пятница, 20 июня 2008 г.

Nuclear Government Decision

UK denies US approval is needed to use its nuclear weapons London, Nov 1, IRNA UK-Nuclear Weapons Defense Secretary John Reid has denied that the British government needs prior permission from the United States to use its ageing American-made Trident nuclear weapons.

"The United Kingdom's independent nuclear deterrent can be targeted and used without the approval of any other country," Reid said.

In a written reply to parliament published Tuesday, he also said that with regard to requiring US permission for any planned upgrade for the submarine-based system, 'no decisions on any replacement for Trident have yet been taken'.

The defense secretary further insisted that decisions on replacing Trident was 'still some way off' and that it was 'too early to speculate' and what type of successor system is being preferred.

The British government is under growing pressure from backbench MPs to allow a parliamentary vote for the first time before any final decision is made to buy a replacement from the US.

Former international development secretary, Clare Short, who resigned from her cabinet post in protest over the government's post-war Iraq policy, says that there is an overwhelming political case against replacing Trident.

"There is also a strong argument that a weapon to replace Trident would breach the non-proliferation treaty (NPT)," Short said in an article for the Independent newspaper Tuesday.

"There would be no prospect of the UK using it without US approval.

If the UK replaces Trident, we will be locked into the role of US poodle for another generation," she also said.

Other backbench MPs have also argued that British government is being hypocritical in opposing Iran's nuclear program when it is not abiding itself by the terms of the NPT.

Curbing Korea's nukes

North Korea's secretive leader Kim Jong Il is a nuclear cheat and an extortionist. The world will only believe his pledge yesterday to scrap nuclear weapons when United Nations inspectors can verify it.

Still, North Korea may just be on the verge of taking a sensible cue from Libya and pre-war Iraq in abandoning weapons of mass destruction. If so, U.S. President George Bush will have managed to isolate Iran as the world's last truly worrisome nuclear renegade, and Tehran will be under intense pressure not to build a bomb it does not have, or need.

That was the hope raised by yesterday's announcement that China had brokered a deal between the United States and North Korea to ease a three-year crisis on the Korean Peninsula, home to 70 million.

This cools a bitter conflict between Washington and Pyongyang. It rewards South Korea's "sunshine policy" of engagement with the North. It shows the U.S. can accomplish more by working closely with countries like China, Russia and Japan.

In principle, Kim has agreed to "abandon" his one or two nuclear weapons in exchange for security guarantees and aid. He will allow U.N. inspectors back in and rejoin the nuclear non-proliferation treaty.

This eases a crisis triggered in 2002 when Bush exposed Kim for cheating on a 1994 pledge to freeze plutonium-based efforts to build a weapon in exchange for aid. The Koreans were secretly using another route: enriched uranium.

Kim then expelled U.N. inspectors, cut U.N. seals on a mothballed reactor at Yongbyon, withdrew from the non-proliferation regime and announced he had the bomb.

Bush threatened to have the U.N. declare Pyongyang an outlaw, urged sanctions and contemplated military action to prevent Kim from giving terrorists nuclear materials.

In exchange for Kim's climb-down yesterday, Bush has pledged to respect the North's sovereignty, has affirmed he won't attack, has muted a demand that Kim give up civilian atomic power, and has agreed to provide aid and energy supplies. In effect, this resurrects the 1994 deal.

In November, the diplomats hope to negotiate the "sequencing" of all this. That will be tricky.

Kim deserves an early reward in food, energy and aid. But he can't be trusted. The U.N. must have speedy access to nuclear sites to deter cheating. And Kim should shut down the Yongbyon reactor.

His pledges are welcome. Prompt follow-up would be better yet.

Canada should not open doors to U.S. deserters

I am becoming increasingly convinced that the invasion and occupation of Iraq is illegal and will go down in history as a political and human tragedy for the United States. Much like Vietnam.

But that does not mean I would advocate that Canada open its doors to American military deserters, like we did during the Vietnam War.

Iraq war deserters chose their own fate. For us to open the door to them could harm our delicate relations with the United States. Iraq may yet become America's second Vietnam, but the circumstances of those who fought in these wars are different. Many deserters who came here during Vietnam were conscripts who could make the legitimate claim that they never chose to fight.

But today, the U.S. military is an all-volunteer force. Thus it makes little sense that American military deserters can come to this country and claim the same victim status as someone fleeing the civil war in Sudan or elsewhere.

"The war in Iraq is a completely separate issue than was the case in Vietnam," says Russell Terry, founder of the Iraq War Veterans Organization. "They signed a contract and that involves a commitment to do whatever they were told, as long as that order was a lawful order."

It is the legality of the order sending troops to Iraq that is used as justification by many of the deserters and those helping them in this country.

"This contract that the U.S. serviceman signs today is not unlimited," says Lee Zaslofsky, co-ordinator for the War Resisters, a Toronto-based support group that provides assistance to American military deserters. "A contract has two parties and the other party, the president of the United States, has been clearly proven to have launched an illegal war on the basis of fraudulent information."

But before we open the border to deserters solely on the grounds that the war is illegal, Canadians should first ask themselves: Who in the U.S. should have the power to place restrictions on the president? In other words, should any democratic society sanction insubordination and desertion as a right that all military or police personnel can freely exercise whenever they may feel the political mandate for their task may not be legitimate under domestic or international law?

Or, should the power to challenge government policy in a democratic society come from the voters and their elected representatives? More importantly, if we open the door to American military deserters we may be accused, at least in the court of American public opinion, of indirectly meddling in that country's internal affairs.

The White House has already hinted that the war may continue for some time, and Americans are becoming increasingly aware of the trickle of military deserters coming to Canada. Should this trickle turn into a flood, it is quite possible a U.S. politician would claim that allowing American deserters to remain here is a government-sanctioned attempt to deliberately weaken the already strained ranks of the U.S. military.

Talk-Northkorea-Nuclear

China tries to woo N.Korea back to nuclear talks 2 BEIJING "It is unlikely the six-party talks will be resumed in the near future," he told state television.

"But all parties concerned, including China, are conducting consultations with each other positively."

China is reclusive North Korea's closest friend and U.S. officials, while grateful to Beijing for already having brought it to the negotiating table three times, have faulted the Chinese for failing to exert more influence.

North Korea, described by U.S. President George W.

Bush as part of an "axis of evil" along with Iran and pre-war Iraq, said for the first time last week it had nuclear weapons, arguing it needed them to deter a hostile United States.

It announced it was pulling out of the talks in what analysts said could be a tactic to win concessions at a time when attention is focused on Iran's nuclear programmes.

North Korea said on Saturday there was also no justification for one-to-one talks with the United States -- something it had previously requested.

"Because the United States insists on its hostile policy towards the DPRK (North Korea) and refused to co-exist with the DPRK ...

the DPRK has no justification to take bilateral talks by one-to-one on the nuclear issue of the Korean peninsula with the United States now," a North Korean Foreign Ministry spokesman was quoted as saying.

Iraq`s charge d`affaires meets press with US

Hussain met the press in New Delhi in the company of US Ambassador to India David Mulford while requesting Indian assistance for rebuilding infrastructure in post-war Iraq.

The press interaction, the first since landmark elections were held in the war-ravaged country, was packed with Indian and foreign print and electronic media.

According to IRNA`s correspondent here, the new representative noted that India has a long experience of working in the Mideast region.

"Iraq could benefit from their expertise," he added.

Asked whether Baghdad has made any formal request to India for assistance, he said, "Iraq appreciates the positive stance of the Indian government...I wish we can receive more and more help from it."

Addressing the unconventional press meet in the company of the US ambassador, the new Iraqi charge d` affaires said in an intriguing statement that the US invasion of of Iraq was a "small price" to pay for "democracy."

The press conference was held with the Iraqi and American flags in the backdrop in the hastily done up residence of the Iraqi ambassador in New Delhi.

The US ambassador said he was optimistic that his government was not making any special request to the Indian side for assistance in Iraq, and added that it was left for India and Iraq to work out matters between themselves.

Another interesting moment of the press conference came when questions were raised about the fate of the former dictator, Saddam Hussein, which elicited this response: "We do not like to think about Saddam Hussein, we do not like to remember him."

The press meet was an introductory venture of the new charge d` affaires to India intended to attract new enterprising players into the war-torn economy.

However, the attending mass of media professionals learned from the charge d`affaires that there was no possibility of withdrawal of US troops from Iraq in the near future.

Republic of Iraq - history

The Tigris-Euphrates valley, formerly called Mesopotamia, was the site of one of the earliest civilizations in the world. Mesopotamia ceased to be a separate entity after the Persian, Greek, and Arab conquests. The Arabs founded Baghdad, from where the caliph ruled a vast Islamic empire in the 8th and 9th centuries. Mongol and Turkish conquests led to a decline in the region's population, economy, cultural life, and irrigation system.

Britain secured a League of Nations mandate over Iraq after World War I. Independence under a king came in 1932. Rebellious army officers killed King Faisal II, July 14,1958, and established a leftist, pan-Arab republic, which pursued close ties with the USSR. Successive regimes were increasingly dominated by the Baath Arab Socialist Party. In the 1973 Arab-Israeli war Iraq sent forces to aid Syria.

A Baath leader, Saddam Hussein, became president of Iraq, July 16, 1979. After purging his enemies, he ruled as a dictator for more than 2 decades, repressing Iraq's Kurds and Shiites and launching disastrous wars against 2 neighboring nations, Iran and Kuwait. Hussein was believed to be seeking to develop weapons of mass destruction; Israeli planes destroyed a nuclear reactor near Baghdad June 7, 1981, claiming it could be used to produce nuclear weapons.

After skirmishing intermittently for 10 months over the sovereignty of the disputed Shatt al-Arab waterway that divides the two countries, Iraq and Iran entered into open warfare on Sept. 22, 1980. Iran repulsed early Iraqi advances, producing a long and costly stalemate; hundreds of thousands of Iraqis lost their lives during the 8-year conflict. Hussein used poison gas against the Iraqi Kurdish minority in 1988, killing up to 5,000 people in Halabja, in the 1st mass use of poison gas since the Holocaust.

