IMPEACH BUSH

BAGHDAD, Jan 3 (Reuters) - Former U.S.-installed Iraqi Prime Minister Iyad Allawi has denounced the policies of President George W. Bush as an "utter failure" that gave rise to the sectarian venom that ravaged his country.

In an interview published on Saturday in the pan-Arab newspaper Asharq al-Awsat, Allawi found fault with American management of Iraq since the U.S.-led invasion in 2003 as well as the government of present Prime Minister Nuri al-Maliki.

Allawi ruled Iraq for almost a year after U.S. occupation officials handed power to him in 2004 as prime minister of an interim government. He was selected by a council hand-picked by Washington after the 2003 invasion that toppled Saddam Hussein.

"Yes, Bush's policies failed utterly," said Allawi, describing the U.S. administration that once backed him. "Utter failure. Failure of U.S. domestic and foreign policy, including fighting terrorism and economic policy."

"His insistence on names like 'democracy' and 'open elections', without giving attention to political stability, was a big mistake. It cast shadows on Iraq, Iran, Afghanistan and Egypt, and I believe this will be remembered in history as President Bush's policy," he said.

A former member of Saddam's Baath Party who fled into exile and agitated against the dictator, Allawi now heads a secular political movement which did poorly in elections in 2005. His bloc was part of Prime Minister Nuri al-Maliki's government but walked out last year.

Maliki's government was characterised by "weak performance, erected upon political quotas, major government corruption and infiltrated state agencies," he said. "Four years passed ... and they can't build the police, army, national institutions."

"Ending Saddam's regime was essential, but replacing the Saddam regime with extreme chaos was not right," he said. "I did not imagine the political process would eat itself from inside or that it would abandon the rule of law and establish political sectarianism."

Sectarian violence has dropped sharply in Iraq, but reconciliation and political harmony remain elusive even as the United States prepares to withdraw its 140,000 troops by 2012. (Reporting by Khalid al-Ansary; Writing by Missy Ryan)