By Patrick Markey and Suadad al-Salhy
BAGHDAD (Reuters) - Iraq's Prime Minister Nuri al-Maliki on Thursday hosted Baghdad's first Arab League summit in two decades, a meeting dominated by Syria's crisis.
As the summit began, a rocket exploded near the Iranian embassy in Baghdad on the edge of the fortified Green Zone, where leaders were meeting under extremely tight security in a Saddam Hussein-era palace.
"The blast happened close to the Iranian embassy. The windows of the embassy have been shattered, but there are no casualties," a senior Iraqi security source said.
Two other rockets struck central and western Baghdad.
After years of war, Iraq's Shi'ite-led government hopes the Baghdad summit will highlight its stability and renewed role in the Arab region, where Sunni Gulf nations have long been wary of Iraq's close ties to Shi'ite power Iran.
Nine Arab League leaders met Maliki on Thursday, including the emir of Kuwait, the only high-ranking Gulf Arab leader to take part and the only such visitor since Saddam Hussein invaded Kuwait in 1990.
The summit was twice delayed because of Baghdad's clashes with its Gulf neighbors over a crackdown on Shi'ite protesters by Bahrain's Sunni leadership, with the aid of fellow Sunni monarchies Saudi Arabia and United Arab Emirates.
Reflecting the region's wariness, Sunni power Saudi Arabia sent its Arab League delegate, while Qatar said it had sent a low-level delegation to Baghdad as a message to Iraq's leadership about its relations with Iraq's Sunni minority.
"Qatar didn't boycott the Arab League's summit in Baghdad but it tried to signal a message to its Iraqi brothers," Qatar's Prime Minister Sheikh Hamad bin Jassim Bin al-Thani told Al Jazeera television.
Leaders attending were from Sudan, Somalia, Comoros, Djibouti, Lebanon, Palestine, Tunisia, Kuwait and Libya.
In the weeks before the meeting, Iraq pursued a campaign of detente with Gulf nations. Saudi Arabia named its first envoy in two decades, Kuwait reached a $500 million deal to end a standoff over debt, and Baghdad paid $408 million to Egyptian workers who fled the 1990-91 Gulf War.
But the summit is being held as Sunni Arab powers and Shi'ite Iran increasingly jockey for influence in the Middle East, split along sectarian lines over Syria's crisis and Western sanctions on Tehran. Gulf Arab states also worry about Iraq's influence over their own Shi'ite communities.
"Any expectations that the Maliki government will be able to emerge as a significant regional player are likely to be disappointed," Crispin Hawes at Eurasia Group said. "Among its neighbors Iraq is viewed with great suspicion and some fear."
SYRIA TOPS AGENDA
The summit comes as Iraq's power-sharing government among Sunni, Shi'ite and Kurdish blocs crawls back from a crisis following the departure of last U.S. troops in December, nine years after the 2003 invasion.
Maliki in December sought the arrest of one Sunni leader and asked lawmakers to sideline another Sunni deputy in measures that fuelled regional worries Iraq might once again slide into broad sectarian violence.
Many Iraqi Sunnis, the minority who dominated under Saddam, saw the move as an attempt to shore up Maliki's position at their expense.
While violence from Iraq's conflict has ebbed since the days of sectarian carnage in 2006-2007, al Qaeda affiliates and other Sunni Islamist insurgents are still a threat.
Iraq's al-Qaeda claimed responsibility for a series of bombs in Baghdad and other cities last week that killed 52 people, a reminder of their capacity to carry out coordinated attacks.
Thousands of extra troops were drafted in Baghdad for the summit and a maze of checkpoints and roadblocks turned the Iraqi capital into a fortress. Even the airport was closed and the government declared a five-day holiday to help ease congestion.
Syria's crisis topped the agenda for the summit, with U.N. Secretary-General Ban Ki-moon meeting the leaders to discuss a U.N.-backed peace plan to end the turmoil in Iraq's neighbor.
Ban said Syria's President Bashar al-Assad must live up to his agreement to accept the U.N. proposal, telling him: "the world is waiting for commitments to be translated into action."
Arab League members have endorsed special envoy Kofi Annan's six-point plan that calls for a ceasefire and peace talks in Syria, but they remain sharply split over how to deal with the violence that risks deepening sectarian divisions.
Sunni powers Saudi Arabia and Qatar have led the push to isolate Syria, but non-Gulf Arab states such as Algeria and Shi'ite-led Iraq urge more caution, fearing that toppling Assad could spark sectarian violence.
(Writing by Patrick Markey; Editing by Serena Chaudhry and Andrew Roche)