Measuring Stability and Security in Iraq

March 2007
Report to Congress
In accordance with the
Department of Defense Appropriations Act 2007
(Section 9010, Public Law 109-289)

---

1. Stability and Security in Iraq

1.1. Political Stability

The United States and its Coalition partners are working with the GOI to build strong democratic institutions that impartially serve all Iraqis; to support national reconciliation; and to gain support for Iraq from its neighbors, the region, and the international community. Fundamental to all of this is security and the effective rule of law.

1.1.1. Strong Democratic Institutions

Iraqi Prime Minister Nuri al-Maliki has promised to reform his government, beginning with his cabinet and the ministries.² This promise recognizes the poor performance of the ministries, and the reform is meant to redress their failure to counter corruption and reduce sectarianism. The majority of Prime Minister Maliki's current cabinet reflects the results of the December 2005 election and is majority Shi'a with generally proportional representation from the other main ethnic and sectarian communities. Prime Minister Maliki has also promised that the GOI will engage all illegally armed groups, regardless of sectarian affiliation.

1.1.2. National Reconciliation

Since the last report, a series of high-casualty and high-profile attacks primarily against Shi'a civilians-likely perpetrated by AQI- have hampered efforts to demobilize militia groups and have set back the reconciliation process. Likewise, some Shi'a extremist groups have used "death squads" to kill and intimidate Sunni civilians. This type of sectarian violence in Baghdad and the failure to reliably apprehend and punish criminals and terrorists has hampered progress toward reconciliation.

The new approach adapts to new conditions by emphasizing the precondition of security in advancing meaningful reconciliation and setting realistic and achievable goals that are vital to stabilizing Iraq in the medium and long term. Whereas prior efforts had emphasized an all-encompassing "national compact" as the vehicle for political progress, the coming months will seek to advance four specific national reconciliation goals-a hydrocarbon law, local elections, constitutional review, and de-Ba'athification reform-while also focusing more on political accommodations at the provincial and local levels. There have already been some achievements, including passage of a framework hydrocarbon law by the Council of Ministers on February 26, 2007 to be presented for final passage by the Council of Representatives (CoR) when it returns to session in March.

The last two months of 2006, however, saw little progress on the reconciliation front. The first two of four planned reconciliation conferences were described in the last report (November 2006). These conferences laid solid groundwork for subsequent conferences, but there has been little progress since then and the conferences had no effect on quelling violence. On December 16-17, 2006, the Political Parties Conference was held in Baghdad. Speeches given by the Prime Minister and other Iraqi officials focused on political participation and national unity, and welcomed former Ba'athists into the political process, so long as they showed loyalty to the new national government. The Sadrist bloc, top Ba'athists, and many Sunni factions did not participate. A fourth conference of religious leaders has not yet been scheduled due to lack of financial support and attendance challenges.

1.1.3 Transnational Issues

Transnational issues addressed in the November report, including water-sharing agreements, drug trafficking, and negative foreign influence, continue to shape regional relations. The overall regional environment remains poor, and there is great suspicion among Sunni Arabs whether a Shi'a-majority government can act independent of Iran, advance the national interests of Iraq, and serve the interests of the region as a whole. Prime Minister Maliki has begun intensive efforts to correct these perceptions with envoys dispatched throughout the region in the past six weeks. Maliki's government this year has also restored diplomatic relations with Syria for the first time in three decades and reopened an Iraqi Embassy in Saudi Arabia for the first time since the First Gulf War. Transnational issues that bear particular attention in the near term include the following.

• Iranian and Syrian Influence. The United States and Prime Minister Maliki have publicly noted the lethal Iranian support to Shi'a militias as well as the Syrian provision of safe haven to some Iraqi insurgents, especially former Saddam-era Iraqi Ba'ath party members.³ Iran and Syria are discussed in greater detail later in this report.
• Tensions on the Border with Turkey. The President's new approach calls for increased efforts to counter the Kurdistan Worker's Party (PKK), a Kurdish terrorist organization with a history of terror activities in Turkey, often launched from northern Iraq.⁴ Countering the PKK is essential to accomplishing regional goals, preventing unilateral Turkish military action, and maintaining good U.S.-Turkish and Iraqi- Turkish relations. In 2006, General (ret.) Joseph Ralston was named Special Envoy for Countering the PKK in Northern Iraq. Both Turkey and Iraq have appointed counterparts to work with General Ralston to attempt to arrive at a diplomatic solution. While there has not yet been a trilateral meeting, there has been progress in breaking the hold of the PKK at the Makhmour refugee camp.
• Refugees. Significant population displacement, within Iraq and into neighboring countries, diminishes Iraq's professional and entrepreneurial classes and strains the capacities of the countries to which they have relocated. According to the Office of the United Nations High Commissioner for Refugees, approximately 2 million Iraqis are living outside of Iraq, with more than a million in Syria and Jordan. It is estimated that as many as 9,000 people are fleeing Iraq every month.

