By Mussab al-Khairalla

BAGHDAD, Dec 3 (Reuters) - An Iraqi Sunni Arab leader decried the exclusion of former members of Saddam Hussein's Baath party from public life during a parliamentary hearing on Monday, calling it "racism" aimed at punishing Sunnis.

The main Sunni Arab bloc, the Accordance Front, returned to the legislature after a two-day boycott and joined the debate into a measure designed to ease curbs on former Baathists.

Washington considers easing de-Baathification to be one of the main tests of whether the Shi'ite-led government can achieve political reconciliation with its Sunni Arab foes. A bill easing the rules was first presented to parliament a week ago.

"The de-Baathification law was set up not to uproot a party but to uproot a section of the Iraqi people," Abed Mutlaq al-Jubouri, a former deputy prime minister and senior Accordance Front lawmaker, told parliament.

"Democracy cannot live alongside sectarianism and racism."

Parliament speaker Mahmoud Mashhadani, himself a Sunni Arab member of the Front, urged Jubouri to avoid political remarks and stick to discussion of technical aspects of the law.

Violence in Iraq has fallen dramatically in recent months since the United States launched a "surge" of 30,000 troops this year. But political progress in Baghdad has been slow.

Political tensions also rose further during the past few days when the Accordance Front staged a walkout of parliament in protest against what it called the house arrest of its leader, Adnan al-Dulaimi.

The standoff ended when Dulaimi was escorted from his home on Sunday to a hotel opposite parliament in the fortified "Green Zone" government and diplomatic compound.

He had been confined to his home for three days after his son and dozens of members of his entourage were arrested, accused of having links to a car bomb found near his office.

A number of Shi'ites are opposed to the draft law on former Baathists, casting doubts on whether the bill will pass.

Many Baath party members were Sunni Arabs who feel persecuted by successive Iraqi administrations since the U.S.-led invasion in 2003 that toppled Saddam.

Tens of thousands of Baath party members were fired from government and military jobs after Saddam, who persecuted Iraq's Shi'ite community, was ousted.

(Writing by Peter Graff; Editing by Samia Nakhoul)

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