oh for gods sake!

Iraq dents Labour win

By Mike Peacock

LONDON (Reuters) - Tony Blair survived opposition to the Iraq war to win a historic third straight term in power on Friday -- but saw his authority weakened by a drastically reduced majority in parliament.

"I know Iraq has been a divisive issue in this country, but I hope we now can unite again and look to the future," a chastened Blair said after victory was confirmed overnight

Of the main global allies in Iraq -- Blair, U.S. President George W. Bush, Australian Prime Minister John Howard and Spain's Jose Maria Aznar -- only Aznar lost his country's top office in postwar elections.

With most results in, Blair was heading for a majority of between 60 and 80 seats in the 646-seat House of Commons, sharply down from 161 last time. Projections suggested Labour only secured 36 percent of the vote, an all-time low for a winning party.

That could hinder his legislative programme and hasten a handover to his powerful chancellor and assumed heir apparent Gordon Brown, analysts said.

Markets were not expected to move significantly, even though Blair won a smaller majority than many predicted. In an early indication before the London stock market opened, the pound barely budged against the dollar and euro in currency trading.

"I LOVE YOU"

"It seems as if it is clear that the British people wanted the return of a Labour government but with a reduced majority," Blair said at his Sedgefield constituency. "We will have to respond to that sensibly and wisely and responsibly."

Blair looked more ebullient later at a party with Labour Party loyalists in London, grinning and telling activists: "It's an extraordinary achievement ... I love you!"

But the mood still contrasted with the outright euphoria of landslide victories in 1997 and 2001.

Blair, who turned 52 on Friday, has said he plans to stand down at the end of a third term.

The election result will fuel a view among many Labour members of Parliament that Blair is a liability rather than asset. Some will be looking immediately for Brown, who is far more popular with both party and public, to take over.

The 54-year-old chancellor of the exchequer is widely credited with masterminding the stability of Britain's economy, which has outperformed its European neighbours during the global downturn and was a big vote-winner for Labour.

"Power will start visibly seeping through the walls to Number 11 Downing Street to the Chancellor," said Kevin Theakston, politics professor at Leeds University.

With 615 results declared by 7.15 a.m. Labour had won 352 seats, compared with 192 for the Conservatives and 59 for the Liberal Democrats.

"Clearly this is a very unpopular government. It has done very badly," said politics professor Anthony King.

HISTORIC NONETHELESS

Blair is only the second premier in British history after Margaret Thatcher to win three elections in a row. He is also the first leader to win three successive terms for Labour, the socialist party founded a century ago and now the dominant force of the centre-left.

Michael Howard's Conservatives face a third consecutive term in opposition.

But their strategy of homing in on emotive issues like immigration and targeting key winnable seats had paid off with a moderately improved showing.

"What has happened on this election day marks a significant step towards our recovery," Howard said as he conceded defeat on a national scale but held his seat in the southern coastal constituency of Folkestone and Hythe.

Blair has been called a "liar" and "poodle" of Bush over Iraq. Accused of hyping intelligence over Saddam Hussein's banned arms and misleading Britons over the legality of war, Blair has refused to apologise, saying he did the right thing.

He lost at least one loyal MP, Labour's Oona King, solely to the Iraq factor. She was beaten by George Galloway, a radical expelled from the Labour Party for attacking Blair over the war, in an east London seat with a large Muslim population.

"All the people you killed, all the lies you told, have come back to haunt you," Galloway told Blair in his victory speech.

Blair said last year a third term would be his last, a move critics say may make him a lame duck whose government will be riven by in-fighting between potential successors.

The premier faces a fight to persuade Britons to approve the EU constitution in a promised 2006 referendum.

If Blair's majority ends up much below 70, he also faces the grim prospect of having his legislative plans -- particularly public sector reform -- blocked by a hard core of implacable opponents in his party still angered by the Iraq war.