International Compact

The International Compact with Iraq provides a 5-year framework for economic reform commitments between Iraq and the international community. This is an important initiative and a key component of the diplomatic line of action under the new strategic framework. The Compact is a joint initiative of the GOI and the United Nations (UN) and will commit Iraq to reforming its oil and agriculture sectors, establishing new investment laws and regulations, building the institutions needed to combat corruption, ensuring good governance, and protecting human rights. In return, members of the international community will commit to providing financial, technical, and other forms of assistance needed to support Iraqi efforts to achieve economic self-sufficiency. The main text of the Compact has been approved and finalized; background material can be found at www.iraqcompact.org. The GOI would like to conclude the Compact during a ministeriallevel event in spring 2007. To facilitate that objective, Prime Minister Maliki has asked UN Secretary General Ban Ki-Moon to host a sub-ministerial meeting in New York to finalize the Compact text and secure commitments from international partners.

1.1.4. Rule of Law

Stability and security depend on establishment of, and respect for, the rule of law by government institutions that represent the state and by the citizens whom the rule of law seeks to protect. The rule of law is founded on clear, understandable legislation that is applied equally to all, respect for and adherence to such laws by the public and governmental officials, governmental authority to enforce adherence to the law and to bring violators to justice, and the means to hold government officials accountable for the misuse of power.

Legislative Action

The Iraqi Constitution sets forth a list of rights and freedoms, but additional legislation is needed to implement these guarantees. Iraq's Constitutional Review Committee officially began work on November 15, 2006. The committee has another two months to complete its work and to recommend constitutional changes to the CoR. In accordance with Iraq's Constitution, recommended amendments will be voted on in a national referendum within two months of CoR approval.

The CoR did not achieve a quorum from December 10, 2007 to January 6, 2007, due to significant absenteeism and a boycott by the Sadrist bloc, which holds about 10% of the CoR's 275 seats. The speaker of the parliament has attempted to improve CoR attendance by threatening to fine members for each missed session. The Sadrists have since returned to the CoR without having the demands met that they initially declared when announcing the boycott in November.

Legislative highlights of the last quarter include the following.

• The Constitutional Review Committee met on November 15, 2006, and formed three subcommittees with fair representation from all major party blocs. The committee is working with technical advisors from the UN to help ensure that the constitution is technically sound and improved upon where possible.
• On January 23, 2007, the CoR passed a law establishing the Independent Higher Election Commission. The CoR must now appoint commission members and pass legislation to set a date for provincial elections. Successful local elections and a possible constitutional referendum will require sufficient Iraqi and international resources, and the United States will be working through diplomatic channels to take the necessary steps to help ensure that these electoral events-like the electoral event in 2005-are genuine and credible.
• The CoR passed the Military Court Procedures Law on January 24, 2007, and the Military Punishment Law on February 5, 2007. Although Coalition Provisional Authority Order 23 promulgated a Code of Military Discipline for the Iraqi Army, it was not formally institutionalized. These new laws formally establish Iraq's military justice system, which will include due process protections and judicial review. This is a major step toward institutionalizing the rule of law within the Iraqi military.
• The CoR passed the 2007 Federal Budget on February 8, 2007, before adjourning until March. The US$41 billion budget was a significant achievement for the GOI. The US$7.3 billion committed to Iraqi Security Forces (ISF) is evidence of the GOI commitment to the fight. This 35% increase over the 2006 budget is a sign of growing Iraqi self-sufficiency.

The CoR failed, however, to move forward on other critical pieces of legislation, including a law to reform the de-Ba'athification system and a law to clarify the powers of provinces that are not part of regions. On de-Ba'athification, there are currently three different proposals-one from the Sunni Iraqi Islamic Party, one from the cross-sectarian Iraqiyya Party, and one from the CoR De- Ba'athification Committee. Iraqi leaders are working to synthesize these drafts and reach an agreeable compromise position, with the three-member Presidency Council taking a leading role on this issue. On the provincial powers legislation, a draft law has been read twice on the floor of the CoR and appears headed for passage, though key issues, such as a date and structure for local elections, remain unresolved. These pieces of legislation are among the most important steps toward meaningful national reconciliation, and the United States will continue to encourage the GOI to achieve agreement when the CoR returns to session this month.

Crime

Criminal activities remain elevated and are often difficult to distinguish from sectarian and other violence. White collar crime is an entrenched practice stemming from decades of nepotism and organized criminal activities by government institutions of the former regime; it will remain a serious obstacle for the GOI for years to come. The Board of Supreme Audit, the Commission on Public Integrity, and ministry inspectors general continue to work with the Ministry of Justice (MOJ) to promote transparency and to curb this entrenched practice.

Public Corruption

Budget execution and corruption problems continue to hamper the GOI's ability to perform and turn good intentions into results. The United States is helping the GOI target and spend the US$10 billion in Iraqi funds dedicated to capital investment, reconstruction, and job creation programs through an effort headed by Ambassador Tim Carney, appointed by Secretary Rice in January to serve as an Economic Transition Coordinator in Baghdad. To be fully effective, however, Iraq must also reform Saddam-era laws that allow cabinet ministers to shield government officials from prosecution, and all Iraqi leaders must commit to ensuring the neutral and independent application of the law. The United States is also working with the World Bank and other international institutions to support the three primary anti-corruption institutions in Iraq: the Commission on Public Integrity, the Supreme Board of Audit, and the inspectors general assigned to the government ministries. The U.S. Embassy in Baghdad recently restructured its rule of law and law enforcement offices to improve their effectiveness in achieving civilian rule of law objectives in Iraq.