Iraq attacked and overran Kuwait Aug. 2, 1990, sparking an international crisis. Backed by the UN, a U.S.-led coalition launched air and missile attacks on Iraq, Jan. 16, 1991. The coalition began a ground attack to retake Kuwait Feb. 23. Iraqi forces showed little resistance and were soundly defeated in 4 days. Some 175,000 Iraqis were taken prisoner, and Iraqi casualties were estimated at over 85,000. As part of the cease-fire agreement, Iraq agreed to scrap all poison gas and germ weapons and allow UN observers to inspect the sites. UN trade sanctions would remain in effect until Iraq complied with all terms.

In Feb. 1991, Iraqi troops drove Kurdish insurgents and civilians to the borders of Iran and Turkey, causing a refugee crisis. The U.S. and allies established havens inside Iraq for the Kurds. The U.S. launched a missile attack aimed at Iraq's intelligence headquarters in Baghdad June 26, 1993, citing evidence that Iraq had sponsored a plot to kill former Pres. George Bush. Iraqi cooperation with UN weapons inspection teams was intermittent throughout the 1990s. On Dec. 9, 1996, the UN began a program that allowed Baghdad to begin selling limited amounts of oil for food and medicine. (The UN, Apr. 2004, launched an investigation of the program amid charges that the administration of the program was corrupt and that the Hussein regime skimmed billions of dollars from the fund.)

Iraqi resistance to UN access to suspected weapons sites touched off diplomatic crises during 1997-98, culminating in intensive U.S. and British aerial bombardment of Iraqi military targets, Dec. 16-19, 1998. After 2 years of sporadic activity, U.S. and British warplanes struck harder at sites near Baghdad on Feb. 16, 2001.

In a speech before the UN, Sept. 12, 2002, Pres. George W. Bush accused Iraq of repeatedly violating UN resolutions to eliminate weapons of mass destruction, refrain from supporting terrorism, and end repression. Under Security Council Resolution 1441, approved Nov. 8, Iraq allowed UN inspectors to search for banned weapons, while the U.S. and Britain built up troops in the Persian Gulf. Despite opposition from some countries, including France, Germany, and Russia, a U.S.-led coalition launched an invasion of Iraq on the evening of Mar. 19 (EST), 2003. By Apr. 6 the British controlled Basra and other areas in the S, and the U.S. entered Baghdad Apr. 7. Hussein had disappeared, the Iraqi government had collapsed, and most of Iraq's armed forces had dissolved into the civilian population. On May 1, Pres. Bush declared that major combat there was over. Continuing searches failed to uncover evidence of stockpiled chemical, biological, or nuclear weapons.

The U.S. initially governed Iraq through a Coalition Provisional Authority, headed by L. Paul Bremer. A 25-member Iraqi Governing Council was appointed and named a cabinet Sept. 1, 2003. Reconstruction efforts continued but were hampered by guerrilla attacks from Baath remnants, Islamic extremists, and others. Iraqi resistance activities widened with the bombings of the Jordanian embassy, Aug. 7, the UN headquarters in Baghdad, Aug. 19, killing UN special envoy Sergio Vieira de Mello and 21 others, and a blast in Najaf Aug. 29 that killed at least 83 people, including Ayatollah Mohammad Bakir al-Hakim, a Shiite leader. After a 2nd bombing at its Baghdad headquarters Sept. 22, the UN scaled back its presence in Iraq.

Coalition forces succeeded in neutralizing many leaders of the former regime. Two of Hussein's sons, Uday and Qusay, were killed July 22, 2003 by U.S. troops in Mosul. Saddam Hussein was captured in an underground hideout Dec. 13; he appeared before an Iraqi tribunal July 1, 2004, and was charged with crimes against humanity. The insurgency continued to mount attacks that killed large numbers of Iraqi civilians as well as many foreign troops and civilians participating in reconstruction, under leaders such as radical Shiite cleric Moqtada al-Sadr and Jordanian militant Abu Musab al-Zarqawi; the U.S. believed Zarqawi was behind a series of kidnappings, beheadings, and suicide bombings. Fallujah remained a center of Sunni Muslim resistance. Among other atroocities, gunmen ambushed and killed 4 security contractors in Fallujah in March, and a mob dragged their bodies through the streets. Attacks on pipelines and other facilities cut Iraq's oil production.

Photographs released in Apr. 2004 graphically showed instances of physical abuse and sexual humiliation of Iraqi inmates by U.S. military personnel at Baghdad's Abu Ghraib prison in fall 2003. The images sparked widespread outrage.

On June 28, 2004, the U.S. authorities officially transferred sovereignty to a transitional Iraqi government led by Prime Min. Iyad Allawi. About 140,000 U.S. troops remained, along with 25,000 allied forces and thousands of foreign civilian advisers and contractors. A 3-week confrontation at Najaf, with U.S. and Iraqi forces battling Sack's Mahdi Army guerrillas, was defused Aug. 27 by Iraq's most influential Shiite leader, the Grand Ayatollah All al-Sistani.

PRIMITIVE BANKING

The existing financial system comprises the Central Bank of Iraq (CBI), six state-owned 'monolithic' banks and 19 small private banks — formed during the early 1990s. The CBI and state banks — notably Rafidain and Al Rasheed — were merely fiscal instruments for the Baathist party, or more specifically, they acted as Saddam Hussein's personal bankers and as such were responsible for massive 'flight capital' from pre-conflict Iraq.

According to the US Treasury Department, total assets are now estimated at about $2bn, equivalent to 10% of gross domestic product, while the aggregate equity of Iraq's 25 banks is reported at a mere $42m. The sectors capital-assets ratio of 2.1% is extremely low by international comparison.

Most, if not all of Iraq's banks are 'technically insolvent', possessing negligible capitalisation, while the true value of assets falls well short of liabilities to depositors and other creditors, including foreign banks and western export credit agencies.

Moreover, the bad debts of these 'typical' Iraqi banks exceed their own paid-up capital, while reserves are far too small to cover loan losses. Inadequate accounting systems and poor regulations enabled banks to conceal non-performing loans (NPLs) in their accounts by constantly rescheduling principals and capitalising interest arrears in order to maintain the status quo.

The main reasons for NPLs are excessive directed lending for the financing of ballooning budget deficits, funding operations of public enterprises and large, uneconomical projects during the past three decades. Other irregular practices such as inside lending to former ruling elites/cronies have also resulted in huge bad debts.

The 'Old Iraq' lacked a commercial banking culture, with lending based on cronyism, not credit quality.

To date, effective competition remains weak, and therefore concentration in the banking sector is extremely high. The two big banks, Rafidain and Al Rasheed, control 85%-90% of total banking assets. During the 1980s, Rafidain (founded in 1941) was the largest Middle Eastern bank with assets of $47bn, but today it owes some $24bn to western and regional Arab banks, as well as Paris Club countries.

Rafidain Bank also carries the old regime's [unpaid] sovereign debts and letters of credit. Until the issue of Sl27bn-plus external debt is settled, international trade-finance business is closed to state-owned banks. The Trade Bank of Iraq, a consortium of 13 international banks led by JP Morgan Chase (US), was established in December 2003 to handle all trade documentation, covering Iraqi exports/imports and is solely responsible for issuing and confirming letters of credit.

The distressed banks are unable to provide services and products largely taken for granted elsewhere in the world, including corporate financing, structured trade finance, cash management/treasury services, mortgages, insurance, leasing, credit cards, and cash machines (ATMs).

Iraq remains a predominantly 'cash-based' economy, where banking is confined to deposit taking and a few short-term loans. It is estimated that only one-third of the total money supply in circulation is inside the banking sector. Apparently, most Iraqis elect to keep their savings "under the bed".

Meanwhile, the domestic payments system is almost primitive — money transfers between two banks, or even between branches of the same bank, can take over a week. Due to the absence of electronic links and a depleted telecommunications infrastructure, the system is largely 'manually-based', with banks processing checks via messengers. This has often led to long delays and high levels of credit float.

Substantial investment in IT systems is urgently needed. Neither SWIFT (Society For Worldwide Interbank Financial Telecommunications) — a messaging system that facilitates global funds transfers — nor MICR (Magnetic Ink Character Recognition) — a secure, high-speed method of scanning and processing information used by banks — are available in Iraq.

The CBI has raised minimum capital requirements for private banks to help promote consolidation and restore solvency ratios. The move should encourage mergers and acquisitions within the sector. By April 2005, core capital (shareholders' funds) must reach $5m. Among the large private institutions are the Bank of Baghdad, Iraqi Middle East Investment Bank, Commercial Bank of Iraq, Investment Bank of Iraq and Credit Bank of Iraq. The clientele group frequently includes family members or business associates of the owners. A recent Citigroup report shows that the total deposits of private banks were mostly invested in treasury bills and affiliated companies.

Iraq: A frontier for brave bankers

THE WORLD BANK AND UNITED Nation's Joint Iraq Needs Assessment report (2003) said: "In the medium term, the private sector will be a crucial means to achieve high growth and create employment. Also critical is the revival of a banking system that is able to operateon commercial lines." John Taylor, the US Undersecretary of the Treasury for international affairs, told the Senate committee: "Strengthening and modernising the banking sector is central to achieving overall economic progress in Iraq."

A dysfunctional banking system can have a severe impact upon real economy — consumption, investment and exports. Iraqi policymakers face the challenge not only of liberalising a repressed financial services industry but also of reforming, or creating from scratch, the institutions required to underpin a market-oriented system.

The interim government in Baghdad has devised a long-term strategy for reactivating economic activity on the basis of structural reforms, including price liberalisation, taxes to promote private-sector participation in the reconstruction process, foreign direct investment (FDI) into industries besides petroleum and banking regulations in tune with best practices in developing countries.

However, such an ambitious policy agenda will also require establishing the legal, institutional and regulatory frameworks for the smooth functioning of markets. Dr. Sinan Al Shabibi, governor of the Central Bank of Iraq, formerly a senior economist for the UN Conference on Trade and Development, told the American-based journal Institutional Investor. There is a great potential in this country. The prospects are very bright. Once security is under control, Iraq will be very attractive to investors." A new central bank — restructured under a nine-member governing board comprising the governor, two deputy-governors, three senior managers and three full-time outside directors — has introduced a law that provides for independence and accountability and prohibits the bank from extending credit to the government.

