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Sunni and Shiite Muslims disagree over who was the caliph. The Shiite believe that the grandsons of Mohammed should have been the caliph (leader of the Islamic Emma.) The Sunnah believe in a different line, led off by a friend of Mohammed Abu Bakr.
There are other subtle differences - such as the rites and celebrations. Shia tend to focus on the martyrdom of the grandsons at Karbala, and as such have a devotion for saints that is not entirely unlike the Catholics. Shia each are expected to devote themselves to an Imam (also almost the way a Catholic is under a bishop.)
http://en.wikipedia.org/wiki/Shia
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