Iraq’s political paralysis continues. Ayad Allawi and Nouri al-Maliki, the country’s leading politicians, have failed to come up with a compromise and form a government. The holy month of Ramadan has descended, so chances are Iraq will remain leaderless until at least mid-September.

A variety of daunting challenges confront the fledgling democracy – the pressing need to form a new government after the 7 March elections, the fragile security situation, corruption and the government’s inability to deliver essential services to its citizens.

The US, however, is running on its own timetable. Washington has set itself a deadline of 31 August to formally conclude its combat mission in Iraq, reducing its troop presence to fewer than 50,000, the lowest since it led the invasion of Iraq in April 2003. Following on from Operation Desert Storm in 1991, Operation Iraqi Freedom will be re-designated Operation New Dawn. Those who remain in September will conduct “stability operations”, including training and advising the Iraqi Security Forces.

Proactive stand

Going into mid-term elections in November, this has now become the number one priority for the US administration. The Whitehouse is desperate for a new government to be formed.

President Obama’s concern has led him to turn to Iraq’s clergy for solutions. The international and regional media has been whipped into a frenzy over reports that Obama sent a personal letter to Grand Ayatollah Ali al-Sistani, Iraq’s most senior Shia cleric.

The Whitehouse has been trying to engage with Iraq’s influential Shia cleric for some time, urging him to take a more proactive stand in the country’s political deadlock. Al-Sistani has so far resisted the call and steered clear of getting involved in politics. The line between religion and politics in Iraq is thin and Al-Sistani has been careful to avoid squeezing it further, says one London-based analyst.

The security situation has certainly calmed since the peak levels of sectarian violence seen in 2006 and 2007. According to a July report by the US Special Inspector General for Iraq Reconstruction (SIGIR), Iraq has seen an average of seven security incidents a day in the second quarter of 2010, down 96 per cent from the peak of 198 incidents a day in 2007. This statistic will be of little comfort to the families of the 204 Iraqis killed in June. May was an even worse month, with 337 people killed.

The decline in security incidents appears to reflect favourably the ongoing transition of security responsibility to the government of Iraq. However, the threat of internal violence has not dissipated. Iraq remains a dangerous place.

Continuing tensions

“After 2003, we had butchers killing bakers, the Shias and Sunnis, Arabs and Kurds at each others’ throats. Now it is a different type of violence,” says one Baghdad-based source.

Arab-Kurd tensions continue over disputed internal boundaries, power sharing and hydrocarbon legislation, while Sunni and Shia groups are only part religiously motivated in their attacks. The more pressing desire has been the expulsion of US forces and reduction of government influence in their respective areas.

“For individual citizens it is safer, but they face threats when political incidents ignite. We used to have five car bombs a day in 2006 and 2007. Now, maybe once a day there is a political killing. Sometimes there is a violent raid. When that happens it is just as ugly as before,” says the Baghdad source.

Targeted attacks on individuals have generally been aimed at state institutions, including banks and the police or sectarian groups, such as the former Sunni insurgents the Sons of Iraq, as well as Shia neighbourhoods. Police officers, Provincial Council officials and an Iraqi Army general were among those assassinated in the past three months.

On 13 June, gunmen dressed in Iraqi Army uniforms conducted a commando-style raid on the Central Bank of Iraq’s office in Baghdad. The ensuing firefight ended in the deaths of 26 people, including 15 bank employees and all seven militants. Within a week, two car bombs exploded outside the Baghdad offices of the Trade Bank of Iraq killing another 18 people.

In early July, more than 70 Shia pilgrims were killed in a series of bombings over three days across Baghdad. There have also been a number of political killings. Three members of the Al-Iraqiya coalition party, led by Ayad Allawi, have been assassinated in the Sunni-controlled areas near Mosul, one of them newly elected in March.

Difficult definitions

It is often difficult to differentiate insurgent activity from violence attributed to criminal gangs, personal grudges or tribal rivalries.

The SIGIR’s July report on Iraq’s reconstruction, notes that Al-Qaeda in Iraq (AQI) and some Shia groups appear to be responsible for most of the violence in Baghdad. AQI has seen its capabilities severely dented this year, with the capture or killing of 34 of its top 42 leaders.

The group now faces a harder operating environment and can no longer count on foreign fighters crossing Iraq’s borders to support the insurgency. The Brookings Institute’s Iraq index, which tracks the security situation in the country, says the numbers infiltrating Iraq has fallen to fewer than 20 a month, down from as many as 90 a month in early 2007. SIGIR estimates AQI is now comprised almost entirely of Iraqis.

“It’s almost difficult to tell if things are calmer, or it is just a summer lull”, says another Baghdad-based source.

Despite the fall, insurgent groups remain capable of inflicting attacks on Iraq’s army. A week into the holy month of Ramadan, on the morning of 18 August, at least 60 Iraqi army recruits were killed and scores more injured when a lone suicide bomber blew himself up in a crowd outside an army base in the centre of Baghdad. Almost 1,000 recruits had gathered at the 11th army division headquarters for what was meant to be the last day for soldiers to sign up.

“As US forces draw down, AQI has been focusing its rhetoric and attacks against the government and Shia groups in an effort to discredit the central government and incite sectarian violence,” says the July report.

Nearly 85 per cent of all attacks occurred in Baghdad, Anbar, Diyala, Ninewa, and Salah al-Din provinces, which account for more than half of Iraq’s population. Outside these areas, according to the Washington-based Centre for Strategic and International Studies, many parts of Iraq are already operating in a post-US mode.

Basra is a prime example. Its security forces have been operating largely independently of the US since the defeat of Moqtada al-Sadr’s forces in the region in March 2008. Its security forces are well organised, highly visible and often heavy handed, but this reflects the importance of the area to country. Almost 80 per cent of Iraq’s oil is produced in the Shia-led Basra province and it is home to many of the oil fields awarded to international oil companies in Iraq’s first and second oil field licensing rounds. The province will be vital to the future economic stability of Iraq.

Economists expect Baghdad to run a budget deficit of at least $19.6bn this year. Funding effective development of the Iraqi security forces and, perhaps more crucially, the cost of economic reconstruction and development is going to be difficult. Iraq will need continuing support and aid until it can expand its petroleum exports and rebuild other parts of its economy.

Despite the very real threat from Iraq’s insurgents and sectarian tensions, the single biggest threat to Iraqi security and stability comes from a different source. Now running into its sixth month, the lack of unity and personal ambitions among its democratically elected politicians is creating more damage. Obama’s letter to Al-Sistani, if it fails, will be another sign of Washington’s shrinking influence in Iraq.