Police

The Ministry of Interior (MOI) views its primary role as that of providing security. An emphasis on tactical skills is understandable, considering the nature of the violence in Iraq, but little time is left for training in the conduct of criminal investigations. To address this shortcoming, Multi-National Security Transition Command-Iraq (MNSTC-I) is strengthening the Iraqi Major Crimes Task Force and the Major Crimes Unit. Additionally, MNSTC-I and the MOI are working to improve Iraq's forensic investigative capabilities by adding several thousand forensic specialists to the police forces. Militia infiltration of local police remains a problem and Prime Minister Maliki has demonstrated a commitment to retraining and reforming police units that are shown to be serving sectarian or parochial interests. Though improving, the lack of a fully functional justice system has led to unreliable detention practices, and police have often disregarded release orders signed by Iraqi judges. Security forces also remain prone to intimidation by or collusion with militias and criminal gangs, thereby decreasing the confidence among ordinary Iraqis in their legitimate security force.

Courts

As of January 2007, Iraq had approximately 870 investigative and trial judges (up 70 from the last report) and 100 criminal courts. The GOI recognizes the need to expand judicial capacity. To meet the growing demands of the judiciary, the number of judicial investigators is scheduled to reach 700 in 2007 and 1,000 in 2008. The MOJ now operates a Judicial Training Institute. The first class of 178 judges and prosecutors is scheduled to graduate in summer 2007. A second class of 60 trainees is scheduled to graduate in fall 2008. These are positive steps, but to meet the growing demand across the judicial sector, the MOJ needs to increase the system's capacity.

Judges frequently face threats and attacks, and thus absenteeism and resignations undermine the workforce. Those who remain often fear handing down guilty verdicts against defendants with ties to insurgent groups or militias. In the provincial courts, judges often decline to investigate or try cases related to the insurgency and terrorism.

The United States has obligated roughly US$38 million since 2004 for judicial security. To counter judicial intimidation, secure criminal justice complexes are under development. A criminal justice complex may include a courthouse, detention facilities, forensic labs, and judicial housing-all located within the same secure perimeter. This concept provides enhanced security for the judges and staff and creates synergy among the judiciary, police, and detention officials. The first such complex will be located in the Rusafa district of Baghdad, outside the Green Zone. Investigative judges of the Central Criminal Court of Iraq will be housed there; it will also have detention facilities and housing for judicial and court personnel.

Prisons and Detainees

Concerns remain that the Iraqi Corrections Service is increasingly infiltrated by criminal organizations and militias. Detention facilities in Iraq do not meet incarceration needs. Pre-trial detention facilities in Iraq, administered by the MOI, the Ministry of Defense (MOD), and the MOJ, are reported to be overcrowded, substandard facilities with poor detainee accountability practices.5 Posttrial prisons, administered by the MOJ, generally meet international standards, but are at maximum capacity. To address this problem, Prime Minister Maliki and the Minister of Justice are demanding greater oversight of prison facilities, and U.S. advisors are encouraging the MOJ to increase the salaries of corrections officers to bring them more in line with those of police officers and thus to reduce the temptations of bribery. The Embassy and Multi-National Force-Iraq (MNF-I) are also working with the GOI to increase detention capacity in the near term through additional compounds with adequate oversight in Baghdad and in the long term through hardened facilities to be administered by the MOJ.

1.2. Economic Activity

1.2.1. Building the Iraqi Economy

The GOI has taken significant steps to improve its economy, although security concerns continue to restrain Iraq's economic growth. In February 2007, the Iraqi Cabinet approved a framework hydrocarbon law that provides the structure and principles for foreign investment in Iraq's energy sector, decentralized management for the oil industry, and equitable distribution of oil revenues to provincial and regional governments. Very recent Cabinet approval of the oil law demonstrated the importance of this legislation in promoting the economic development and political unity of the country. It is anticipated the framework hydrocarbon law and related revenue-sharing legislation will be submitted to the CoR in March.

In 2006, the CoR passed the Foreign Investment Law and the Fuel Import Liberalization Law to facilitate the expansion of private sector activity. To become effective, these laws require promulgating regulations to provide a sufficient legal framework. The GOI is drafting these regulations, which should be implemented later this spring. An increase in foreign investment will be effective in stimulating growth, building trust, and strengthening the Iraqi dinar.