Henceforth, monetary and credit policy actions will not require the approval of the Ministry of Finance. The central bank's extended powers mean that it now holds the responsibility to control money supply, regulate interest rates, and license and supervise Iraq's commercial banks.

However, as the International Monetary Fund (IMF) noted: "The latitude for proper monetary and exchange-rate policy actions is limited by a lack of appropriate instruments, the current low level of foreign exchange reserves, and constraints on institutional and physical infrastructure capacity."

A new commercial banking legislation, based on global standards and adopted in October 2003, lays down stringent fit-and-proper criteria for bank ownership and higher minimum capital requirements, as well as plans to open the sector to foreign competition.

Bush victory brings relief for Halliburton shareholders

Halliburton shareholders have shaken off the shadows of a raft of investigations into their company's practice in Iraq to embrace a new four-year term of George Bush and Halliburton's old boss Dick Cheney in the White House.

Voters ignored criticism from Senator John Kerry and other Democrats during the election campaign which charged Cheney with favouritism over the $7 billion (3.8 billion pounds) in no-bid contracts Halliburton, through its KBR engineering and construction unit, to run virtually everything in post-war Iraq from US soldiers' meals to the oil infrastructure.

Halliburton shares rose 7 percent to hit three-year highs along with stocks in other oil-related firms expected to be big beneficiaries of the return of the two ex-oilmen to the top US jobs.

While Pentagon auditors have found evidence of possible overcharging on the part of KBR, Halliburton predicted the inquiries would be quietly dropped if Bush won.

Such a move would result in howls of protest from the Democrats but, in their current demoralised condition, a resurgent Bush is expected to shrug off complaints easily.

The Halliburton issue failed to gain traction in the Presidential race despite the US Army Corps of Engineers' top contracting official last week calling the no-tender deal the worst case of contracting abuse she had seen. Bunnatine Greenhouse said: "It was misconduct, and part of the misconduct was blatant."

US auditors have also accused KBR of being unable to account for more than a third of the items it handled in Kuwait.

Norway charged with 'hypocrisy' over Iraq war

The Norwegian government was accused of hypocrisy Tuesday, after reports that it authorized the Defense Department to lend military equipment to the US just 10 days before the US led the invasion of Iraq.

Stale Ulriksen, assistant director of the Norwegian Foreign Policy Institute (NUPI), said the case shows that Norway is so dependent on the US that the government could not refuse the loan of equipment 'central for modern warfare'.

"It directly defies the policies the government stood for at that time," Ulriksen said.

He said that it made the Norwegian government look 'hypocritical' as the equipment was loaned at a time when it publicly claimed to be opposed to the war.

According to Oslo daily Aftenposten, the equipment, high-tech laser systems used to help the US to define bombing targets, was provided without the knowledge of parliament's full foreign relations committee.

The Iraq war Iraq was strongly opposed by a majority of Norwegians.

Prime Minister Kjell Magne Bondevik linked his government's opposition to the invasion to the United Nations refusal to back it.

But the equipment was said to have been sent to a US marine base in Kuwait less than two weeks before the invasion in the spring of 2003.

It was not returned to Norway until last summer.

Defending the government's position, Foreign Ministry spokesman Karsten Klepsvik confirmed the 'loan' had been made but insisted that it it was common to lend out such equipment to allies.

"It would have been more sensational if Norway had refused to deliver such equipment to an ally," Klepsvik said.

Asbjorn Eide, senior researcher at Oslo's Center for Human Rights, said that the case was 'inflammatory under international law'.

At the time the equipment was sent to US forces, it was clear that the UN Security Council would not approve the invasion, Eide said.

He said that Norway and the US have a long history of lending military equipment back and forth, but that the government must have known the lasers would be used in a war that Norway officially opposed.

It 'curious and worrisome' that Parliament's foreign relations committee was not informed of the loan, Eide said.

"This was a very special situation that should have set off some alarms," he said.

He said it indicated 'only a limited number of our politicians found this acceptable, and that they didn't dare take up the case in full openness'.

Blair tries to heal rift over Iraq

British Prime Minister Tony Blair has flatly acknowledged that his main argument for taking a reluctant country to war - Iraq's alleged weapons of mass destruction - has turned out to be wrong.

Blair yesterday offered Labour party members an apology for the error in a bid to heal deep divisions over the war before a general election expected next year. But he refused to apologize for taking part in the U.S.-led invasion, even as a heckler disrupted his speech by shouting: "You've got blood on your hands."

"The evidence about Saddam having actual biological and chemical weapons ... has turned out to be wrong," Blair told delegates at the Labour party convention in Brighton, south of London.

"The problem is, I can apologize for the information that turned out to be wrong but I can't, sincerely at least, apologize for removing Saddam," he said. "The world is a better place with Saddam in prison."

Blair delivered his speech on the day that two British soldiers were killed in an ambush in Basra, bringing the total number of British soldiers who have died in Iraq since the start of the conflict to 68.

Britain is also gripped with foreboding over the fate of Kenneth Bigley, a 62-year-old British engineer kidnapped along with two American colleagues 13 days ago in Baghdad. Both Americans have been beheaded.

Blair spent most of his hour-long speech to Labour delegates spelling out the domestic issues he believes will win the party an historic third consecutive term in office. He listed education and health reforms, and a revved-up economy, as achievements that should see Labour activists campaign for a third election win "with fire in our bellies."

But Blair acknowledged that his divisive decision to go to war has created "a problem of trust" between him and the electorate.

Before the invasion, Blair made the case for war by publishing British "intelligence" dossiers claiming ousted Iraqi president Saddam Hussein had weapons of mass destruction that could be fired within 45 minutes.

His acknowledgement that such "intelligence" was wrong, the first time he's done so in a major speech, comes after he insisted for 18 months that those weapons would turn up. But his act of contrition stopped short of what critics in his party see as a logical conclusion: If the primary reason for war was wrong, then the war itself was wrong.

Blair insisted he did not knowingly mislead the British people with wrong "intelligence." He claimed "the whole international community" agreed with the information because Saddam Hussein had used such weapons in the past.

In trying to justify the war nonetheless, Blair described "global terrorism" based on a perversion of Islam as a new phenomenon. These extremists are in Iraq, not to fight for its liberation, but to prevent democracy from taking root, he argued. "They are not provoked by our actions, but by our existence," Blair said, referring to the democratic values of Western societies.

Extremists in every European city are preaching "hatred of the West," and defeating extremists in Iraq "means security here," he added.

Blair also addressed critics who accuse him, as he put it, of "pandering to George Bush" and being little more than the U.S. president's poodle.

He clearly distanced himself from the neo-conservative agenda of the Bush administration by insisting "the only lasting way to defeat this terrorism is through progressive politics."

"Salvation will not come solely from a gunship," Blair said, arguing that only by helping countries end oppression will "the conditions in which this terrorism breeds" be removed.

He also declared his "frustration at the lack of progress" in the Israeli-Palestinian peace process, and vowed to make its revival a "personal priority" after the U.S. presidential elections in November. Blair has been widely attacked within his party for failing to push Bush into making a Middle East peace deal a priority after the Iraq war.

The ideas that died in Iraq

Preemptive wars, unilateralism, regime change, the neoconservative approach to foreign policy: Just a few months ago, powerful government officials and influential commentators presented these ideas as not just desirable but inevitable choices for a superpower confronted by unprecedented threats. With more than 900 American soldiers dead, 10,000 coalition troops wounded, a military price tag of more than $90 billion, and the main reason for going to war dismissed as a "massive intelligence failure," these concepts lie buried in the sands of Iraq.

Some of these ideas will not be missed. The reliance on military solutions alone to confront real or presumed security threats proved to be as defective an idea as deep disdain for diplomacy. Murderous chaos in postwar Iraq exposed the limits of U.S. military force, its technical superiority notwithstanding. Meanwhile, diplomacy opened possibilities embraced by once scornful and now desperate U.S. leaders who were forced to eat their words. Hopefully they learned a lesson.

More fundamental, disappointments in Iraq also dealt a blow to a worldview that, for all its references to the terrorist attacks of September 11, 2001, as an epochal event, still hearkens back to the Cold War. Consider the two primary responses to the attacks on the World Trade Center and the Pentagon: Instead of concentrating all energies and resources to fight the strange, stealthy, and stateless network that perpetrated the attacks, the United States launched military assaults against two nation-states. First, it rightly attacked Afghanistan, a country whose government had been the subject of a friendly takeover by such networks. The second was Iraq, a country with a standing army and a dictator evocative of the Cold War era. Iraq offered a target more suited to the mindset of U.S. leaders and military capabilities than the more complicated terrorist networks operating inside powerful states, including the United States itself.

In other words, facing the prospect of waging a new kind of war against a new kind of opponent, the Bush administration chose instead to fight a familiar enemy whose face and address it knew. Yet U.S. troops quickly found themselves fighting not enemy soldiers but what Pentagon lawyers now call "unlawful combatants"--fighters with nationalities as fuzzy as they are irrelevant to determining their leaders, their chains of command, their loyalty, and their lethal willingness to die for their cause.

So much for the certitudes and heroic assumptions about how the United States should deal with the world, as outlined in the Bush administration's 2002 National Security Strategy. National Security Advisor Condoleezza Rice may have claimed that "September 11 clarified the threats you face in the post-Cold War era." But while September 11 might have clarified post-Cold War threats, revelations about high-level decision making regarding the war on Iraq suggest that the Cold War instincts that shaped U.S. national security strategy survived the fall of the Berlin Wall. Let's now hope that they find their final resting place under the rubble of Iraq.

Unfortunately, the war in Iraq has also damaged valuable ideas. The need to push for a profound transformation of the Middle East is but one. The unspeakable, politically incorrect conclusion creeping into many influential minds in Washington is that the Middle East is "incurable"; peace, prosperity, and political freedom are goals out of reach for at least one or two generations of U.S. policymakers. The region's stubborn economic backwardness, dysfunctional politics, and deeply entrenched social ills are just too much to take on, according to this new post-Iraq realism. Rather than attempting to accelerate progress in the Middle East, the new logic dictates, U.S. policymakers should just try to stop the rut from deepening and, more importantly, keep the region's violence and instability from spreading abroad.

