Iraq Cites Arrest of a Top Local Insurgent

"We swear to God, this is from their sick minds in an attempt to make the people believe a fake victory," the statement said. "It is no more than names from their imagination and the devils whispering to them in the Green Zone."

In an interview after his news conference, Rubaie dismissed the statement and said that Saeidi told interrogators he had fought to replace Zarqawi but lost out to Masri, the current leader. Rubaie also said Saeidi had admitted to overseeing al-Qaeda operations in Baghdad and Diyala and Salahuddin provinces.

"He was in charge of more than half of al-Qaeda in Iraq," Rubaie said.

Saeidi financed the group's operations by ambushing Iraqi security forces after they collected their salaries from the bank and by kidnapping civilians for ransom, Rubaie said.

Dabbagh said late Sunday night that Saeidi had been captured within the past few weeks, and that Rubaie had misspoken at the news conference when he said the arrest took place several days ago.

After authorities finish interrogating him, Saeidi will face charges including "mass killings of Iraqis," Dabbagh said.

Despite repeated strikes on the leadership of al-Qaeda in Iraq, the group's diffuse cells have continued to launch deadly attacks throughout the country. "It's a very decentralized organization with a lot of local leaders, so that makes it much harder to strike crippling blows," Daniel L. Byman, director of Georgetown University's Security Studies Program, said in a phone interview from Washington.

U.S. and Iraqi officials say the greatest threat to security in the country is not insurgent attacks on American forces but tit-for-tat killings by the country's various sects. "Sustained ethno-sectarian violence is the greatest threat to security and stability in Iraq," according to a Pentagon report released Friday.

Simmering anger directed by Arabs toward Kurds reached a boiling point this weekend after the Kurdish regional government issued an order forbidding the Iraqi flag to be raised in government buildings across the north. The decree allowed the display of only the Kurdish flag, an assertion of independence interpreted by some as a rebuke of attempts to prevent Iraq from breaking apart.

"The current flag of Iraq is the only one which should be raised over every foot of the land of Iraq," Prime Minister Nouri al-Maliki said in a statement.

In a speech before the Kurdish parliament Sunday, Massoud Barzani, president of the regional government in Kurdish-populated northern Iraq, said the region would not be intimidated by other areas of Iraq and that it retained the option to express independence. "We will not be in an Iraq ruled by a dictator, a fascist or any one sect," he said.

Meanwhile, six mortars fell near the mainly Shiite Sadr City area of Baghdad, killing seven people and wounding 12, police said. Fourteen people were also killed in violence in and around Baqubah, 35 miles northeast of the capital, police said.

The U.S. military on Sunday announced the deaths of four service members. In Baghdad, two soldiers were killed Sunday morning when their vehicle was hit by a bomb. In Anbar province, a volatile Sunni insurgent stronghold, a Marine assigned to Regimental Combat Team 7 was killed in combat Sunday, and another assigned to Regimental Combat Team 5 died in combat Friday.

Researcher Rena Kirsch in Washington, special correspondents Naseer Nouri and K.I. Ibrahim in Baghdad and other Washington Post staff in Iraq contributed to this report.