Stand-By Arrangement

The GOI met most of the performance criteria and benchmarks of the Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) in 2006. The GOI met again with the IMF in mid-December 2006 to discuss the combined third and fourth SBA reviews. A follow-up meeting was held in Paris on February 1, 2007. The participants agreed to schedule the Executive Board meeting, during which the reviews will be completed and the program extended for six months, dependent on the GOI implementing the next mandated fuel price hikes on March 5. Three years of satisfactory performance on an upper credit tranche IMF program are required for Iraq to receive the final 20% tranche of Paris Club debt relief. Therefore, if fuel prices are not raised and reviews are not completed by March 22, the IMF program may expire.

Diversification Issues

The Iraqi economy depends on the oil sector, which generates 67% of Iraq's gross domestic product (GDP) and 95% of the government's internal revenues. To reduce its reliance on oil, the United States is supporting Iraq's economic diversification through increased agricultural exports and private sector development. The Department of Defense's (DoD) Task Force to Improve Business and Stability Operations in Iraq aims to re-energize existing state-owned enterprises, with the ultimate intent of privatization to promote economic diversity. The United States Agency for International Development's (USAID) agricultural development projects include increasing agricultural exports. Strengthening the growth of high-value crops, such as olives, has demonstrated increased export potential. USAID's microlending project has been very successful at addressing private sector development.

Government of Iraq Budget Execution

The GOI has available assets, the product of last year's under-spent budget and profits from higher-than-anticipated oil prices, but it does not yet have the mechanisms to spend them. The GOI will need to make significant investments in oil infrastructure, public works, and agriculture to expand the economy.

In the 2006 Iraqi budget, 9.3 trillion dinar (US$6.2 billion) was allocated to capital projects, but less than 40% was obligated. A number of factors contribute to the consistent under-spending of Iraq's budget. The GOI lacks a public accounting framework and suffers from outdated procurement processes.

To address procurement problems, the United States is helping the GOI formulate simplified contracting procedures that will aid in budget execution.

In addition, the MOD and the MOI have taken steps to spend significant portions of their procurement budgets-anticipated to be in excess of US$2 billion in 2007-through U.S. Foreign Military Sales cases.

1.2.2. Indicators of Economic Activity

Economic indicators are collected and published regularly, largely by the Iraqi Ministry of Planning and Development Cooperation and international organizations. The World Bank projects that 2006 GDP was US$48.5 billion, due largely to higher world oil prices, with a per capita GDP of US$1,687. Real GDP growth was projected to have been 3.0% in 2006, including 10.0% growth in the non-oil sector.

Inflation

Iraq's high rate of inflation is a serious obstacle to economic stability. Inflation in 2006 averaged 50%, well above the IMF's revised 2006 target of 30%. Because fuel shortages contributed to inflation in 2006, the GOI took nominal steps to remove obstacles to private fuel imports. However, the GOI's inability to craft an adequate regulatory structure has so far prevented its efforts from yielding any results. Over the past three months, in an attempt to curb inflation, the CoR passed the Fuel Import Liberalization Law, approved a deal with Kuwait to increase the availability of refined fuel, and agreed to sell imported fuel at market prices. To reduce the rate of core (i.e., non-fuel) inflation, the Central Bank of Iraq (CBI) implemented 14% exchange rate appreciation between November 1, 2006 and February 1, 2007. As a signaling measure, the CBI also raised its benchmark policy interest rate from 12% to 16% in November and to 20% in December. The CBI has indicated its commitment to continued use of monetary policy measures to maintain price stability.

Unemployment

Estimates of unemployment vary from 13.4% to 60%. Underemployment may be a much more significant factor. For example, a January 2007 survey by Multi-National Division Baghdad indicated that only 16% of Baghdadis responded that their current income meets their basic needs.

The GOI must, with Coalition and international help, create an effective strategy to provide jobs. This program must be seen as fair and nonsectarian by ordinary Iraqis. It must produce tangible results for the majority of Iraqis or it will decrease the legitimacy of the GOI. According to the U.S. Chamber of Commerce, since the fall of Saddam Hussein in 2003, new businesses have increased from 8,000 to more than 34,000. In addition, the Task Force to Improve Business and Stability Operations in Iraq is working to improve contingency contracting in Iraq and to reinvigorate operations at targeted state-owned enterprises by driving demand and establishing connections with international business executives. The Task Force has identified 10 state-owned factories that show the most promise to increase productivity and employ the idle labor force, with minimal investment by the GOI; the GOI's 2007 budget includes 1.4 trillion dinars for revitalizing state-owned factories. The Task Force has estimated that reactivating these factories will create 11,000 full-time jobs within six months.

Oil Production, Distribution, and Export

Damage to pipelines, fires, poor maintenance, and attacks have combined to slow production of refined products and crude oil for export, primarily in central and northern Iraq. Production and exports in the south remain the primary driving force of Iraq's economy, although aging infrastructure and maintenance problems impede near-term increases in production and exports. Crude oil production for the October-December 2006 quarter was 2.2 million barrels per day (mbpd), and oil exports were 1.49 mbpd, short of the GOI's 2006 goal of 1.65 mbpd. Fall and winter months generally have low production relative to the spring and summer. Other factors, such as high market prices for crude oil, overcame this shortfall and resulted in revenues of US$1.5 billion above that forecast for 2006.