This conclusion is too demoralizing and politically defeatist to be made explicit. Policymakers will undoubtedly hatch and propose new plans. But it will be a long time before another American-led expedition sets sail to boldly "cure" the Middle East from its grave maladies. Yet, while the world is doubtless better off without another huge, ill-conceived venture in the Middle East, forswearing hope and help for profound, positive, and more rapid change in the region is as dangerous and mistaken as trying to deliver democracy from the barrel of a gun.

Closely linked to the new pessimism about the Middle East is growing skepticism about the general enterprise of promoting democracy, another regrettable casualty of the war's aftermath.

Lurid news stories about warlordism in Afghanistan and bloody chaos in Iraq give a daily boost to misgivings about exporting democracy. Of course, U.S. leaders will continue to wax rhapsodic about America's historical commitment to democracy abroad and how entire peoples are waiting for the United States to help them gain political freedoms. Yet the same leaders remain silent about what they will do in the strong likelihood that rabidly anti-American fundamentalists could come to power in free and fair elections in Muslim countries.

Stability and security have become U.S. obsessions. American politicians increasingly see the promotion of democracy abroad as a threat to both of these goals, with the result that it is becoming a cause with a rapidly dwindling constituency. The war in Iraq has certainly weakened support even further. It is a sad irony that the political will to promote democracy abroad was an intellectual casualty of a war whose promoters claimed was waged in democracy's name.

A step back from the brink

THE two-week-long siege of Muqtada al-Sadr and his fighters in one of Shia Islam's holiest shrines may be coming to an end. On August 18th, in a surprise message reportedly signed by the fiery preacher himself, Mr Sadr told the National Conference, post-war Iraq's first big countrywide deliberative assembly, that he would accept its terms for peace. An aide said that Mr Sadr would leave the Imam Ali mosque, where he is holed up, and disarm his "Mahdi Army", but only if the American and Iraqi forces surrounding him first call a truce and pull back.

The declaration may be a stalling tactic. The interim government of Iyad Allawi demanded that Mr Sadr's militia disarm immediately or face a military strike. Sporadic explosions were still audible near the shrine on August 19th. Condoleezza Rice, America's national security adviser, warned that Mr Sadr could not be trusted. However, hopes were raised that the stand-off in the town of Najaf might end relatively peacefully.

Earlier, Iraq's defence minister had ratcheted up the pressure on Mr Sadr by vowing to storm the mosque. However, Mr Allawi's allies had also offered Mr Sadr a dignified way out. The National Conference had proposed that Mr Sadr evacuate the shrine and dissolve his "Mahdi Army".

Mr Allawi argues that militias like Mr Sadr's have no place in a modern state and so must disarm or be squashed. If Mr Sadr has indeed decided to back down, it will save Mr Allawi from having to make a ghastly choice: either to tolerate a loud challenge to his still-fragile authority, or to risk enraging Iraq's Shia majority by confronting him. Even the many Shia who detest Mr Sadr would be horrified by a battle inside a holy place.

The siege of the mosque had dominated discussions at the National Conference, which began on August 15th. On the first day, Mr Sadr's sympathisers, though a minority among the 1,100-odd delegates, managed to sway the crowd by calling for a halt to violence in the holy city.

With emotions running high, few delegates seemed willing to articulate the government's case. One woman from Najaf complained that the Sadrists were more of a threat to her city than "American cannons", but felt so intimidated by them that she afterwards refused to disclose her name. The conference organisers quickly put forward a resolution calling on the government to avoid violence in Najaf and elsewhere, thus defusing the issue.

The next day the anti-Sadrists had their turn. Speakers declared the need to uphold the rule of law, and that Najaf's shrines were no one's personal property. They put forward a resolution demanding that the Sadrists withdraw from the holy site, and that the Mahdi Army should ditch its guns and become a political party. The Sadrists were not given a chance to reply. The organisers cut the debate short and the resolution passed with a show of hands.

Whatever the procedural deficiencies of the debate, it was probably a rough approximation of what the delegates think, and may have increased the chances that Mr Sadr will stop shooting.

The conference's main business, meanwhile, was the selection of an interim parliament with the power to overrule the government. This has proven fraught. Some delegates complained that the system was rigged to favour the half-dozen largest Saddam-era opposition parties. These same groups were ineffectual when they dominated the Governing Council, the first post-Saddam Iraqi assembly.

Partisan Review

In the run-up to the Iraq war, I tried hard not to be partisan. I distrusted the Bush administration and feared it would be politically empowered by the war. But such thoughts felt petty and limited at such an important time. And so I evaluated the arguments for war on their merits, irrespective of my feelings about the people making them. Doing so made me feel superior to the Democrats, who, I suspected, would have supported an Iraq war waged by Al Gore, and to the Republicans, who had opposed the Kosovo war because it was waged by Bill Clinton.

But, in retrospect, my efforts not to be limited proved limiting. Partisanship, it turned out, was an extremely useful analytical tool in understanding the Iraq war. Had I not tried so hard to cleanse myself of it, I might have seen some of the war's problems earlier than I did.

This was a partisan war. By partisan, I don't mean that it was led by Republicans. It was partisan in the sense that the people who formulated it prized group loyalty above all else. They divided the world, the country, and even their own administration into people who could be trusted and people who could not. And, unfortunately, the people who could be trusted knew much less about how to build democracy in Iraq than the people who could not.

In its broadest sense, the partisanship pitted America against those countries skeptical of war. The governments of France, Russia, and Germany made various arguments against invading Iraq. Sometimes they even suggested that Europe's colonial history provided them with valuable insights into the difficulties of occupying an Arab country. President Jacques Chirac twice told President George W. Bush that France's experience in Algeria should serve as a cautionary tale. But the striking thing about the pro-war camp in Washington was how little it engaged with foreign governments' arguments, let alone experiences, and how much it focused on their motives. Conservatives mocked the conspiracy-minded left for suggesting the Bush administration was going to war for oil. But they simply took it for granted that France and Russia opposed the war to preserve their contracts with Saddam. In the days before the invasion, conservatives speculated gleefully about the Iraqi documents American soldiers were sure to find proving that Chirac had been personally corrupted by Saddam. Who needed to ponder seriously the objections of a man like that?

The second group that could not be trusted was American liberals. Since the press was permeated by left-wing bias, reporting that undermined the case for war was naturally suspect. As Washington Times reporter Bill Sammon writes in his book, Misunderestimated, "Bush thinks that immersing himself in voluminous, mostly liberal-leaning news coverage might cloud his thinking." Since most academics who studied the Arab world were self-evidently anti-American, conservatives trusted only one prominent historian of the Middle East: Bernard Lewis. Nongovernmental organizations (NGOs) also had hidden agendas. In the 1990s, America's NGOs had amassed considerable experience in postwar reconstruction. But that experience had come from Bill Clinton's "social work" wars: Bosnia, Kosovo, Haiti, East Timor--wars the Bushies had ridiculed. And, thus, these examples were rarely cited or examined. It was as if the only countries America had ever occupied were Germany, Japan, and perhaps South Korea.

In his Atlantic Monthly article "Blind into Baghdad," James Fallows notes that the NGOs requested a meeting with Defense Secretary Donald Rumsfeld or his deputy, Paul Wolfowitz, in January to discuss postwar planning. They never got one. And, after the war, as Joshua Marshall, Laura Rozen, and Colin Soloway have detailed in The Washington Monthly, the Coalition Provisional Authority (CPA) didn't hire veterans of the reconstruction efforts of the '90s; it hired conservative lobbyists and Hill staffers. As journalists in Baghdad joked about CPA headquarters, "They don't call it the Republican Palace for nothing."

Finally, there were the enemies within the administration itself. As Fallows notes, the State Department, CIA, and military did a great deal of prewar planning, much of it prescient. But all three institutions were deemed antiwar, and that mattered more than their insights. As former White House speechwriter David Frum has written, "[T]he CIA's warnings on Iraq matters had lost some of their credibility in the 1990s. The agency was regarded by many in the Bush administration as reflexively and implacably hostile to any activist policy in Iraq." When Defense Department employees participated in a CIA simulation of postwar Iraq, they were reprimanded by top Pentagon officials. And, when Jay Garner, Iraq's first post-Saddam administrator, hired Thomas Warrick, who had led the State Department's prewar planning effort, he was forced by Rumsfeld to fire him. After Rumsfeld and Wolfowitz rebuked General Eric Shinseki, who had led U.S. peacekeeping efforts in Bosnia, for saying Iraq would require "several hundred thousand" troops, The Weekly Standard wrote an article on the topic. Determining how many troops it would take to occupy Iraq was an "important question," the article acknowledged. But, it added, "most of the people who ask this question are isolationists trying to make the case against war."

In the fall of 2002, I worried about the administration's aversion to nation-building. But I assumed that, because postwar Iraq--unlike Afghanistan--was crucial to the president's reelection, his administration would listen to the people who understood postwar reconstruction best. What I didn't realize was that, for top Bush officials and their conservative allies, there were no "best practices" that spanned administrations, parties, or nations. There was just their way and their opponents' way. And, if their way placed ideology above expertise, that was fine, because, despite all its denials, the other side did, too.

For conservatives, the right lesson of Iraq is that, if you apply a loyalty test to this country's best sources of knowledge--the academy, the press, and the government itself--you'll lose the war on terrorism through sheer ignorance. For liberals, the lesson is to see conservatives as they are, not as you'd like them to be. I'll try to remember it next time.

U.S. war policy 'grave error'

One of the ideological architects of the Iraq war has criticized the U.S.-led occupation of the country as "a grave error."

Richard Perle, until recently a powerful adviser to U.S. Defence Secretary Donald Rumsfeld, described U.S. policy in post-war Iraq as a failure.

"I would be the first to acknowledge we allowed the liberation (of Iraq) to subside into an occupation. And I think that was a grave error, and in some ways a continuing error," said Perle, former chair of the influential Defence Policy Board, which advises the Pentagon.

With violent resistance to the U.S.-led occupation showing no signs of ending, Perle said the biggest mistake in post-war policy "was the failure to turn Iraq back to the Iraqis more or less immediately.

"We didn't have to find ourselves in the role of occupier. We could have made the transition that is going to be made at the end of June more or less immediately," he told BBC radio, referring to the U.S. and British plan to transfer political authority in Iraq to an interim government on June 30.

