Virtually cut adrift by the administration of US President George Bush, and deemed to have failed to meet the key benchmarks of progress set out by Washington, Iraq’s Prime Minister Nouri al-Maliki had the look of a defeated man in the early months of his premiership.

But fast forward to 2008 and the picture is barely recognisable from two years ago, when Iraq was gripped by bitter sectarian conflict. Over the past three months, there has been a robust asser-tion of centralised power under Al-Maliki’s leadership, enabling him to rack up key political, security and economic successes.

Key improvements

A cursory list of improvements makes for impressive reading. Al-Qaeda in Iraq is on the defensive, hounded out of some of its major territorial redoubts. Shia militias that once ran the southern port city of Basra have been ousted by state security forces, and death counts, whether for Iraqis or US troops, have hit five-year lows.

Just five Americans were reported killed in combat in July 2008, while local casualties have tailed off to fewer than 1,000 a month, according to Interior Ministry figures. After the bloodbath of 2006, this counts for progress.

Arab neighbours who once shunned Baghdad are starting a process of diplomatic re-engagement, with the UAE promising to establish a fully operational embassy in the Iraqi capital. Debt write-offs are beckoning, and Gulf investors may not be too far behind.

“This time last year, we had 8pm curfews, the cabinet had lost half its members, and we were seeing 10-15 car bombs a day,” says Iraq’s Industry & Mines Minister Fawzi Hariri. “No longer. Now we have a unity government with a full cabinet, we have lifted curfews, and areas like Anbar province that were once hotbeds of terrorism are seeking foreign investment. Basra is now free of militia activity and even Mosul is on the mend.”

US officials estimate there has been an 80 per cent reduction in the rate of violence against civilians in Iraq since the US military’s surge campaign began in January 2007.

The security improvement is registering in the pockets of ordinary Iraqis. Four years ago, one dollar would buy 4,000 Iraqi dinars. Today, it would buy only 1,200 dinars, a tangible sign of confidence returning to the economy.

Security successes - choreographed on the back of the success of the US surge - have enabled the Iraqi leadership to build up momentum for a political transformation to consolidate the achievements of the past year.

This looks to be much the trickier part of the equation. Nonetheless, an emboldened prime minister has undertaken a series of measures that either dispense with US assistance, or even directly conflict with Washington’s wishes.

The clearest sign that Al-Maliki is ready to bite the hand that feeds is his refusal to sign a bilateral treaty - the Status of Forces Agreement (Sofa) - with the Bush administration that would govern the relationship between US military and the Iraqi government. Fearing the deal would denude the Iraqi state of authority via the establishment of a permanent US military architecture, Baghdad refused to compromise by the 31 July deadline for the pact to be signed, leaving it to later this year to patch up a deal that would replace the UN mandate governing US troops’ presence in Iraq.

There is a strong vein of political calculation behind the prime minister’s actions. The public animosity towards the Sofa pact would damage any Iraqi leader who agreed to such a deal. Al-Maliki appears to have the bit between his teeth, and in July began mooting US troop withdrawals in speeches - further evidence that he is ready to push an agenda that is out of kilter with Washington’s.

In early July, Al-Maliki announced that he was in talks with US officials over a timetable for withdrawal - the first time an Iraqi leader had explicitly evoked a timeline for troop pullouts - prompting an intervention by the Republican candidate for the US presidency, Senator John McCain, who claimed the Iraqi premier had been “mistranslated”. Al-Maliki responded that he had been “heard right the first time”.

Political dividends

It is not hard to gauge the source of Al-Maliki’s renewed sense of purpose. The defeat of Sadrist militiamen in Basra - and subsequently in Sadrist-dominated Maysan province in the southeast and Sadr City in Baghdad - has yielded political dividends beyond the reduction in violence and banditry. For Sunni muslims, the demonstration of centralised authority has helped to reassure them that the new Iraqi state, though Shia-dominated, is capable of taking on Shia militants that threaten the state as decisively as it did the Sunni-led insurgency.

The main result of the quelling of the Sadrist forces is the emergence of an embryonic nationalist alliance that is seeking to isolate the federalist forces represented on the Shia side by the Islamic Supreme Council of Iraq (ISCI), and by the Kurdish parties in the north.

