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* Iraq minister asks U.S. for air support
* Baghdad wants drone strikes, surveillance -U.S. officials
* Rebels control most of Baiji refinery
* Obama meets with U.S. congressional leaders
* Fighting threatens to spill over borders
By Ghazwan Hassan and Phil Stewart
BAGHDAD/WASHINGTON, June 18 (Reuters) - Iraq has asked theUnited States for air support in countering Sunni rebels, thetop U.S. general said on Wednesday, after the militants seizedmajor cities in a lightning advance that has routed theShi'ite-led government's army.
But General Martin Dempsey, the chairman of the U.S.military's Joint Chiefs of Staff, gave no direct reply whenasked at a congressional hearing whether Washington would agreeto the request.
Baghdad said it wanted U.S. airstrikes as the insurgents,led by fighters from the Islamic State of Iraq and the Levant,or ISIL, battled their way into the biggest oil refinery in Iraqand the president of neighbouring Iran raised the prospect ofintervening in a sectarian war that threatens to sweep acrossMiddle East frontiers.
"We have a request from the Iraqi government for air power,"Dempsey told a Senate hearing in Washington. Asked whether theUnited States should honour that request, he said: "It is in ournational security interest to counter ISIL wherever we findthem."
U.S. officials, speaking on condition of anonymity, said theIraqi request had included drone strikes and increasedsurveillance by U.S. drones, which have been flying over Iraqfor some time.
In the Saudi city of Jeddah, Iraqi Foreign Minister HoshyarZebari said Baghdad had asked for airstrikes "to break themorale" of ISIL.
While Iraq's ally, Shi'ite Muslim power Iran, had so far notintervened to help the Baghdad government, "everything ispossible", he told reporters after a meeting of Arab foreignministers.
U.S. President Barack Obama briefed congressional leaders onWednesday on efforts to get Iraqi leaders to "set asidesectarian agendas," reviewed options for "increased securityassistance" and sought their views, the White House said.
A senior administration official said afterward that Obamadid not lay out a course of action at the meeting and had yet tomake a final decision.
But a U.S. national security source said the administrationhad quietly started consulting Congress about a plan forredirecting some current intelligence funding to help financeexpanded U.S. operations in Iraq.
Obama is facing pressure from U.S. lawmakers to persuadeIraqi Prime Minister Nuri al-Maliki to step down over what theysee as failed leadership in the face of the insurgencythreatening his country.
REFINERY BATTLE
Sunni fighters were in control of three-quarters of theterritory of the Baiji refinery north of Baghdad, an officialsaid there, after a morning of heavy fighting at gates defendedby elite troops who have been under siege for a week.
ISIL aims to build a Sunni caliphate ruled on mediaevalprecepts, but the rebels also include a broad spectrum of moremoderate Sunnis furious at what they see as oppression byBaghdad.
Some international oil companies have pulled out foreignworkers. The head of Iraq's southern oil company, Dhiya Jaffar,said Exxon Mobil had conducted a major evacuation and BP had pulled out 20 percent of its staff. He criticised themoves, as the areas where oil is produced for export are mainlyin the Shi'ite south and far from the fighting.
Washington and other Western capitals are trying to saveIraq as a united country by leaning hard on Maliki to reach outto Sunnis, the minority who ran Iraq until U.S. troops deposeddictator Saddam Hussein after the 2003 invasion.
Maliki met Sunni and Kurdish political opponents overnight,concluding with a frosty, carefully staged joint appearance atwhich an appeal for national unity was read out.
In a televised address on Wednesday, Maliki appealed totribes to renounce "those who are killers and criminals whorepresent foreign agendas".
But Maliki's government has so far relied almost entirely onhis fellow Shi'ites for support, with officials denouncing Sunnipolitical leaders as traitors. Shi'ite militia - many believedto be funded and backed by Iran - have mobilised to halt theSunni advance, as Baghdad's million-strong army, built by theUnited States at a cost of $25 billion, crumbles.
Maliki announced on Wednesday that 59 officers would bebrought to court for fleeing their posts last week as theinsurgents seized Mosul, northern Iraq's biggest city.
HOLY SHRINES
Like the civil war in Syria next door, the new fightingthreatens to draw in regional neighbours, mustering alongsectarian lines in what fighters on both sides depict as anexistential struggle for survival based on a religious riftdating to the 7th century.
Iranian President Hassan Rouhani made the clearestdeclaration yet that the Middle East's main Shi'ite power, whichfought a war against Iraq that killed a million people in the1980s, was prepared to intervene to protect Iraq's great shrinesof Shi'ite imams, visited by millions of pilgrims each year.