This public criticism of U.S. policy from one of the leading advocates of the war - and a firm political ally of U.S. President George W. Bush - indicates just how much Bush's political fortunes are being damaged by post-war chaos.

With polls indicating 64 per cent of Americans believe Bush has no clear plan for Iraq, the U.S. president is embarking on a series of weekly speeches to pitch his proposal to hand over sovereignty to an appointed interim Iraqi government on June 30. But that plan, contained in a United Nations Security Council resolution drafted by the United States and Britain, has led to confusion about who will have ultimate control over U.S.-led coalition forces.

The resolution leaves over-all military control in the hands of the United States, but British Prime Minister Tony Blair insisted yesterday that such power would be transferred to the interim Iraqi government.

The interim government, Blair added, will even have the power to order foreign troops to leave the country - a power not mentioned in the resolution.

"After the 30th of June there will be the full transfer of sovereignty to the Iraqi government. Therefore, the people who will decide whether the troops stay or not will be the Iraqi government," Blair told reportersat his monthly press conference.

The Iraqi interim government, Blair added, would have the power to veto military actions, such as the one U.S. soldiers launched recently against militants in the Iraqi city of Falluja.

"If there is a political decision as to whether you go into a place like Falluja in a particular way, that has to be done with the consent of the Iraqi government," he said. "And the final political control remains with the Iraqi government. Now that's what the transfer of sovereignty means."

Blair's description of the U.S.'s Falluja operation as a "political decision" - suggesting it was not a matter of military or security necessity - was also veiled criticism of an action that killed an estimated 600 Iraqis, and has been strongly denounced in a British foreign ministry memo as "heavy handed."

Blair made clear that the Iraqi interim government's power over coalition troops would be limited, insisting that British troops will not carry out orders they disagree with.

Still, his comments seemed at odds with U.S. Secretary of State Colin Powell, who insisted yesterday U.S. forces "will remain under U.S. command and will do what is necessary to protect themselves."

Iraq's interim defence minister, Ali Allawi, told reporters in London he thought coalition forces would be gone within months.

"In terms of the timeline for the presence of multinational forces to help us establish security and stability, I think it would be a question of months rather than years," he said.

Blair's comments on the powers of the Iraqi interim government provided the kind of detail that France, a permanent member of the U.N. Security Council, noted is missing from the resolution tabled on Monday.

The resolution says the "unified command" of the multinational force in Iraq remains under U.S. control. It also authorizes coalition forces to "take all necessary measures to contribute to the maintenance of security and stability in Iraq."

Blair added that Britain's 7,500 soldiers in Iraq would leave once Iraqi security forces were able to ensure the country's stability.

"We stay until we get the job done, but obviously, the sooner the better we are able to get Iraqi security forces in charge of their own security, then the easier it is for us to leave," he said.

France, Russia, Spain and China signalled they wanted changes to the draft U.N. resolution.

French President Jacques Chirac called Bush to say Iraqis must see the sovereignty they get June 30 as "real," and Russia said it needed to see the composition of the interim government. But several Security Council members said they expected the resolution to be adopted with only minor changes.

"I do not expect any fight," said Ambassador Abdallah Baali of Algeria, the only Arab member of the council. "All of us are in a constructive mood. We want the transition to succeed."

Bush has made Iraq the central plank in his so-called war on terror. But a report from a leading think-tank yesterday suggests the wars in Iraq and Afghanistan have only accelerated recruitment for Al Qaeda.

The International Institute for Strategic Studies estimates the extremist network now has 18,000 radical militants in its ranks and cells in more than 60 countries.

"Al Qaeda must be expected to keep trying to develop more promising plans for terrorist operations in North America and Europe - potentially involving weapons of mass destruction," institute director John Chipman told a news conference to launch the think-tank's annual survey of world affairs.

Ready for Jihad

It was another bloody week in Iraq as suicide bombers struck in the southern city of Basra, killing some 70 people, including more than 20 children on their way to school. Those attacks, as well as another in the Saudi Arabian capital of Riyadh that left four dead, were blamed on al-Qaeda-connected terrorists. They came as U.S. forces were trying to contain a Sunni uprising in Falluja and ease tensions in Najaf, where they have been involved in a standoff with militant Shia cleric Muqtada al-Sadr and his Mahdi militia. Maclean's Contributing Editor Adnan R. Khan, who is based in Istanbul and currently on assignment in Iraq, filed this report on al-Sadr and the threat he and his forces pose.

"SADR WINS." If al-Hawsa, the now banned newspaper of Muqtada al-Sadr, were still operating in Iraq, that would probably have been its headline last week. Those words were certainly on the lips of his followers after U.S. forces agreed to pull back from their siege positions on the outskirts of Najaf in southern Iraq. Al-Sadr has been holed up in Shia Islam's holiest of cities for nearly three weeks, dodging an arrest warrant for complicity in the murder of a rival cleric last year -- and calling on Iraqis to rise up against the occupation. U.S. authorities still vow to capture or kill the 31-year-old cleric, but throughout the standoff al-Sadr has remained defiant, even threatening suicide attacks against coalition forces.

What comes next could prove to be a defining moment for post-war Iraq. The U.S. retreat in Najaf marks a critical stage in the occupation. With a ceasefire deal in the city of Falluja disintegrating, and U.S. forces preparing for what could be a major confrontation, defusing tensions in Najaf became a top priority before the coalition faced the possibility of a united insurgency. The stakes in Najaf are high. As Lt.-Gen. Ricardo Sanchez, the ranking American soldier in Iraq, said: "The problem of Sadr is bigger than Sadr." It boils down to religion: fighting the Mahdi militia in a holy city would be devastating.

But the chilling prospect of Iraq's insurgency becoming an all-out religious war remains. For weeks, al-Sadr's representatives throughout the Shia-dominated south have been inciting his followers to resist the occupation on religious grounds. "Death is paradise," Sheik Jabri al Khataj, al-Sadr's spokesman, intoned at the mosque in Kufa, 30 km north of Najaf, during recent Friday prayers. "Sunnis and Shias must unite against the great Satan." And the people were listening.

In smaller centres, and in Sadr City on Baghdad's eastern fringes, heavily armed fighters -- members of al-Sadr's newly formed Mahdi army -- took to the streets. On April 7, they routed Ukrainian troops in Kut, a small Shia town on the banks of the Tigris River 200 km southeast of Baghdad. "We are keeping the peace now," Sheik Abdil Jawad, al-Sadr's 30-year-old representative, proclaimed outside Mahdi headquarters in the town's market district. "If anyone wants to fight us, we are ready." In Kufa, one Mahdi fighter declared that his men had Spanish troops cornered "like rabbits." Sadr City oscillated between eerie calm and fierce firefights. And all the while discontent over the occupying forces increased -- as did the rhetoric flowing from al-Sadr's lieutenants.

In the holy city of Karbala, during the Arbaeen festival commemorating the martyrdom of Imam Hussein, one of the most revered of Shia saints, al-Sadr's representative invoked religion to justify the Mahdi uprising. "This is the time for the return of al-Mahdi," he said, referring to the messianic figure in Shia tradition whose return will mark an era of peace and prosperity for Shias worldwide. "Sheik Muqtada was told in a dream that the time has come." Who told this to al-Sadr was up to interpretation -- some said it was an angel, others hinted it was al-Mahdi himself -- but no one dared question the veracity of the vision.

The 34-year-old representative, who refused to give his name, preferring instead to be called simply "the sheik," went on to proclaim that Iraq's Muslims, Sunnis and Shias alike, were united in the cause. "We're all Sunnis and Shias," he said. "There is only one God, and if the Americans want to kill Muqtada then they have to kill all Iraqis." He claimed Ansar al-Islam, the Sunni terrorist group connected to al-Qaeda and based in northern Iraq, had sent a letter to his office announcing its support for the Shia uprising (Ansar al-Islam is widely believed to be behind the most devastating bombings over the past year, including the attack last week in Basra). "They've sent 200 fighters to Karbala," he claimed. "They've melted into the city and are waiting for the call to jihad."

The possibility of Iraq's various anti-coalition forces uniting could be America's worst nightmare. Up to now, the Sunnis have been in disarray, with the closest semblance of unified resistance, in Falluja, contained by a sustained U.S. military offensive. The bulk of Sunni attacks have been uncoordinated, sometimes opportunistic roadside ambushes that have had little impact on the occupation as a whole. Meanwhile, al-Sadr's Mahdi army, a ragtag organization of up to 10,000 discontented youth armed with rocket-propelled grenades, heavy machine guns and the ubiquitous Kalashnikov assault rifles, have so far presented little serious resistance to the overwhelming military capabilities of their American opponents. Mahdi fighters may have taken Kut, but their sojourn there was brief: U.S. tanks, backed by 1,000 troops, rumbled into the city to retake it a day later.

But coalition forces can't be everywhere at once. The Mahdi militia controls other cities such as Diwaniya, 300 km southwest of Baghdad. And in Karbala, youthful fighters roam the streets, tossing their Kalashnikovs over their shoulders like baseball bats. "We haven't even begun to fight," al-Sadr's representative there warned. But neither have the Americans, it seems. Faced with a group of fighters who believe they represent the will of God, coalition planners have opted for a wait-and-see approach, aware that a miscalculation could upset the balance between restraint and all-out war.

It may not be long before a violent confrontation becomes inevitable. "These Mahdi really believe they are fighting a holy war," Hussain Abdil Amir, a businessman whose clothes shop overlooks the Imam Hussain shrine in Karbala, said during Arbaeen. "They are not going to stop. They feel they are privileged. Often they'll push their way past other worshippers waiting to pray at the shrine, saying they deserve to be first. They have no respect for our traditions."

As he spoke, a large group of al-Sadr supporters marched past Amir's shop, chanting anti-American slogans and brandishing an updated version of the Iraqi flag, replete with references to al-Mahdi and the Islamic nature of Iraq. Amir could only shake his head. "They don't understand Islam," he said. "Sadr has taken advantage of their inexperience. He uses young men because he knows their minds are easy to control."

The situation has been in the making for more than a decade: after the collapse of Iraq's education system during the 12-year-long UN-imposed economic embargo, many young people, especially those living in poverty in places like Sadr City (it used to be Saddam City) and the neglected south of Iraq, turned increasingly to religious studies. The pattern is all too familiar in the Muslim world: impoverished youth are indoctrinated at schools where an absolute duty to religion is hammered into their minds.