Critical fuel shortages occurred throughout the fall and early winter, including gasoline, diesel, kerosene, and liquid petroleum gas, largely as a result of poor domestic production, reduced imports from Turkey, and continued distribution problems. The regulated price of regular gasoline (87 octane) in Iraq is currently about 250 dinars per liter (US$.72 per gallon); premium gasoline (92 octane) is about 350 dinars per liter (US$1.03 per gallon).

Gray marketeers continue to profit from the sale of stolen fuel, both within Iraq and in neighboring countries. Gray market prices in many central and northern provinces were reported at 100%-2,000% above official subsidized prices for key fuels.

Electricity Production and Distribution

Estimated peak daily demand for electricity between October and December 2006 was 9,091 megawatts (MW), an increase of 20% over the same period in 2005. During this quarter, the actual average daily peak generation output was 4,226 MW, an increase of 2% over the same period in 2005, and 51% of the average peak daily demand of 8,237 MW. Many Iraqi citizens have established private entrepreneurial generator arrangements to produce electricity on a neighborhood or building basis, therefore underestimating total electrical production. The gap between government- produced supply and consumer demand continues to increase due to the failure to add or rehabilitate capacity, as well as inadequate security, operations, and maintenance practices for the generation and transmission infrastructure. A surging demand is exacerbated by the fact that Iraqis pay very little, if anything, for electricity. Reform of electricity charges for consumers is key to the long-term viability of Iraq's electricity sector.

Government-produced electricity averaged 10.7 hours per day over the reporting period (October-December 2006) and 9.1 hours per day for the month of December. Baghdad, however, averaged only 6.6 hours of power per day this quarter, falling to 6.3 hours in December-5.7 hours short of the target goal.

Water and Sanitation

As of December 2006, Iraqi Relief and Reconstruction Fund (IRRF)-funded water projects have added or restored potable water treatment for approximately 5.35 million Iraqis who did not have access to potable water in April 2003. This is an increase of 150,000 since the November 2006 report. To date, IRRF-funded projects have also restored sewage treatment capacity sufficient to serve around 5.1 million Iraqis, 100,000 short of the U.S. end state goal.

The agricultural sector uses approximately 90% of the water consumed, but has tremendous potential to improve the efficiency of water use. Toward this end, in 2005 and 2006, the U.S. Government funded Phase I of a new national water master plan for Iraq, which, once completed, will guide water resource development in Iraq for the next three decades.

Nutrition and Poverty

In 2006, the UN World Food Programme (WFP) continued to provide assistance through a 12-month operation targeting the most vulnerable groups in Iraq. The operation will continue in 2007, providing food assistance to more than 3.7 million malnourished children and their family members. WFP "safety net" activities include school feeding and supplementary feeding, which build alternative safety net mechanisms for the Public Distribution System.

Agriculture

To help revitalize Iraq's agricultural sector, the U.S. Department of Agriculture initiated a program to enhance agricultural training at Iraqi universities. In addition, Department of Agriculture personnel are participating in provincial and ministerial capacity-building efforts as agricultural officers and advisors at Iraq's Ministry of Agriculture and in the U.S. Embassy and Provincial Reconstruction Teams.

The Ministry of Agriculture and others associated with agriculture in Iraq have not made adequate progress in leveraging Iraq's potential. Lack of modern seed and fertilizer, under-developed irrigation systems, and lack of pesticides have all contributed to underachievement of potential. This, in turn, has caused Iraq to continue to be overly dependent on imported food and to fail to achieve a marked increase in employment for the agricultural sector.

1.3. The Security Environment

The conflict in Iraq has changed from a predominantly Sunni-led insurgency against foreign occupation to a struggle for the division of political and economic influence among sectarian groups and organized criminal activity. As described in the January 2007 National Intelligence Estimate, the term "civil war" does not adequately capture the complexity of the conflict in Iraq, which includes extensive Shi'a-on-Shi'a violence, al-Qaida and Sunni insurgent attacks on Coalition forces, and widespread criminally motivated violence. Some elements of the situation in Iraq are properly descriptive of a "civil war," including the hardening of ethno-sectarian identities and mobilization, the changing character of the violence, and population displacements.⁶ Illegally armed groups are engaged in a self-sustaining cycle of sectarian and politically motivated violence, using tactics that include indiscriminate bombing, murder, and indirect fire to intimidate people and stoke sectarian conflict. Much of the present violence is focused on local issues, such as sectarian, political, and economic control of Baghdad; Kurdish, Arab, and Turkomen aspirations for Kirkuk; and the political and economic control of Shi'a regions in the south. Although most attacks continue to be directed against Coalition forces, Iraqi civilians suffer the vast majority of casualties. Given the concentration of political power and population in Baghdad and the city's ethnic and sectarian diversity, Baghdad security remains the key to stability in Iraq. An Iraqi-conceived and -led Baghdad Security Plan is the centerpiece for addressing the escalating violence.