This process has gained traction with Al-Maliki’s backing of a new law to govern the process of provincial elections, originally slated to be held in October 2008. Yet political wrangling over the fate of the disputed northern oil city of Kirkuk looks set to delay the passage of the electoral law. The bill proposes to delay voting in Kirkuk, fixing seat allocations to various ethnic groups and replacing Kurdish Peshmerga security forces with non-Kurdish soldiers. This is all anathema to Kurds, who view the city as an integral component of the Kurdistan Regional Government’s (KRG) territory.

Electoral reform

Iraq’s Kurdish President Jalal Talabani said on 23 July that he would veto as unconstitutional a measure governing provincial election. The Kurdish bloc want the entire Kirkuk region to be counted as a single voting district to prevent the area’s Arab and Turkmen minorities maximising their vote in areas where they are strongest. Kurdish frustration is also evident in the continued failure to force a referendum on Kirkuk’s integration into the KRG areas.

The breakdown of negotiations over the provincial elections law may prove to be only a temporary setback for Al-Maliki, and could serve to reinforce his authority in the long term. “Al-Maliki is in the process of reasserting what he calls ‘the prestige of the state’,” says Yahya Said, Middle East director of the Revenue Watch Institute, a US-based public finance monitoring body. “In this case, the breakdown of talks on the provincial elections law is a victory for the Al-Maliki camp as it demonstrates the further weakening of the alliance between the Kurds and ISCI, to the benefit of the nationalist coalition spearheaded by Al-Maliki.”

The legitimacy of the broad Kurdish-Shiite alliance that has dominated Iraqi politics since 2005 is being challenged by Al-Maliki’s nascent political coalition, which comprises his own Dawa party, a southern Shia party (Fadhila), some Sunnis, and even Sadrist supporters.

The breakdown of the provincial election law may be a sign of weakness, in that the political process is clearly incapable of dealing with such an issue, but it also shows that Al-Maliki is now able to muster a majority in parliament for key pieces of legislation. In this case, it was only the presidential veto that halted progress on the bill.

More needs to be done to build on the still tentative Sunni re-engagement with national politics. The so-called Awakening movement in Anbar province, under which Sunni tribes drive out Jihadist militants associated with Al-Qaeda on the back of concerted co-operation with US forces, has yet to deliver a coherent political voice for Sunnis at the national level.

The decision by Sunni ministers to rejoin the cabinet in late July is a positive step, but it could expose divisions within the Sunni camp. Those ministers that have rejoined the government are representatives of the existing Sunni political order, headed by the Iraqi Islamic party. That faction, which took part in the 2005 polls that were overwhelmingly boycotted by Sunnis, may also have its position on the governing council of Anbar challenged by the Awakening groups. Tribal leaders have already called for prominent Sunni cabinet ministers to be replaced by their own candidates.

Iraq can ill-afford to let the Sunni participation be undermined just when its confidence has been buoyed by the repeal of anti-Baathist legislation. “It will be interesting to see whether the wider Awakening groups and ex-Baathists re-engage with the state,” says Said. “As yet, it has not taken a formal shape, and Anbar Sunnis are not working with Al-Maliki directly.”

Sunni Arabs may become subject to the attentions of rival federalist and nationalist camps. Federalist ministers have tried to interest the Anbar Sunnis in their vision of federalism by highlighting the substantial mineral resources in the western desert.

“They have tried to show them that it could be worthwhile to go along with the federalist model by showing that they have resources of their own,” says Said. “But that is not likely to be enough.”

Al-Maliki still depends on Washington’s military support, as shown by joint combat operations in the restive Diyala province in early August, targeted at Al-Qaeda forces in one of their last strongholds. But such assistance will not count for much if the marriage of convenience between Kurds and Shiites disintegrates, precipitating worsening violence in the Kirkuk area.

It also remains to be seen how far the Sadr movement has been absorbed into Al-Maliki’s alliance. Many fear that the Sadr militia, Jaysh al-Mahdi, is biding its time in anticipation of the departure of US troops. It may be ready to reassert its once formidable street presence in key urban centres.

Al-Maliki has proved he can shape a domestic political agenda by building on security improvements, but he has yet to show that he has a blueprint for long-term stability. As ethnic tensions resurface in Kirkuk, his political skills will be tested to the limit.