Key Issues

NATIONAL RECONCILIATION. Prime Minister Maliki outlined a commendable

program of national reconciliation soon after he entered office.

However, the Iraqi government has not taken action on the key elements

of national reconciliation: revising de-Baathification, which prevents

many Sunni Arabs from participating in governance and society;

providing amnesty for those who have fought against the government;

sharing the country's oil revenues; demobilizing militias; amending

the constitution; and settling the future of Kirkuk.

One core issue is federalism. The Iraqi Constitution, which created a

largely autonomous Kurdistan region, allows other such regions to be

established later, perhaps including a "Shi'astan" comprising nine

southern provinces. This highly decentralized structure is favored by

the Kurds and many Shia (particularly supporters of Abdul Aziz

al-Hakim), but it is anathema to Sunnis. First, Sunni Arabs are generally

Iraqi nationalists, albeit within the context of an Iraq they believe

they should govern. Second, because Iraq's energy resources are in the

Kurdish and Shia regions, there is no economically feasible "Sunni

region." Particularly contentious is a provision in the constitution

that shares revenues nationally from current oil reserves, while

allowing revenues from reserves discovered in the future to go to the

regions.

The Sunnis did not actively participate in the constitution-drafting

process, and acceded to entering the government only on the condition

that the constitution be amended. In September, the parliament agreed

to initiate a constitutional review commission slated to complete its

work within one year; it delayed considering the question of forming a

federalized region in southern Iraq for eighteen months.

Another key unresolved issue is the future of Kirkuk, an oil-rich city

in northern Iraq that is home to substantial numbers of Kurds, Arabs,

and Turkmen. The Kurds insisted that the constitution require a

popular referendum by December 2007 to determine whether Kirkuk can

formally join the Kurdish administered region, an outcome that Arabs

and Turkmen in Kirkuk staunchly oppose. The risks of further violence

sparked by a Kirkuk referendum are great.

Iraq's leaders often claim that they do not want a division of the

country, but we found that key Shia and Kurdish leaders have little

commitment to national reconciliation. One prominent Shia leader told

us pointedly that the current government has the support of 80 percent

of the population, notably excluding Sunni Arabs. Kurds have fought

for independence for decades, and when our Study Group visited Iraq,

the leader of the Kurdish region ordered the lowering of Iraqi flags

and the raising of Kurdish flags. One senior American general

commented that the Iraqis "still do not know what kind of country they

want to have." Yet many of Iraq's most powerful and well-positioned

leaders are not working toward a united Iraq.

SECURITY. The security situation cannot improve unless leaders act in

support of national reconciliation. Shiite leaders must make the

decision to demobilize militias. Sunni Arabs must make the decision to

seek their aims through a peaceful political process, not through

violent revolt. The Iraqi government and Sunni Arab tribes must

aggressively pursue al Qaeda.

Militias are currently seen as legitimate vehicles of political

action. Shia political leaders make distinctions between the Sunni

insurgency (which seeks to overthrow the government) and Shia militias

(which are used to fight Sunnis, secure neighborhoods, and maximize

power within the government). Though Prime Minister Maliki has said he

will address the problem of militias, he has taken little meaningful

action to curb their influence. He owes his office in large part to

Sadr and has shown little willingness to take on him or his Mahdi

Army.

Sunni Arabs have not made the strategic decision to abandon violent

insurgency in favor of the political process. Sunni politicians within

the government have a limited level of support and influence among

their own population, and questionable influence over the insurgency.

Insurgents wage a campaign of intimidation against Sunni

leaders--assassinating the family members of those who do participate in

the government. Too often, insurgents tolerate and cooperate with al

Qaeda, as they share a mutual interest in attacking U.S. and Shia

forces. However, Sunni Arab tribal leaders in Anbar province recently

took the positive step of agreeing to pursue al Qaeda and foreign

fighters in their midst, and have started to take action on those

commitments.

Sunni politicians told us that the U.S. military has to take on the

militias; Shia politicians told us that the U.S. military has to help

them take out the Sunni insurgents and al Qaeda. Each side watches the

other. Sunni insurgents will not lay down arms unless the Shia

militias are disarmed. Shia militias will not disarm until the Sunni

insurgency is destroyed. To put it simply: there are many armed groups

within Iraq, and very little will to lay down arms.

GOVERNANCE. The Iraqi government is not effectively providing its

people with basic services: electricity, drinking water, sewage,

health care, and education. In many sectors, production is below or

hovers around prewar levels. In Baghdad and other unstable areas, the

situation is much worse. There are five major reasons for this

problem.

First, the government sometimes provides services on a sectarian

basis. For example, in one Sunni neighborhood of Shia-governed

Baghdad, there is less than two hours of electricity each day and

trash piles are waist-high. One American official told us that Baghdad

is run like a "Shia dictatorship" because Sunnis boycotted provincial

elections in 2005, and therefore are not represented in local

government.

Second, security is lacking. Insurgents target key infrastructure. For

instance, electricity transmission towers are downed by explosives,

and then sniper attacks prevent repairs from being made.

Third, corruption is rampant. One senior Iraqi official estimated that

official corruption costs Iraq $5-7 billion per year. Notable steps

have been taken: Iraq has a functioning audit board and inspectors

general in the ministries, and senior leaders including the Prime

Minister have identified rooting out corruption as a national

priority. But too many political leaders still pursue their personal,

sectarian, or party interests. There are still no examples of senior

officials who have been brought before a court of law and convicted on

corruption charges.

Fourth, capacity is inadequate. Most of Iraq's technocratic class was

pushed out of the government as part of de-Baathification. Other

skilled Iraqis have fled the country as violence has risen. Too often,

Iraq's elected representatives treat the ministries as political

spoils. Many ministries can do little more than pay salaries, spending

as little as 10-15 percent of their capital budget. They lack

technical expertise and suffer from corruption, inefficiency, a

banking system that does not permit the transfer of moneys, extensive

red tape put in place in part to deter corruption, and a Ministry of

Finance reluctant to disburse funds.

Fifth, the judiciary is weak. Much has been done to establish an Iraqi

judiciary, including a supreme court, and Iraq has some dedicated

judges. But criminal investigations are conducted by magistrates, and

they are too few and inadequately trained to perform this function.

Intimidation of the Iraqi judiciary has been ruthless. As one senior

U.S. official said to us, "We can protect judges, but not their

families, their extended families, their friends." Many Iraqis feel

that crime not only is unpunished, it is rewarded.

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