MANAGUA, June 19 (Xinhuanet) -- The newly elected chief of the Organization of American States (OAS) warned of a crisis in Nicaragua Sunday at the end of his four-day political mediation mission in the Central American country.

    OAS Secretary General Jose Miguel Insulza, who was last month elected to the post, said he had "genuine reasons for concern, although society continues to function."

    Warning of "a profound political division" which could develop into a crisis, he appealed to Nicaraguan politicians to make concessions to avoid it.

    "It is necessary to make concessions," Insulza stressed, vowingto continue the mediation.

    The former Chilean interior minister has tried unsuccessfully to bridge differences between Nicaraguan President Enrique Bolanosand the opposition parties over constitutional reforms, which Bolanos sees as steps to cripple his powers.

    The OAS chief, who arrived in Managua Wednesday, reportedly proposed that Bolanos accept a more powerful legislature in exchange for peace with the two parties -- the leftist Sandinista National Liberation Front and the right-wing Constitutional Liberal Party.

    Bolanos, who has repeatedly sought OAS help to ease a crisis, rejected the offer which he views as against the "basic democraticprinciples."

    The president instead proposed Saturday that a national referendum be held during the next general election in 2006 on the forms recently approved by the opposition-led Congress, according to presidential aide Ernesto Leal.

    The referendum option has been sent to the two parties, said Leal.

    "What I can say is that it is important to listen to the voice of people," he told reporters after a meeting between Insulza and Bolanos.

    The political discord erupted late last year when the National Assembly revised the constitution, stipulating that Congress has the final say over the appointment of Cabinet members and ambassadors accredited to foreign countries. The powers are traditionally held by the president.

    Bolanos and his government have rejected the reforms, citing a ruling by the Central American Court of Justice which deemed Nicaragua's constitutional reforms inapplicable, saying they limitthe power of the executive branch in appointing ministers and diplomats.

    The tension escalated last week when Congress designated new directors in the public services sector like telecommunications toreplace those named by Bolanos.

    In response, the president ordered police to block the designees from taking office. Enditem