BAGHDAD, Iraq -- Members of Iraq's new National Assembly elected Kurdish leader Jalal Talabani as president of this predominantly Arab nation yesterday and set the appointment of a Shiite Muslim to the most powerful post, prime minister, as his first order of business today.

In Kurdish-populated northern Iraq, where Talabani led a rebel group that battled the Iraqi military during the rule of Saddam Hussein, Kurds pounded drums and swayed and spun in traditional dances. Iraqi Kurds, who make up 15 to 20 percent of the country's population, were subjected to repression, relocation and attack during Saddam's decades in power.

The expected appointment today of Ibrahim Jafari, a Shiite who also battled Saddam's dictatorship, as prime minister would give Iraq's Kurdish minority and its Shiite Arab majority their greatest measure of political power in modern times.

Iraq's new leaders made sure Saddam got the message. Jailers set up a TV and video player in the deposed leader's prison cell so he could watch Talabani, 71, sweep the balloting for the presidency.

"According to witnesses, he was unhappy and playing with his beard," said Barham Salih, a Kurd who is deputy prime minister in the U.S.-supported interim administration that will end when the new transitional government is seated.

"It seems that it's sinking in that he's no longer president," Salih added.

Saddam, who ratified his rule through periodic elections widely considered to be fraudulent, has maintained in court hearings since his capture in December 2003 that he is still president and immune from prosecution. "He had that grand illusion," Salih said.

Talabani's election by parliament filled the first of two government posts that have been empty since Shiite and Kurdish slates placed first and second in January elections. Assembly members have been in agreement on making Talabani president for weeks, but behind-the-scenes horse-trading was required to fill the two vice presidencies -- with Adel Abdul Mahdi, a Shiite, and Ghazi Yawer, a Sunni -- so that yesterday's vote seamlessly put the three candidates into the three posts in a single ballot.

For some Iraqis, the vote was practically a cliffhanger compared with Saddam's predetermined politics.

"I love that this is democracy -- that up to this moment, we did not know who is going to be president," said Baqer Abdul Nabi, 42, a merchant in a Baghdad cafe full of men drinking tea and smoking water pipes. When the television broadcast of the assembly session began, customers turned up the volume on the TV set and on their political debate.

"Before, there was no one else but Saddam, so we knew who it was going to be: It was Saddam," Nabi said. "They said he is watching TV now, and he saw what happened today. I am glad that he saw the thing that he did not want to happen."

"This is not fair. He's harmless now, and waiting for the court," said a young man in a corner of the cafe who wore dark glasses and a gray suit and would not give his name.

"I do not know why they insist on saying Kurd president, Shiite prime minister, Sunni whatever," the man said. "By doing that, they will create a difference that will lead to dividing the country and causing a civil war."

The interim constitution written by the U.S. occupation authority calls for power-sharing among the Sunni Arab minority that monopolized power under Saddam, the now-dominant Shiite Arab majority and the enthusiastically ascendant Kurds, the majority of whom are Sunnis.

Shiite and Kurdish leaders say they are determined to continue rationing out power among the factions, seeing inclusion as the only way to end the Sunni-led insurgency and draw the independence-minded Kurds in northern Iraq into a federal nation.

Some politicians complain that such a quota system accentuates religious and ethnic divisions and want it abandoned in the next national elections, to be held after the incoming government drafts a new constitution.

Talabani, an aggressive, tactically shrewd rebel leader, battled both Saddam's military and a rival Kurdish faction, which at one point joined forces to fight him.

Today he is widely respected as a sharp politician and regarded as a moderate. Talabani says he would never tolerate making Iraq an Islamic state, and secular Iraqis -- and the United States -- welcomed his election as a counterweight to the heavily religious Shiite bloc. Talabani also talks of Kurdistan as part of a federal Iraq, in contrast to Kurdish independence activists.

Kurdish and Shiite leaders in parliament, in a sign of lingering distrust, signed a pledge that Jafari would be named prime minister today, assembly members said. Talabani said he planned to honor the pledge. Negotiations to choose the two deputy prime ministers and fill key cabinet positions have yet to be settled.

The negotiations have been complicated by efforts to draw in the 40-seat parliamentary bloc led by interim Prime Minister Iyad Allawi, a secular Shiite. Secular Iraqis want Allawi's alliance in the cabinet, working with the Kurds to counter potential Shiite religious extremism; Sunnis see Allawi as a strong leader, and his bloc as sympathetic, and want him in as well.

Allawi's bloc is demanding five top cabinet jobs out of about 30 that the Shiites and Kurds had mostly split between themselves. By yesterday, some Shiite politicians were no longer voicing determination to bring Allawi into the government, and his own bloc appeared split on the matter.