EDITORIAL CRUNCH TIME U.S. POLICY AND HOPE FOR DEMOCRACY IN IRAQ AT CRITICAL JUNCTURE.

ONCE again U.S. forces have started a climactic attack on the Mahdi Army of Muqtada al-Sadr in historic Najaf only to pull back for another round of truce talks.

It has become increasingly clear that the radical Shiite cleric and his followers hold the balance of power as the fledgling Iraqi government struggles to gain control on a country verging on the brink of a disastrous civil war.

This is a critical point in time for both for interim Prime Minister Iyad Allawi and the United States. It is now that the groundwork for the hope of democracy will be laid, or laid to waste.

But the violence has been escalating between the U.S.-backed secular Iraqi government and the extremist rebels. The clashes have killed hundreds on both sides - including U.S. soldiers - and spread across the Shiite dominated south of the country. It now seems less and less likely that the United States will be able to extricate its forces anytime soon.

Despite several attempts to kill al-Sadr and take out the leadership of his insurgency, he remains alive and strong, able to find sanctuary in the Imam Ali Shrine, the holiest of Shiite sites which if seriously damaged could ignite Muslims across a broad region.

So much is at stake on the outcome of this battle. The future of Iraq and indeed the future for democracy throughout the Middle East may hinge on whether Iraq's new government can establish its legitimacy by suppressing al-Sadr's forces or finding an accommodation that does not turn the country over to the kind of fundamentalist regime that has ruled Iran since the fall of the Shah.

So much about the war in Iraq has not gone as hoped and the danger grows that the U.S. will find itself into a deepening quagmire as the country falls into anarchy and civil war between religious factions.

At this point, al-Sadr appears to hold the key.