WASHINGTON: The Fund for Peace (FfP) has recently completed its work on its tenth and final report tracking progress in Iraq. Eight years of rigorous analysis of the complex pressures facing the Iraqi state have yielded some important conclusions about the sustainability of the current situation. The study suggests that as U.S. combat troops prepare to leave Iraq, and despite some notable accomplishments - increased revenues from oil production, a build-up of the Iraqi military, and the conduct of parliamentary elections - Iraq remains a highly fragile state that has not yet achieved sustainable security. Though not failing precipitously as it was during 2006-2008, it suffers from a host of unresolved problems, lingering disputes, sectarian rivalries and institutional deficiencies that have been downplayed by the media and top decision-makers. If not addressed adequately, these factors have the potential to plunge the country back into civil conflict.

Substantial threats of political violence, sectarian divides and millions of displaced persons persist eight years after the invasion. Compounding the political challenges, the Iraqi economy's fundamental weaknesses are being masked by oil-driven GDP growth. Corruption remains pervasive and public services are largely inadequate. The FfP has tracked the evolution of these issues over the last 84 months and has drawn critical insights.

Based on the trends identified in this study, the most likely near-term scenario is an unstable coalition between the Shia and Kurds, with some Sunni representation, and the creation of a ruling elite that will contain competing factions and repress opposition using a considerable security establishment: about 1 out of every 30 Iraqi citizens is a member of a military or police organization. If the country holds together after the transition to full sovereignty, it will be because of 1) the militarization of Iraqi society, 2) back-room alliances among the sects, tribes and clans and 3) large oil revenues that will grease the wheels of those political machines. Iraq also stands to become a political battlefield for rival regional influences, including Iran, Saudi Arabia, Syria, Turkey and Jordan, and a lucrative prize in the wider Middle East power struggle between Sunni and Shia communities.

Pauline H. Baker, President of The Fund for Peace, commented: "Iraq serves as an example of what can happen when state-building strategies are not well thought-out, given adequate resources, or tailored to the needs of the particular country at risk. The good news is that, while not yet a success story, Iraq does have a chance to make it. The bad news is that the emphasis on security and counter-terrorism has shortchanged other priorities of state-building. The trend line has flattened. Iraq's future depends upon how the sectarian and tribal groups will coalesce and whether their political leaders will put the national interest above their narrow factional interests."

For a copy of the report, go to: http://www.fundforpeace.org/trackiraq

The Fund for Peace is an independent research and educational organization based in Washington, D.C. Visit The Fund for Peace website at www.fundforpeace.org.