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WHILE Australian and American troops stay in Iraq, the Gulf country will remain a terrorist haven, Opposition Leader Kim Beazley has said.

Speaking at a dinner in Sydney for Oxford University graduates tonight, Mr Beazley said it was time Iraq started taking care of itself.

"While our troops are there we are providing a magnet for every ratbag in other parts of the Middle East to go into Iraq to support the insurgent activity," Mr Beazley said.

"We are creating the situation by the way we are deploying currently.

"What is starting to be a civil war between the Sunni and Shiite community ... we are advancing ... we are stirring the pot while we continue to be unable to resolve the political issues there."

Iraqis would be better off resolving their own tribal and religious struggles, Mr Beazley said.

"Make it clear that the Sunnis and Shiites have to resolve this problem themselves, that you are not going to be manipulated any longer," he said.

"You've (the government's) got to sit down with the Americans now and suggest to them very strongly, it is not a matter of us cutting and running ... we've got to get the Americans out of there."

America should be looking at taking care of itself, Mr Beazley said.

"What would I do if I was prime minister tomorrow? I would say to the Americans enclave yourself ... as the first phase of your withdrawal from that area," he said.

"Enclave yourselves, reduce your force levels from about four or five divisions to two."

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