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Tension looms in Somalia as talks aimed at averting an all-out war between the transitional government and increasingly powerful Islamists have collapsed in Khartoum, Sudan.

The Arab-League mediated peace talks collapsed on Wednesday night after the Supreme Council of Islamic Courts (SCIC) and transitional government refused to meet face-to-face, the mediators said in a statement received in Nairobi Thursday.

Analysts say a war between the militarily superior Islamists and the government could draw in neighboring countries -- Ethiopia and its arch rival Eritrea -- igniting existing regional bitterness over boundary.

The analysts also fear a conflict which could engulf the entire region is imminent but in a move to avert the looming war, the mediators called for restraint and said further consultations were needed to move the dialogue forward.

Eye witnesses and local reports from Somalia said Islamist forces have taken control of another key Somali port.

Residents of Hobyo on the central Somali coast, about 500 km from the capital Mogadishu, say there was no fighting as Islamists entered the town Tuesday.

The transitional government's Foreign Minister Ismail Hurreh had earlier denounced the Islamists as no longer partners for peace. The foreign minister said there was a danger of all-out conflict in the Horn of Africa.

He said his government hoped to avoid war but warned that conflict would become inevitable if the Islamists continued on their current path. The minister said countries in the region were deeply concerned about the SCIC's declaration of "jihad" on their neighbors.

And as talks stalled in Khartoum, Islamist forces remain positioned near the interim government's base of Baidoa, prompting officials there to prepare for a possible attack.
 
The militia groups loyal to Somalia's Islamic courts have seized control of much of the country's south since winning a battle for the capital Mogadishu in June.

Somalia's interim government has international support but virtually no power outside Baidoa.

The Islamists had indicated before the talks that they will not negotiate until Ethiopian soldiers leave Somali territory. The Islamists say Ethiopia has sent thousands of troops across the border to protect the weak but United Nations backed Somali interim government.
 
However, Addis Ababa denies this, saying it has sent only a few hundred military instructors.

With neither side willing to accept the other's preconditions for talks, international mediators have called on both parties to exercise restraint.

"The parties are urged to commit themselves to previous agreements reached in Khartoum," a mediators statement issued after the talks collapse, said.

"After long consultations with the two sides and the international community, it was decided that the meeting should be postponed and that (the talks) be held as soon as possible after more meticulous preparations," said Samir Hosny, who heads the African section of the Cairo-based Arab League.

Hosny said neither party was to blame for the failure of the peace talks, and expressed hope that both sides would return to the negotiating table in the future.

"We did not set a date or venue for any upcoming meetings, but the sooner the meetings take place the better -- in a week or two. But we did not set a date," he said.

He added that the decision to call off the talks indefinitely was reached after the Arab League's consultations with both sides, as well as with the United Nations, the African Union and a number of European countries.

"Let us hope that this step does not reflect negatively on the situation on the ground," Hosny said.

There has been no sign of reconciliation on the ground in Somalia, where the Islamic courts seek to impose an Islamic state and the internationally recognized government lacks the force to assert its authority beyond Baidoa, the only town it controls.

The head of the Islamist team, Ibrahim Hussein Adow, praised the postponement and denied his side was planning any attack.

"There was a gap between the parties and substantial issues, so it was necessary to adjourn," he told reporters. "We are not preparing nor planning for any confrontation. We want peace."

But whether the collapse of the talks will give the rival groups' time to prepare for counter attacks in the Horn of African nation remains to be seen.

Somalia has been in the grip of warlords and militias for years and has not had a functioning national government since 1991.

(Xinhua News Agency November 3, 2006)