Now, by all accounts, enrolment in the Mahdi army continues to rise, and the retreat of U.S. forces at Najaf will likely increase the flow of recruits. A BBC estimate suggests that up to 2.5 million Iraqis -- 10 per cent of the population -- support al-Sadr. If even a fraction of them decide to take up arms, the result could be overwhelming.

The Americans aren't taking any chances; 20,000 troops already deployed in Iraq have been told that their tour will be extended by 90 days. Planners are considering sending as many as 10,000 more. But with coalition partners such as Spain and Honduras heading for the exits, bulking up on military might may prove too little, too late. If insurgent rhetoric is reflected in action, and al-Sadr's Shias merge with Sunni fighters, backed by the ruthless tactics of terrorists, Iraq is destined to endure far more bloodshed than it has already seen.

Terrorism turns into resistance

I think of Saadq, my friend and driver in Iraq, as a weathervane. He is the sort of person for whom Tony Blair invaded Iraq. After 24 members of his family, all Shias, had been executed by the Ba'ath regime, Saadq and some of his brothers arrived in Britain as refugees. They set up Le Chef, a restaurant off the Edgware Road in London, and it was there I first met Saadq before he returned to his "liberated" country.

A couple of months ago, as we sat eating roasted carp in a breezy restaurant by the Tigris in Baghdad, Saadq and his friends berated me when I referred to the anti-coalition forces as the muqawama, meaning "resistance". I should call them irhab, meaning "terrorists".

Now Saadq, who met me on the Kuwaiti border when I returned to Iraq a few days ago, tells me of how he watched a US tank, caught in a traffic jam, simply drive over and destroy a parked car and a street stall. This was in Sadr City in Baghdad, where US troops have genuine reason to fear being trapped, but Iraqis such as Saadq, who have experienced real danger themselves, are unimpressed by soldiers who get so panicked. Saadq still doesn't support the uprising led by the young cleric Moqtada al-Sadr, but many of his friends have joined al-Sadr's Mahdi army. Saadq may eventually be persuaded to do so if the Americans fail to withdraw. "You have to realise," he told me, "that we are as stubborn as the strongest animal."

Iraq is nowhere near a civil war. But the US looks to be involved not in state-building, but in a slow and unwitting process of state destruction. On its own terms, the US strategy of crushing insurgency must be right - occupation cannot proceed by half-measures - but the execution has been poor. US troops are too worried about their own safety to fight effectively in cities, and so they kill civilians with heavy weapons such as artillery and 500lb bombs. More important, the US has not understood the need for political disengagement. Most Iraqis probably wanted the US to oust Saddam Hussein. But they certainly didn't want an occupation.

I once asked Brigadier Nick Carter, the just-departed British army commander in Basra, if the UN could have done a better job of Iraq's reconstruction. He looked at me as if I had asked a stupid question. The UN, he said, was "absolutely tried and tested, full of administrators who have significant capacity", while the Coalition Provisional Authority "has had to be stood up from nowhere".

Apocalypse Now?

Hijacking, murder, kidnap. Last week anarchy seemed to have gripped 'post-war' Iraq. Mark Franchetti reports from Baghdad on the revolt that gained momentum as it spread.

The barrels were long and the slogans menacing. As several American tanks hunkered together in Sadr city, the lawless slum near the centre of Baghdad, the words daubed on two were clear. "Anger Management" read one; "Analyse This" read another.

For the three marines nervously uncoiling barbed wire around the position last Wednesday, the analysis was all too uncomfortable: anger management, American-style, was not working. The locals were just getting more vengeful, more bloodthirsty.

A few hundred yards down the road a horde of armed Shi'ite Muslims were spoiling for a fight. Clustered on a rooftop, they were dressed in black and laden with rocket-propelled grenades, AK-47s, sabres and other weaponry.

"Come and get us if you dare," they chanted at the tank crews. "We will fight you to the death." Below, the street crowd cheered and children set fire to truck tyres built into a barricade.

The fighters were members of the al-Mahdi army, an outlawed militia loyal to Moqtada al-Sadr, the fiery Islamic cleric blamed for the bloody rioting that erupted last week throughout central and southern Iraq. Inside the building al-Sadr's local representative was holding court.

Surrounded by aides and wearing a thick black turban, Said Amir al-Husseini looked more warlord than cleric as people queued to offer him their help. One woman, her face covered with a veil, came in cradling an AK-47 saying she would fight the Americans. A man kissed the sheikh's ring and claimed he was willing to sell his house to raise money for al-Sadr. Some visitors offered food, others weapons and ammunition.

"This is a proper army defending our beliefs and our people," said al Husseini.

"The Americans are no longer welcome. They are killing and arresting innocent people. This is our country. We want to rule ourselves. And if they want to fight we have no shortage of volunteers."

It sounded like a declaration of war -and yesterday the battles were still raging. In the town of Falluja, west of Baghdad, men and teenagers brandished rocket-propelled grenades (RPGs) as American planes screamed overhead. Explosions rocked buildings. Bodies and burnt-out vehicles littered the streets.

Inside Sadr city, tens of thousands of Shi'ite men performed prayers outside for the weekend's holy festival. In unison they raised their fists and pledged their lives to al-Sadr. It was a fearsome sight at the end of a bloody week in which militants across the country had battled the troops who had liberated them from Saddam Hussein. By last night 42 US troops and more than 500 Iraqis had died.

Civilians, aid workers and journalists all came under fire. Then a terrifying new tactic -kidnap -seemed to take hold. Three Japanese citizens were snatched by militiamen and an ultimatum was issued: Japan must withdraw its forces helping the coalition or the captives would be burnt alive.

Yesterday two US soldiers were reported missing, feared kidnapped. A British worker, Gary Teeley, is also missing.

In Hit, a town 110 miles west of Baghdad, a British security contractor called Michael Bloss emailed friends on Wednesday amid the rioting: "We are expecting to be overrun tonight and we may have to fight our way to a safe haven. Unfortunately all the safe havens are already under attack."

The next day, as Bloss guided workers to safety, he was shot dead.

In Basra, controlled by British troops, the Ministry of Defence claimed all was calm. Some calm. One unit commander contacted in the field on Thursday said: "I survived an RPG attack ... one of dozens of multi-weapon attacks in the last 48 hours. My regiment alone has had four wounded in action and two vehicles destroyed."

Even Paradise Square, where the toppling of Saddam's statue had symbolised triumph, was sealed off. "Warning, warning," blared loudspeakers in Arabic. "If anyone tries to get close to a military vehicle they will be attacked. If anyone is carrying a gun he will be shot. Thank you."

For Bush and Blair it was a grim anniversary of "victory". On Wednesday, on the secure videolink from the basement of No10 to the White House, they discussed what to do ahead of Blair's forthcoming visit to Washington.

Blair is said to have advised the president to be more conciliatory. But the American instinct was to be bold: al-Sadr's support was limited, they judged, and ordinary Iraqis wanted the process towards democracy, however imperfect, to continue.

This was no popular uprising or "intifada", the Americans argued. The trouble was being caused by a limited number of hotheads who had to be hit, and hit hard. They would either be martyred or driven to the negotiating table.

THE road to democracy in Iraq was always going to be spattered with blood. As Iraqi exiles returned after the fall of Saddam to vie for power with local politicians, the struggle quickly turned murderous.

Soon after allied troops began racing through southern Iraq towards Baghdad in March last year, Ayatollah Abdul Majid al-Khoei, a young, moderate Shi'ite Muslim, flew in from London. With American money behind him, he went to Najaf to hold talks with the most senior Shi'ite cleric, Grand Ayatollah Ali al-Sistani. The two were seen as offering Iraq some of the best hopes for a prosperous future.

But the day after Saddam's statue fell in Baghdad, al-Khoei was emerging from a holy shrine in Najaf when he was stabbed. As people tried to get him to safety, he was stabbed again, near al-Sadr's offices. This time it was fatal.

Although the evidence of murder pointed at al-Sadr and his supporters, the coalition let them be. In October he denounced America as the "Bigger Satan", in an echo of the old Iranian chant of the US being the "Great Satan", but still he was left alone.

The cleric's power base is the Baghdad slum of Sadr city, home to some 2m Shi'ites who live in desperate poverty. A sprawling labyrinth of fetid streets, it is the poorest and most crime-ridden district of the capital.

It is to the dispossessed youth of this ghetto that al-Sadr owes his power. He has established a sophisticated welfare network there and "courts" that dispense sharia justice in his name.

It was his militia -the al-Mahdi army -he likes to remind people that protected the local Shi'ites from looters and Saddam loyalists in the wake of the war.

If the Americans thought that they could ignore or sideline al-Sadr, they were wrong. The young cleric has proved to be an adept media manipulator and his al-Mahdi army is now thought to number about 6,000 men.

"The word was put out in the mosques," said Abu Hammed, from Sadr city, who gave up his job to join the militia. He now heads a cell of 40 men. "The recruiting has been going on for months. I was given an AK-47 and joined overnight to protect our people and our land from the Americans. They are cheating us and have become occupiers, not liberators."

Al-Sadr fomented trouble by spreading his poisonous preachings through a weekly newspaper called al-Hawza. "We are still under the rule of Saddam but with an American face," began one article, which went on to accuse the coalition of spreading "moral corruption by the selling of pornographic movies and liquor and hashish that America brought with it to Iraq".

Another report claimed that American forces had started throwing dead soldiers into the sea (although Iraq is almost landlocked) to avoid bad publicity. Another railed against Freemasons for being in league with Zionists in a worldwide conspiracy.

More seriously, other articles accused America of deliberately killing Iraqi police and civilians. The newspaper also derided Paul Bremer, the American consul running Iraq, as a "third-rate intelligence agent" with a desire to "erase Islam from the Earth".

As al-Sadr grew more and more outspoken, Bremer and the Americans started to take an interest. Then on March 28 -without warning -Bremer acted: he ordered the newspaper to close for 60 days and arrested one of al-Sadr's most senior aides.

Shi'ites took to the streets in protest. Why did Bremer act then? Had he just had enough of al-Sadr or did he want to deal with the al-Mahdi "army" before it was too late?

Events were suddenly coming together with explosive results.