1.3.1. Overall Assessment of the Security Environment

The level of violence in Iraq continued to rise during this reporting period as ethnic, tribal, sectarian, and political factions seek power over political and economic resources. Consistent with previous reports, more than 80% of the violence in Iraq is limited to four provinces centered around Baghdad, although it also exists in other population centers, such as Kirkuk, Mosul, and Basrah. Sectarian violence and insurgent attacks still involve a very small portion of the population, but public perception of violence is a significant factor in preventing reconciliation on key issues. The conflict in Iraq remains a mosaic and requires maximum flexibility on the part of the Coalition and the GOI to uproot the main drivers of violence in different areas of the country.

• The conflict in the north is characterized by sectarian tensions, insurgents and extremist attacks, and competition among ethnic groups (Kurd, Arab, Turkomen) for political and economic dominance, including control of the oilfields centered around Kirkuk. Violence remained focused primarily in and around the northern cities of Kirkuk, Mosul, and Tal'Afar, where ethnic competition for power is exacerbated by violence from Sunni extremists.
• Violence in Anbar is characterized by Sunni insurgents and AQI attacks against Coalition forces. AQI and affiliated Sunni extremists are attempting to intimidate the local population into supporting the creation of an Islamic state. However, in a positive development, these efforts are provoking a backlash among some tribal figures and Sunni insurgent leaders, who are encouraging local opposition to AQI, particularly in ar-Ramadi. Local Sunni sheikhs are leading this opposition and have strengthened recruiting efforts for local police forces.
• Violence in Baghdad, Diyala, and Balad is characterized by sectarian competition for power and influence between AQI and JAM, principally through murders, executions, and high-profile bombings. AQI and JAM elements rarely clash directly; most of their reciprocal violence is against Shi'a and Sunni civilians through high-profile bombings or campaigns of sectarian cleansing.
• The conflict in the southern provinces is characterized by tribal rivalry; factional violence among the Supreme Council for the Islamic Revolution in Iraq (SCIRI)/ Badr Organization, the Office of the Martyr Sadr/JAM, and smaller militias for political power; and attacks on Coalition forces.

1.3.2. Recent Developments in the Security Environment

As described above, the new way forward in Iraq focuses on security where violence is highest-in Baghdad and Anbar. While the overarching strategic goals remain unchanged, securing the population will assume a top priority to help set conditions for political and economic progress. We will increase our forces in Baghdad by 21,500 personnel to give our commanders an enhanced ability to hold previously cleared neighborhoods. The ISF are also reinforcing the capital with three additional brigades. Prime Minister Maliki has established a Baghdad Security Command with 10 Security Framework Districts, with an Iraqi brigade, partnered with a U.S. battalion, permanently located in each. More than 40 Joint Security Stations will be established to facilitate cooperation between Coalition and Iraqi forces and to build trust and confidence with the local population. In Anbar, U.S. Marines will be added to provide more forces to consolidate recent gains against AQI networks. Throughout Iraq, our embedded teams advising Iraq units are being substantially increased in size to improve ISF operational capabilities more rapidly. As security improves, economic reconstruction programs enabled by Iraqi and Coalition funding and expanded Provincial Reconstruction Teams will move in to assist with basic services and improving economic opportunities for Iraqi citizens.

As of the end of 2006, the primary ending point of data collection for this report, Shi'a militias and Sunni insurgent groups were engaged in sectarian cleansing in Baghdad neighborhoods and forcibly displacing both Sunni and Shi'a Baghdad residents. The new approach is designed to help the Iraqis end this trend. In January 2007, Prime Minister Maliki announced that the ISF would renew their efforts to lead operations to secure Baghdad from insurgents and militias. Demonstrating support for the Prime Minister's efforts, the CoR voted to support the principles of his Baghdad Security Plan on January 25, 2007. This newfound GOI willingness to challenge the militias, especially JAM, and the announcement that the ISF would pursue all illegally armed groups, regardless of affiliation, is a positive development- though ultimate success will require sustained and consistent commitments to action and even-handed application of the rule of law by all Iraqi leaders.

1.3.3. The Nature of the Conflict

Violent opposition to the GOI and Coalition forces comes from a variety of groups with political, religious, ethnic, or criminal objectives. Some groups receive support from outside Iraq. Although much of the violence is attributable to sectarian friction, each of the violent factions is driven by its own political power relationships, and the factions are often hostile to one another. Shi'a sectarian militias have differing objectives, which occasionally lead to violence. JAM, which is associated with Muqtada al-Sadr, conducts attacks and provides services in support of Sadr's efforts to dominate the Shi'a areas of Baghdad and the south. The Badr Organization often works against JAM and in support of SCIRI and its political agenda of autonomy in the south. AQI and associated foreign fighters attack Coalition and GOI targets and both Shiites and Sunnis to further AQI's goal of establishing an Islamic state in Iraq and to build a sanctuary to support operations against targets outside Iraq, while Sunni insurgents attack Coalition forces and the Shi'a-dominated GOI to promote a predominantly secular Sunni Arab agenda. This rivalry will be most evident during coming months as Maysan, Qadisiyah, and Wassit provinces assume Provincial Iraqi Control (PIC).

