar, a professor in Najaf, acknowledged the fatwa had stirred sectarian feelings, but said it was "more positive than negative". The alternative, he argued, was state collapse.
"I consider this fatwa a dividing line between two stages - the stage of the retreat of the armed forces and even of the political authorities, a stage of collapse," Nazar said. "And the second stage - which is to preserve what is there." (Additional reporting by Ned Parker and Isra' al-Rubei'i; Writing by Alexander Dziadosz; Editing by Peter Graff)
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