The PMOI operates in Iraq under U.S. protection in Ashraf City in eastern Diyala province. The group is listed as a terrorist organization by the United States and several other nations for its activity under the former Iraqi regime, though that status is being reviewed.

Iranian media outlets last week carried a statement from a senior Iraqi official saying Iraqi forces had taken over responsibility of Ashraf city, though that claim has been refuted.

"U.S. forces are coordinating with Iraqi security forces to prepare for a gradual transfer of security at Camp Ashraf. A date is not yet set," the U.S. military in Iraq told United Press International in response to e-mail questions.

The PMOI is a source of contention for Iran and several Iraqi leaders, prompting calls for the group to abandon its stronghold in Iraq, Iraqi daily Azzaman said.

"The government will deal with the elements of (PMOI) in a humanitarian way and in the light of international law," Iraqi government spokesman Ali al-Dabbagh said. "Iraq will not force the group to leave. It will rather encourage the group to go to another state that will accept their asylum," he added.

The PMOI claims protection in Iraq under the Fourth Geneva Conventions.

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