THREE days after the newspaper was closed, four employees of a private security firm called Blackwater set off from an army base in a convoy of vehicles. Their mission: to collect kitchen equipment.

According to Blackwater, members of the Iraqi Civil Defence Corps (ICDC) promised to help the contractors with safe passage through Falluja. But inside the town, masked men were waiting with guns and grenades.

Two vehicles caught fire and the occupants were dragged out. A mob descended. One body was tied to a car and dragged through the streets. Another was hacked to pieces. Some of the remains were strung up from a bridge as the mob chanted their delight.

"The bodies were hanging upside down on each side of the bridge," said one resident. "They had no hands, no feet, one had no head."

Blackwater now believes that the contractors were deliberately led into the ambush either by renegade members of the ICDC or by impostors. Regardless of whether the incident was engineered by al-Sadr or by Sunni extremists, it fuelled the terror.

The next day militants gathered in Najaf outside a coalition base and a three hour gun battle erupted against the Spanish, American and Salvadorian troops there. It left 24 dead and some 200 wounded.

Inside Sadr city, the militiamen also let rip with RPGs and small arms when they encountered an American patrol.

"There was shooting everywhere," said Hasen Keldar, who witnessed some of the fighting. "It was hell. I saw one Humvee take a direct hit from an RPG and explode. Minutes later an ambulance carrying a mother and daughter was caught in the crossfire. Both died."

The attacks spread across the country. In Ramadi, 12 US soldiers died. In al Kut, Ukrainian forces pulled out after a night of relentless mortar fire. It took American troops two days to retake the town. In Karbala, Polish forces were attacked.

In Falluja, hell and vengeance came to town as US marines moved in to quell the city where their countrymen had been butchered. Plumes of black smoke rose as helicopter gunships attacked dozens of targets. A mosque was hit by two 500lb precision-guided bombs. Some 40 people were said to have died.

As tanks and armoured vehicles sealed off the city, the hospital filled with hundreds of casualties, including children.

"It was terrible," said one witness speaking on a satellite phone from inside the besieged town. "People are holed up at home. Groups of insurgents are fighting in the streets firing at the Americans with RPGs. I saw the dead bodies of three Americans in the middle of the street. Militants poured petrol over them and burnt them."

Shi'ite Muslims from Baghdad set out to take food and other supplies to the Sunnis in Falluja. Other Shi'ites were said to be donating blood to help. It seemed as if the country was uniting against the Americans. Sheikh Qais al-Qazali, one of al-Sadr's senior aides, said: "The Americans have managed to achieve in one year what Saddam did not in more than 30 years of brutal rule: an alliance between Sunni and Shi'ites. We are all brothers in arms."

As fear gripped the towns, al-Sadr was reported to be holed up in Najaf, where his militia manned checkpoints at the city gates and had full control of the main police station.

Outside al-Sadr's main offices opposite the Iman Ali mosque, one of the holiest Shi'ite shrines, dozens of heavily armed men stood guard in open defiance of the Americans who have branded them outlaws. Others were digging in and stockpiling weapons. Among them was Ali Hassani, 29, who a year before had been jubilant at the fall of Saddam.

He had watched the bronze statue of the Iraqi dictator torn down in central Baghdad and had been among the throng that jumped onto the toppled monument and thumped the dictator's face with his shoes. It had been an exhilarating day.

Now all that was forgotten. Hassani was sitting in the back of a pick-up truck, clad in black with an AK-47 cradled in his lap. Hand grenades and ammunition magazines were strapped to his chest. Anger and hatred were in his heart -and their target was America. "If the Americans dare provoke us we will turn ourselves into human bombs," he said. "There will be a bloodbath. I welcomed the Americans when they got rid of Saddam. But they have become an army of occupation. They must leave. Now."

For some the fury and violence seemed beyond resolution. "The international civilians here are not robust," said one leading security adviser in Iraq last week.

"Okay, they like to get a share of the $18billion on offer (in reconstruction aid) , but they're not that keen on ritualised murder. A lot of them now are just sitting in holes, keeping their heads down and doing the accounts. There's no reconstruction going on whatsoever and I can't blame them."

As ever, though, the bombs and killings that grabbed the television headlines and prompted the best soundbites did not tell the whole story. The silent majority in Iraq was not heard. Away from the bloodshed, other moves were afoot.

"THE Americans have made many mistakes, but it would be terrible if they left now," said Raad al-Khafagi, a writer in Baghdad. "There would be civil war.

Al-Sadr is trading only on his father's and grandfather's good name. He does not represent the opinion of most Shi'ites."

It was a view echoed by another middle-class Iraqi, Haider al-Jelaui, an engineer.

"We don't need a new war," he said. "We need negotiations. I am Shi'ite. We have clerics like al-Sistani. He is a wise and respected man.

Our interests are best served by him not by radicals like al-Sadr."

To many moderates, engaging with the American drive towards democracy makes sense since the Shi'ites are the majority in Iraq. So as the fighting raged last week, calmer Shi'ite leaders were putting pressure on public opinion and on al Sadr's support. Al-Sistani urged "all involved parties to refrain from resorting to intrigues". Another moderate, Ayatollah Sayed Hayeri, said that all sides "should observe patience and wisdom".

The language was quaintly restrained but the message was clear: do not join al-Sadr's fight. Certainly there has been no general uprising of the population so far.

Reliable figures for the size of al-Sadr's militia are hard to obtain, but Donald Rumsfeld, the US defence secretary, reckoned that it numbers no more than 6,000 active members in a country of some 25m people. American generals vowed to "destroy" the militia while Bremer ordered al-Sadr's arrest.

Behind the scenes the Iraqi Governing Council was trying to cut a deal with al-Sadr, promising to give him a fair trial in return for his surrendering to the council (rather than the Americans) and calling off his militia. According to one well placed source, al-Sadr's family was negotiating with members of the governing council for much of last week. At the time of going to press, al-Sadr was said to be talking directly to representatives about handing himself in.

However, in public he remained defiant. On Friday he issued another call for Iraqis across the country to rise up against the "occupiers".

This weekend the country remains on a knife-edge. The Americans have some 70,000 combat troops to hand; the British have a total force of 8,700. Detachments from other nations number in the low thousands or hundreds.

Military commanders admit that these numbers are too small to control Iraq if large swathes of the population turn hostile. Some evidence, however, shows that many of the population are more interested in cooling things down than firing them up.

In Basra, although violence was never far from the surface last week, the shops are now full of refrigerators and air-conditioning units. Such is the demand for them that the electricity supply cannot keep up. Sales of mobile phones and cars are also rising. Satellite dishes abound.

True, there are problems with crime and black markets, and some observers worry that a lack of electricity to run all the air-conditioning units will be blamed on the coalition, leading to more discontent this summer. But the flourishing of consumer goods may be a glimmer of hope amid the chaos.

This week Blair is determined to stand by Bush, despite some aides advising him not to travel to Washington to gladhand the president while Iraq is in turmoil.

Both the president and the prime minister must be hoping that among ordinary Iraqis the long-term desire is for fridges, not firearms.

Our Last Real Chance

In early June 1920, Gertrude Bell, the extraordinary woman who helped run Iraq for Britain, wrote a letter to her father on some "violent agitation" against British rule: "[The extremists] have adopted a line difficult in itself to combat, the union of the Shi'ah and Sunni, the unity of Islam. And they are running it for all it's worth… There's a lot of semi-religious semi-political preaching… and the underlying thought is out with the infidel. My belief is that the weightier people are against it--I know some of them are bitterly disgusted--but it's very difficult to stand out against the Islamic cry and the longer it goes on the more difficult it gets." In fact, the "agitation" quickly turned into a mass (mostly Shia) revolt. British forces were able to crush it over three long months, but only after killing almost 10,000 Iraqis, suffering about 500 deaths themselves and spending the then exorbitant sum of 50 million pounds. After the 1920 revolt, the British fundamentally reoriented their strategy in Iraq. They abandoned plans for ambitious nation-building and instead sought a way to transfer power quickly to trustworthy elites.

There are many differences between Britain's experience in Iraq and America's current course. But there is a distinct danger that what we are witnessing in Iraq could turn the national mood against the United States. Recent polls suggest that Iraqis remain tolerant of, though not happy with, American forces in their country. But that support is clearly waning. Images of America's massive operations in Fallujah have generated anti-American sentiment across Iraq. The United States could be entering a ruinous cycle. As attacks on its troops grow, it uses full-blown military might, which produces anti-Americanism, which helps insurgents. When pro-American members of the Governing Council resign in protest, it must be that they sense a shift in the public mood.

There is an additional dynamic at work, particularly in the south. The contest to succeed the Americans is beginning. Shia religious leaders and politicians are beginning to speak out against the American occupation because being against foreigners--"Out with the infidels"--is an easy way of demonstrating nationalist credentials. There is a growing market for anti-Americanism in Iraq, and politicians are beginning to compete for it.

The "weightier elements" within the Shia community, like Grand Ayatollah Ali Sistani, do not support the firebrand cleric Moqtada al-Sadr; nor does al-Sadr have a large following. But if things deteriorate, his direct, passionate appeals for anti-American action might well drown out Sistani's carefully crafted statements urging calm and negotiations. And if not al-Sadr, someone else could well emerge. Extremists thrive on instability. After the fall of the Shah of Iran in 1979, Islamic fundamentalists did not take power. In fact, the leading figures at the time of the transition--"the weightier elements"--were Western-style liberals like Prime Minister Abolhassan Bani Sadr. But within a year Bani Sadr had been impeached, his successor assassinated, and the clerics were firmly in power. In revolutionary situations, the Leninists usually win.

America has gotten thousands of things right in Iraq. It has repaired roads, opened schools, provided food, built hospitals and introduced local self-government across the country. But nation-building ultimately succeeds or fails on the basis not of engineering but of politics. And Washington has made crucial political mistakes. Those errors, alas, have jeopardized the heroic work of thousands of American soldiers and civilians.

It is conventional wisdom that the United States should stay engaged with Iraq for years. Of course it should, but for this to work Iraqis must welcome the help. In the face of escalating anti-Americanism, U.S. involvement in Iraq will be unsustainable. For one thing, the American people are not likely to want to keep spending blood and treasure in Iraq. It will be the end of Washington's grand plans for a new Iraq, and the United States will face the dilemma that Britain did in 1920: how to get out while still saving face, maintaining stability and preserving its interests.

