The government has seen rising oil prices increase its revenues, and it has committed nearly one third of its budget to reconstruction projects. But U.S. officials complain that the government spending has been slow, and, says one senior military official in Baghdad, "the capacity to actually get what it pays for is limited."
Corruption is rampant, and it doesn't help that, because of security fears, Shiite workers tasked with rebuilding projects are often unwilling to go into Sunni areas—leading Sunnis to charge that the Shiite-led government is denying them essential services.
The Iraqi government would be well advised to brace for other charges as well, particularly from the U.S. Congress. The surge was sold to the American public on the premise that better security would buy the Iraqi government time to move ahead on 18 benchmarks set by Congress to foster reconciliation. These include, most prominently, measures to divvy up the nation's oil wealth and to bring former low-ranking members of Saddam Hussein's old Baath Party back to work. Thousands of low-ranking Baathists were fired by the American-led Coalition Provisional Authority from jobs as teachers and bureaucrats in 2003, fueling support for the insurgency. But a draft de-Baathification bill was dramatically jettisoned last month by Shiite politicos who complained that it amounted to a general pardon. Sunni legislators in turn accuse Shiite members of being bent on revenge.
It's a problem, but some American officials are keeping a closer eye on deeds rather than legislated words. "By all accounts, the government is actually distributing money and hiring Baathists in a way that the laws would have them do, and yet they won't pass the dumb laws," says Stephen Biddle, a senior fellow at the Council on Foreign Relations.
If that's the case, why don't they just do it and get Congress off their backs? One reason, Biddle and others argue, is that the government led by Prime Minister Nouri al-Maliki remains "scared to death" of the Sunnis, but the security environment has improved just enough that legislators are willing to experiment with concessions.
That's a step removed, however, from passing laws that legally mandate them to empower their enemies, particularly if they begin to see signs of security backsliding. U.S. officials add that laws still need to come next. The question is whether they will come during Maliki's tenure. Many U.S. officials have their doubts. "Maliki," says one, "sees a coup behind every palm tree."
3. A firebrand cleric
One of the biggest factors in the recent downturn in violence beyond even the surge, U.S. military officials privately point out, is the decision of Sadr to declare a cease-fire for his powerful militia, the Mahdi Army. But the stand down has a shelf life: It expires in February, and what the Shiite cleric will do at that point is anyone's guess. It is clear that the cease-fire has allowed him to consolidate his authority with some expedient housecleaning: Sadr is challenged by rogue elements in his own force, "and so you call a cease-fire and let the Americans" go after those who fail to follow commands, says Biddle. "You don't get blood on your hands, and it produces a more malleable militia."
America is engaging in a bit of realpolitik of its own in southern Iraq, where criminal Shiite gangs have been duking it out for control of Iraq's rich southern oil city, Basra, and environs. The gangs there have formed an uneasy alliance for now, officials say, but they are vigorously vying for influence. The British, who have military responsibility for the region, hand over control of Basra (Iraq's second-largest city) to the Iraqis this week, completing the turnover of the southern provinces of the country.
Despite disturbing accounts of intimidation and violence—such as militants threatening schoolgirls without head scarves and the killings of Iraqis who cooperated with the British troops—some argue that it would be a mistake for U.S. forces to get involved in the internecine squabbles of rival Shiite factions. There is little chance of that happening; the U.S. military can ill afford to divert its troops to the south. "It's certainly not an ideal situation down there," says a senior U.S. military official, "but we believe it's manageable."