Iranian Support. Iranian lethal support for select groups of Shi'a militants intensifies the conflict in Iraq. Consistent with the National Intelligence Estimate, Iranian support to Shi'a militias, such as JAM and the Badr Organization, includes providing lethal weapons, training, financing, and technical support.⁸ This includes supplying some Shi'a extremist groups with explosively formed projectiles (EFPs), the most effective of the roadside bombs. Shi'a extremist groups have been implicated in direct attacks against Coalition forces, including with EFP technology. EFPs require advanced manufacturing processes and training for employment that clearly place them outside the category of "improvised explosive devices."

Syrian Support. Although Iraq resumed diplomatic relations with Syria in November 2006, Damascus appears unwilling to cooperate fully with the GOI on bilateral security initiatives. Syria continues to provide safe haven, border transit, and limited logistical support to some Iraqi insurgents, especially former Saddam-era Iraqi Ba'ath Party elements. Syria also permits former regime elements to engage in organizational activities, such that Syria has emerged as an important organizational and coordination hub for elements of the former Iraqi regime. Although Syrian security and intelligence services continue to detain and deport Iraq-bound fighters, Syria remains the primary foreign fighter gateway into Iraq. Despite its heightened scrutiny of extremists and suspected insurgents, Damascus appears to want to appease Islamist extremist groups. Damascus also recognizes that Islamist extremists and elements of the former Iraqi regime share Syria's desire to undermine Coalition efforts in Iraq.

1.3.4. Attack Trends and Violence

For this report, the term "attacks" refers to specific incidents reported in the Multi- National Corps-Iraq (MNC-I) Significant Activities Database. It includes known attacks on Coalition forces, the ISF, the civilian population, and infrastructure. Attacks typically involve improvised explosive devices; small arms, including sniper fire; and indirect fire weapons.

The total number of attacks on and casualties suffered by Coalition forces, the ISF, and Iraqi civilians for the October-December reporting period were the highest for any 3-month period since 2003. These attacks were concentrated in the provinces of Baghdad, Anbar, Salah ad Din, and Diyala, with Baghdad experiencing a record 45 attacks per day. The other 14 provinces of Iraq experience comparatively low levels of attacks.

Coalition forces continued to attract the majority of attacks, while the ISF and Iraqi civilians continued to suffer the majority of casualties. Casualties from these attacks decreased slightly in January, but remained troublingly high. In addition, as these data only include violence reported to or observed by Coalition forces, they only provide a partial picture of the violence experienced by Iraqis. The UN estimates civilian casualties based on the number of casualties reported by hospitals throughout the country. For the month of December, the UN estimated that more than 6,000 civilians were killed or wounded. This is about twice as many casualties as were recorded by Coalition forces.

1.3.5. Infrastructure Attacks

This past quarter (October-December 2006) saw an average of 1.4 attacks per week on infrastructure providing essential services, such as electrical power, water, and fuel. The attack rate is down from an average of 6.7 attacks per week in the pre-sovereignty period of April-June 2004. However, the timing and location of more recent attacks resulted in greater disruption of service. In addition, weak ministerial oversight, ineffectual rapid-repair teams, and criminal harvesting of infrastructure assets (e.g., copper from power lines) have proved to be major impediments to improving the supply of essential services. Since poor delivery of essential services adversely affects the legitimacy of the government in the minds of the civilian population, Iraq's infrastructure will remain a high-value target for insurgents and criminal elements.

1.3.6. Public Perceptions of Security

Surveys of the Iraqi people consistently demonstrate a rejection of violence, particularly violence against civilians. More than 80% of the population rejects violence against the government under any circumstance, and more than 90% rejects attacks against women and children.^9,10 However, two-thirds of Iraqis express a sense that conditions for peace and stability are worsening, and the population is roughly split on whether the government is moving in the right or the wrong direction to quell the violence.^11,12 This situation is consistent with polling data described in previous reports. Almost twothirds of the population feel personally powerless to do anything to stop the violence.¹³ Nevertheless, the number of actionable tips-something individuals can do to improve the situation-continues to rise.

Many Iraqis feel more positive at the local level than they do at the national level.¹⁴ As noted above, the number of community watch groups is increasing, indicating Iraqis are taking personal responsibility for the security of their neighborhoods. However, efforts must be made to coordinate these groups with GOI security efforts and prevent them from acting as "mini-militias" outside ISF control. Almost 80% of Iraqis polled said that they thought militias should be dissolved,¹⁵ with more than half reporting that they thought militias make conditions more dangerous.¹⁶ Overall, confidence in the GOI to provide protection has improved nationally.¹⁷ Iraqis indicate a steady increase in confidence in their security forces, both Army and police. This national improvement is reflected in improvements in the confidence in the Iraqi Army and Iraqi Police to improve the situation. ¹⁸ These aspects vary widely by province, with most support coming from the Shi'a-dominated south and the Kurdishdominated north.

