(Fixes spelling of name in paragraph 17)
* Islamic State digging in for hard fight
* Battle expected to be most difficult in western Mosul
* Political reconciliation needed for Iraq's stability
By Michael Georgy and Babak Dehghanpisheh
SALAHUDDIN, Iraq, Nov 6 (Reuters) - Iraqi forces are expected to face much fiercer resistance from Islamic State in the next phase of the battle for Mosul, including booby traps that can blow up entire neighbourhoods, the top Kurdish security official said on Sunday.
Masrour Barzani, head of the Kurdistan Regional Government's Security Council, said that even if Islamic State is driven out of its main stronghold Mosul, that will not be enough to eliminate the group, and its radical ideology will survive.
"The fight against ISIS is going to be a long fight," Barzani told Reuters in an interview. "Not only militarily but also economically, ideologically."
Barzani said Iraqi forces have made quick progress clearing out Islamic State fighters from eastern Mosul after Kurdish peshmerga units broke through its first lines of defence.
"As they are getting more desperate, expectations are that they might fight more fiercely as you close in," said Barzani.
So far in the three-week operation, Islamic State has deployed drones strapped with explosives, long-range artillery shells filled with chlorine and mustard gas and highly effective snipers, said Barzani. Kurdish forces have destroyed more than 50 car bombs.
And he cautioned that western Mosul will be a more complex campaign, with a vast number of narrow streets that can't accommodate large military vehicles and an enemy that will fight to the death to defend the capital of its so-called caliphate.
"There are many different IEDs (improvised explosive devices) that they put in different places, come up with different tactics. Many that are used like networks," Barzani said.
"So in one house they are putting one IED and trying to hide it. And once it explodes then the entire neighbourhood explodes."
The Mosul campaign is the most critical land battle in Iraq since a U.S.-led coalition toppled Saddam Hussein in 2003.
Iraqi leaders are also under pressure to ensure that the offensive does not inflame sectarian tensions in predominantly Sunni Mosul and in the country as a whole.
That's why Shi'ite militias and Kurdish peshmerga forces are not fighting inside Mosul, although some Iraqi forces who are taking part have been flying Shi'ite banners on their vehicles, an act that has angered Sunni residents.
Barzani called on Iraq's complex patchwork of sects and ethnic communities to set aside their political differences or risk long-term instability in the major oil producer.
When the Sunni Islamic State seized Mosul in 2014, some members of that minority sect supported the group after accusing the Shi'ite-led government of widespread discrimination, an allegation it denied.
"Winning the peace after winning the war is equally important," said Barzani.
"The number one point to prevent the rise of terrorist and radical organizations is to make sure there is political reconciliation and a political agreement among all the components so that no one will feel like an outcast."
The KRG's counter-terrorism forces and intelligence agencies report to Barzani, 47, son of veteran Kurdish leader and KRG President Masoud Barzani. As a teenager, Masrour joined the peshmerga, who were fighting Saddam Hussein at the time.
Some 35,000 Islamic State jihadists have been killed inside Iraq yet there are still tens of thousands arrayed against the Iraqi army and Kurdish peshmerga, said Barzani.
"Every day, every week, every month they are trying to recruit new people, new fighters are joining," he said, though he added the numbers have recently decreased.
Hundreds of Islamic State militants have been caught trying to disguise themselves as displaced Iraqis since the Mosul campaign began on Oct. 17, said Barzani.
The world's most feared and violent militant group has tried to set up sleeper cells in Erbil, capital of the autonomous Kurdish region, and elsewhere, in order to try and divert attention away from the Mosul campaign.
"We have captured a number of sleeping cells, or people that were disguised as IDPs (internally displaced people). Hundreds of them actually," Barzani said.
Islamic State militants, who have been fighting Iraqi forces, are mosty Iraqis but there are also significant numbers of foreign fighters from other parts of the Middle East, Europe, Asia and Africa, said Barzani.
"We do believe that ISIS is the byproduct, is the result of a political failure, the political system that failed in this country," he said. (Editing by Adrian Croft)
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