Rice dropped in on Kurdish regional president Massoud Barzani in Arbil, his northern capital, after an unannounced visit to the Iraqi capital Baghdad, which is in the grip of a brutal sectarian conflict.
"The Kurdish people will ... certainly be better served if Baghdad and its surrounding areas are stable and democratic," Rice told reporters at a joint press conference with Barzani. "We had a very good discussion about the national reconciliation process and the vision of unified democratic Iraq that is stable, that is at peace and at peace with its neighbors," she said.
Grateful for US support in throwing off the yoke of ousted dictator Saddam Hussein, Iraq's Kurds have put their long-cherished dreams of independence on hold while the Baghdad government struggles to rebuild the war torn country.
But separatist tensions are never far from the surface, and fierce rows have recently erupted over the banning of Iraq's national flag in the north and the Kurdish government's determination to develop its own oil industry.
Washington fears that a Kurdish declaration of independence would accelerate the possible disintegration of Iraq and knows that it would be bound to anger regional ally Turkey, which has a restive Kurdish minority of its own.
The sensitivity of the situation was on display even at the media conference, where Rice and Barzani stood in front of US and Kurdish flags, while the Iraqi national flag, which the Kurdish leader has banned, was nowhere to be seen.
"Kurdistan, as any other nation, has the right to self-determination," said Barzani, adding, however, that "the parliament of Kurdistan has adopted, within the framework of a democratic Iraq, the federal system."
The Iraqi parliament is debating a law that would allow other areas of Iraq to follow the Kurdish model and merge groups of provinces into self-governing regions under a federal central state.
Kurdish leaders regularly warn that they will secede if the rights of their region - a union of three Iraqi provinces that has been broadly autonomous since 1991 - are trampled on by the Arab-led Baghdad administration.
This threat reared its head again last week, when the Kurds announced the development of a new oilfield, amid complaints from the central government that it should be consulted before deals are signed with foreign firms.
Barzani's oil minister furiously rejected federal oversight of oil contracts, and repeated the threat to declare independence.
Rice tried to calm the oil row during her visit. "Our view ... which I think most Iraqis agree with, is that oil needs to be a unifying factor and not one that would help to make the country less unified," she told reporters late Thursday.
Barzani said after meeting Rice: "We are for a fair distribution of oil revenues for the Iraqis."
Meanwhile, officials in Baghdad confirmed that a Kurdish lawmaker in Iraq's national parliament had been kidnapped and murdered during Rice's visit, which came after Monday's breakthrough pledge by Iraq's political factions to work together to halt the bloodshed.
"Our role is to support all the parties and indeed to press all the parties to work toward that resolution promptly," Rice said. "Obviously the security situation is not one that can be tolerated and it isn't one that has been helped by political inaction," she warned.
Rice met with Iraqi Prime Minister Nuri Al Maliki, President Jalal Talabani, and senior leaders from both sides of Iraq's bitter sectarian divide between Sunni and Shiite factions.
"The mass murders have shocked the people," Maliki said on Iraqi television, insisting that the reconciliation initiative was not reached under foreign pressure "but by the will of the Iraqis."
Rice emphasized her confidence in Maliki's leadership several times during the trip, in a clear effort to counter reports out of Washington that the US leadership has become disenchanted with Iraq's embattled prime minister.
"I do think he has the strength. I think he's a very good and strong prime minister," Rice said, praising Maliki's steps to purge his security forces of rogue elements supporting sectarian death squads.
The violence convulsing the capital was in full evidence for Rice's visit, with 16 US soldiers killed since Monday. A rocket attack on the airport upon her arrival forced her military C-130 transport plane to spend 45 minutes circling the airfield.
Rice departed Arbil around 1100 GMT after a delay of more than two hours due to aircraft problems and headed to London for a meeting of six major powers on whether to urge the United Nations to slap sanctions on Iran over its suspect nuclear program.
© 2006 Agence France-Presse
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