"Regarding the holy Shi'a shrines in Karbala, Najaf,Kadhimiya and Samarra, we announce to the killers and terroriststhat the great Iranian nation will not hesitate to protect holyshrines," Rouhani said in an address to a crowd on live TV.
He said many people had signed up to go to Iraq to fight,although he also said Iraqis of all sects were prepared todefend themselves: "Thanks be to God, I will tell the dearpeople of Iran that veterans and various forces - Sunnis, Shiasand Kurds all over Iraq - are ready for sacrifice."
Iraqi troops are holding off Sunni fighters outside Samarranorth of Baghdad, site of one of the main Shi'ite shrines. Thefighters have vowed to carry their offensive south to Najaf andKerbala, seats of Shi'ite Islam since the Middle Ages.
Saudi Arabia, the region's main Sunni power, said Iraq washurtling towards civil war. Foreign Minister Prince Saudal-Faisal, in words clearly aimed at Iran and at Baghdad'sShi'ite rulers, deplored the prospect of "foreign intervention"and said governments needed to meet "legitimate demands of thepeople".
Maliki's government has accused Saudi Arabia of promoting"genocide" by backing Sunni militants. Riyadh supports Sunnifighters in Syria but denies aiding ISIL.
The Baiji refinery is the fighters' immediate goal, thebiggest source of fuel for domestic consumption in Iraq, whichwould give them a grip on energy supply in the north where thepopulation has complained of fuel shortages.
The refinery was shut on Tuesday and foreign workers flownout by helicopter.
"The militants have managed to break into the refinery. Nowthey are in control of the production units, administrationbuilding and four watch towers. This is 75 percent of therefinery," an official speaking from inside the facility said.
The government denied the refinery had fallen.Counterterrorism spokesman Sabah Nouri insisted forces werestill in control and had killed 50 to 60 fighters and burned sixor seven insurgent vehicles after being attacked from threedirections.
Oil prices rose on news the refinery was partly in rebelhands.
FROSTY MEETING
Last week's sudden advance by ISIL - a group that declaresall Shi'ites to be heretics deserving death and has proudlydistributed footage of its fighters gunning down prisoners lyingprone in mass graves - is a test for Obama, who pulled U.S.troops out of Iraq in 2011.
Obama has ruled out sending back ground troops and U.S.officials have even spoken of cooperating with Tehran againstthe mutual enemy. But the White House said more talks with Iranabout dealing with the crisis in Iraq, which have taken place onthe sidelines of meetings on Tehran's nuclear programme, areunlikely for the time being.
U.S. Senate Majority Leader Harry Reid said he did not backsending U.S. troops into the conflict in Iraq, which hedescribed as a "civil war".
"The Maliki government, candidly, has got to go if you wantany reconciliation," said Senator Dianne Feinstein, Democraticchairwoman of the Senate Intelligence Committee.
U.S. Vice President Joe Biden spoke on Wednesday with threeIraqi leaders, including Maliki, to urge unity againstinsurgents and to emphasize the need to form an inclusivegovernment after April's elections.
In his call with Maliki, the White House said Biden"underscored that the United States stands ready to enhance oursupport to all Iraqis in their fight against ISIL. At the sametime, he emphasized the need for the Prime Minister - and allIraqi leaders - to govern in an inclusive manner, promotestability and unity among Iraq's population, and address thelegitimate needs of Iraq's diverse communities."
Western countries fear an ISIL-controlled mini-state inSyria and Iraq could become a haven for militants who could thenstage attacks around the globe.
In a rerun of previous failed efforts at bridging sectarianand ethnic divisions, Shi'ite, Sunni and Kurdish leaders metlate on Tuesday behind closed doors. They later stood beforecameras as Ibrahim al-Jaafari, a Shi'ite politician who held thepost of prime minister before Maliki, read a statement.
"No terrorist powers represent any sect or religion,"Jaafari said in the address, which included a broad promise of"reviewing the previous course" of Iraqi politics. Afterwards,most of the leaders, including Maliki and Usama al-Nujaifi, theleading Sunni present, walked away from each other in silence.
(Additional reporting by Ghazwan Hassan, Ahmed Rasheed, NedParker, Oliver Holmes, Mark Hosenball, Amena Bakr and YaraBayoumi, Patricia Zengerle, David Alexander and Roberta Rampton;Writing by Giles Elgood and David Stamp; Editing by WillWaterman, Robin Pomeroy and Peter Cooney)