1.4. Transferring Security Responsibility

The President of the United States and the Prime Minister of Iraq met in Amman, Jordan, in November 2006, to review the recommendations regarding the transfer of security responsibilities to the GOI. These recommendations included the establishment of nine committees focused on the following issues: MOD training and equipping, MOI training and equipping, transfer of operational control of Iraqi Army Divisions to the GOI, transfer of provincial control to the GOI, development of ministerial capacities, improved security coordination between MNF-I and the GOI, development of an Iraqi counter-terrorism capability, development of an Iraqi National Intelligence system, and development of a National Security Architecture. With the approval of the Iraqi Prime Minister, implementation of this effort is under way. The first series of reports from the nine committees was completed on February 19, 2007. The committees will continue their efforts toward acceleration and transference of security responsibilities until completion. After the transfer of security responsibilities is complete, a long-term security relationship serving the interests of the United States, Iraq, the region, and the rest of the world can be established.

1.4.1. Progress in Assuming Leadership in Counter-Insurgency Operations

As part of the process of transferring security responsibility, an Iraqi unit assumes the lead once it has been assessed and demonstrated sufficient capability to plan and execute combat operations. As of February 13, 2007, 8 Division Headquarters, 31 Brigade Headquarters, and 93 Iraqi Army battalions had assumed the lead for counter-insurgency operations within their assigned areas of operations, and Iraqi Ground Forces Command (IGFC) had assumed command and control of 6 of 10 Iraqi Army divisions (1st, 2nd, 3rd, 4th, 8th, and 10th). Although these units lead security in their respective areas of operations, most still require substantial logistics and sustainment support from Coalition forces.

The Coalition is focusing on improving the proficiency of all military and police units, primarily through the efforts of Transition Teams. These teams, composed of 6,000 advisors in more than 480 teams, are embedded at all levels of Iraqi units in all major subordinate commands.

1.4.2. Process for Implementing Provincial Iraqi Control

The transfer of security responsibility from Coalition forces to the GOI reflects Iraq's ability to protect its citizens and safeguard its territory. As Iraqis take on more responsibility for security, Coalition forces move into supporting roles, while maintaining sufficient forces on the ground to help Iraq consolidate and secure its gains.

The Joint Committee to Transfer Security Responsibility (JCTSR) has developed criteria to guide the transfer of security responsibility to Iraq. Recommendations for transfer include an assessment of conditions in four categories: Threat Assessment, ISF Readiness, Local Governance Capability, and MNF-I Ability to Respond Quickly to Major Threats (if needed). The appropriate Multi- National Force division commander and provincial governor, assisted by representatives of the Iraqi Ministries of Interior and Defense and U.S. and United Kingdom Embassies, conduct monthly assessments of provinces and provincial capitals. Once a decision is made to transfer security responsibilities, the JCTSR provides transition directives, develops a public affairs plan, and arranges a post-transfer security agreement between MNF-I and provincial governors.

In December 2006, responsibility for security in An Najaf Province was transferred from MNF-I to the provincial government and civilian-controlled Iraqi Police. An Najaf is the third of Iraq's 18 provinces to be designated for transition to PIC. The joint decision of the GOI and MNF-I to hand over security responsibility is the result of the An Najaf civilian authorities' demonstrated ability to manage their own security and governance duties at the provincial level.

Events in January 2007 validated the posttransfer security concept. When the local An Najaf police were unexpectedly fired upon, they assessed the situation to be beyond their means to control. The provincial governor then requested assistance from the National Command Center (NCC), which alerted and deployed additional units from outside the province. Once those units arrived, an additional call for support was sent. The NCC requested helicopter and airplane support from Coalition forces, which also sent a Quick Reaction Force to assist. The outcome was a decisive victory by the ISF.

On December 17, 2006, the Prime Minister and the Ministerial Committee for National Security approved the transfer of security responsibility for Dahuk, Irbil, and Sulaymaniyah to the Kurdistan Regional Government (KRG). These provinces will transition to PIC on completion of negotiations between the GOI and the KRG to resolve a national budgetary issue concerning the defense budget. These three provinces and three others-Qadisiyah, Maysan, and Ninewah-are expected to transition to PIC by the spring of 2007. The remaining provinces are expected to achieve PIC in 2007 except for Anbar, which is projected to transfer to PIC in early 2008.

1.4.3. MNF-I Basing Construct

MNF-I is consolidating its locations in Iraq to reduce its temporary basing requirements using a "bottom-up" conditions-based process to synchronize basing requirements with Coalition forces requirements and the projected command-and-control structure. The timeline for this process is being adjusted to support the short-term surge for the Baghdad Security Plan. However, MNF-I has already reduced its presence in major cities while developing the flexibility and maintaining the force level required to support other elements in Iraq, including Coalition partners, Provincial Reconstruction Teams, Transition Teams, other supporting entities, and the Department of State. This process will maximize support through a minimum number of strategically located forward operating bases and convoy support centers. Because most of the ISF have been strategically based on former Coalition bases, MNF-I is actively engaging the Ministry of Finance and other entities in the GOI in order to identify future tenants to take possession of the remaining bases.