CAMBRIDGE, Mass., Oct 1 (Reuters) - The U.S. Senate's proposal for a federal system in Iraq would fail because of the difficulty in creating regions dominated by sect and ethnicity, Iraq's foreign minister said on Monday.

"If you divide the country along sectarian and ethnic lines, there are some mixed areas and how would you draw the line?" Hoshiyar Zebari said, responding to a question after giving a speech at Harvard University.

"In many cities and in the capital itself it would be difficult. That's why we believe that this decision should be left for the Iraqi people to settle and agree on what is the best solution for them," he said.

The nonbinding Senate amendment, sponsored by Delaware Democrat Joe Biden and passed last week, says the United States should actively support a political settlement among Iraqis based on a federal system of government.

The amendment has been widely interpreted as a proposal to divide Iraq along sectarian and ethnic lines into Sunni Arab, Shi'ite Arab and Kurdish regions.

Zebari said the resolution was well-meaning but failed to recognize the ethnic complexity of Iraqi cities and regions.

"Their premise is (that) as long as these three communities are unable to live together, to co-exist, it's better to put them each in their own region. But that's not a solution, there's no magical solution for that," Zebari said.

"This needs to be discussed by the Iraqis. Maybe they need more than three regions -- four or five regions. This would be up to the Iraqi parliamentarian, the Iraqi legislator and leaders to decide," he said.

Iraqi Prime Minister Nuri al-Maliki has said it would be a disaster for Iraq.

Iraq's constitution describes the country as a republican, parliamentarian, democratic and federal state, but it does not define specifically the degree or nature of the federalism that Kurds and some Shi'ites are seeking in parts of the country.

Sunni Arabs have fiercely opposed federalism, worrying that it could lead to the country's partition. That could leave the world's third biggest oil reserves, which are mostly in the south and the north, in the hands of Shi'ites and Kurds.

Only Iraq's Kurds, who already enjoy autonomy in the north of the country, openly welcomed it.

Biden said on Monday the resolution did not seek Iraq's partition. It would devolve power to regional governments with a limited central government responsible for protecting Iraqi borders and oil distribution, he said.

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