The United States does not face this dilemma yet. The trends that I outlined are just beginning and are not irreversible--yet. Washington has a final window of opportunity to end the myriad errors that have marked its occupation and adopt a new strategy.

The tragedy is that so much of this was avoidable. The Bush administration went into Iraq with a series of prejudices about Iraq, rogue states, nation-building, the Clinton administration, multilateralism and the U.N. It believed Iraq was going to vindicate these ideological positions. As events unfolded the administration proved stubbornly unwilling to look at facts on the ground, new evidence and the need for shifts in its basic approach. It was more important to prove that it was right than to get Iraq right.

The history of external involvement in countries suggests that, to succeed, the outsider needs two things: power and legitimacy. Washington has managed affairs in Iraq so that it has too little of each. It has often been pointed out that the United States went into Iraq with too few troops. This is not a conclusion arrived at with 20-20 hindsight. Over the course of the 1990s, a bipartisan consensus, shared by policymakers, diplomats and the uniformed military, concluded that troop strength was the key to postwar military operations. It is best summarized by a 2003 RAND Corp. report noting that you need about 20 security personnel (troops and police) per thousand inhabitants "not to destroy an enemy but to provide security for residents so that they have enough confidence to manage their daily affairs and to support a government authority of its own." When asked by Congress how many troops an Iraqi operation would require, Army Chief of Staff Eric Shinseki replied, "Several hundred thousand" for several years. The number per the RAND study would be about 500,000.

But the civilian leadership of the Pentagon knew that such troop strength would require large-scale support from allies. Besides, it was convinced that the Clinton administration, the United Nations and the Europeans were feckless and incompetent. Donald Rumsfeld publicly ridiculed the U.N.'s efforts in Kosovo and declared that the administration intended to do its nation-building quite differently--better, lighter, cheaper. Thus America has tried to stabilize Iraq with one half to one third of the forces that its own Army chief of staff thought were necessary.

Even worse, these troops were not asked to make security for the Iraqi people their core mission. After spending a week in Iraq last November, the Brookings Institution's Kenneth Pollack noted that "the single greatest impediment" to the success of the reconstruction efforts was that Iraqis "do not feel safe in their own country. Iraqis resent the fact that American forces take such pains to protect themselves and do so little to protect the Iraqi people." He noted the "constant (and fully justified) complaint of Iraqis: the Americans have no presence and make no effort to stop street crime or the attacks on [Iraqis] by the [insurgents]." Since November, American forces have been moving out of cities into heavily armed base camps in outlying districts, out of sight. In Baghdad, the Army started out with more than 60 small units scattered throughout the city. It will soon be based in eight camps, mostly outside the city. When patrols take place, they are usually quick tours using armored cars and tanks, not the frequent foot patrols that provide order and friendly relations with locals.

The Bush administration's answer to the need for security was "Iraqification," the transfer of security to local forces. It's an excellent idea but takes months or even years to accomplish. The administration solved the problem by dramatically shortening the training schedule, and placed barely trained and vetted Iraqi security personnel on the streets. These hapless and ill-equipped forces command neither respect nor authority. In the last few weeks, at the first sign of trouble, whether in the north or south, the Iraqi Army and police vanished, in some cases siding with the militias and insurgents, in others simply running away.

Allowing militias to gain strength has been another reason for the pervasive sense of insecurity in the country. Moqtada al-Sadr's Mahdi Army is currently in the news, but also armed and at large are the Badr Brigade, Ahmad Chalabi's troops, Iyad Alawi's ex-Baathists, and the two Kurdish political parties' peshmerga. In some sense, American strategy in Iraq mirrored the mistakes of Afghanistan. Here too we failed to disarm the warlords.

America's lack of presence on the ground is even greater when it comes to civilian authorities--political advisers, engineers, agronomists, economists, lawyers and other experts who could help Iraqis as they rebuild their country. The Coalition Provisional Authority has about 1,300 people working for it. Douglas MacArthur had four to five times as many when he was in Japan--and that was in circumstances where the Japanese state was fully intact and functioning. As a result, the CPA has virtually no presence outside Baghdad. Across much of the country, its acronym is jokingly said to stand for "Can't Provide Anything."

If the administration paid little attention to the need to assert power and authority on the ground, it paid even less attention to the need for legitimacy--whether from international or domestic sources. Weeks after formal hostilities ended, France and Germany made clear that they would be willing to provide major support for postwar reconstruction in Iraq. But they asked that it take place under U.N. auspices, as had all recent nation-building, including Afghanistan's. Tony Blair urged that the United States accept these offers, but Washington spurned them, finding the requirement for U.N. control intolerable. "We're utterly surprised," a senior U.N. diplomat told me in June 2003. "We thought the United States would dump Iraq on the world's lap and the rest of the world would object… The opposite is happening. The rest of the world is saying, 'We're willing to help,' but Washington is determined to run Iraq itself."

Even worse, convinced by Iraqi exiles that Iraq was deeply pro-American, Washington didn't much bother about creating legitimacy inside Iraq. Anyone who had studied Iraq knew that Saddam Hussein had destroyed all rivals. The only political forces that existed in Iraq were tribal sheiks and religious leaders. Given that the Shia constitute a majority, their leaders would be key. One towered above the others: Grand Ayatollah Sistani, a moderate who had tacitly supported the American intervention. He was also a longstanding critic of the Iranian model and argued that clerics should not participate in politics. In other words, he was the key potential ally and should have been the center of American political efforts in Iraq. Yet the U.S. paid insufficient attention to him.

In March 2003, as American and British troops entered Iraq, Sistani issued a fatwa asking the people of Iraq "not to interfere" with the foreign troops. His later statements urged ethnic and religious harmony. Sistani was well aware that America had an image problem in the Arab world and that he could not seem to endorse a naked American occupation. "We had demanded from the beginning that the U.N. play a primary role in the political process," he later explained in an interview. He refused to meet with any American. Yet he held meetings with the U.N.'s representative, Sergio Vieira de Mello.

Once Sistani heard of American plans for transferring power to an unelected Iraqi interim government, he objected. But the United States did not try to satisfy him. Indeed, it did not make many overtures to the aging cleric. Sistani's objections were taken lightly until, finally, after weeks of increasingly critical statements, he issued a fatwa declaring the American transition plan unacceptable. Even then it took months--and street demonstrations--for the CPA to appreciate Sistani's power.

Washington believed that its hand-picked Governing Council gave the occupation legitimacy. In fact, besides the Kurdish leaders and a few others, the members of the Governing Council have little support within Iraq. The Council is stacked with Iraqi exiles who are mostly disliked and suspected by Iraqis. Shia leaders in particular are suspicious that American plans for a phased transition and an unelected interim government are ways to empower exiles like Ahmad Chalabi. Sistani has told gatherings of tribal leaders that it is they who must take power in Iraq, not "those from abroad." In the CPA's own polling, Chalabi has the highest negative ratings of any public figure in Iraq. And yet he continues to get plum positions and generous funding (for intelligence!) from the U.S. government.

In order to make possible a long-term commitment in Iraq, Washington needs to correct its mistakes. First, it must make the lives of Iraqis more secure. The experiment with hasty Iraqification has failed. Iraqi security forces and police should be pulled off the streets and given proper training. In the meanwhile, the United States will have to bulk up its forces--and make those forces engage in patrols and crime prevention and provide a general sense of law and order. The Third Infantry Division should be sent back into Iraq. The option of mobilizing reserves or transferring troops from other theaters of operation should not be ruled out. And after July, if the transition to Iraqi self-rule is administered by the United Nations, it should be possible to get other countries' troops involved. Obviously, the numbers offered will be much lower than they would have been a year ago. But something is better than nothing.

Next, the cpa must find a way to create a legitimate interim government. Ayatollah Sistani can provide that legitimacy. America will have to concede to Sistani's objections to the current plans: he is unlikely to endorse any transfer to the current Governing Council, or even a modestly expanded version of it. He has objected to a three-person presidency, and to giving the Kurds a veto over the constitution. He also wants restrictions on the powers of the interim government, and an understanding that the interim constitution can be amended. Many of Sistani's objections are valid, others less so. But in any event, right now his blessing is crucial.

This is not impossible. For now, the interests of Sistani and the United States are aligned. Moqtada al-Sadr is trying to assert power and sideline Sistani and the other grand ayatollahs of Najaf. Most of the other Shia leaders dislike al-Sadr. They need to come together and marginalize him, but they can't do so openly. If they help the Coalition and create a legitimate Iraqi government, al-Sadr will find little popular support for attacks against it. At that point, perhaps al-Sadr should be co-opted by giving his faction a seat at the table. All this will require extremely delicate negotiations, which will have to be carried out by the U.N.'s Lakhdar Brahimi, whom Sistani respects. It is ironic that an administration so hostile to the U.N. finds that it is at the mercy of the U.N. for its salvation.

To defang the Sunni insurgency, military operations will not be enough. Force alone has rarely been able to crush an insurgency with popular support. The U.S. must bribe, cajole and co-opt various Sunni leaders to separate the insurgents from the local populations. It's easier said than done, since there are few non-Baathist Sunnis of any stature. (They were all killed.) But the tribal sheiks, former low-level Baathists and regional leaders should be courted assiduously. In addition, money must start flowing into Iraqi hands. Too much of the money being spent in Iraq is going to American firms. Iraqi unemployment must keep falling fast if people are to believe that their lives are getting better.

Washington's grander plans for a new Iraq will have to be put on hold. The goal for now is to create a stable, credible, even popular Iraqi grouping to which Washington can hand over power. If that means incorporating Islamic fundamentalists, tribal chieftains and even some former low-level Baathists, so be it. If this step is successful, the United States can push for reforms because of its forces on the ground and its offers of aid. It should ask the United Nations to administer the political process and some of the aid, so that the handover is seen as the return of Iraq to the international community with new participation from the world. Otherwise, June 30 will change nothing--certainly not the attacks on American imperialism.

The date, June 30, is less important than the entity to which power is transferred. If that new government is seen as an American puppet, then challenges to it will persist, and America will find itself propping up an unpopular local regime that is doomed to fail. And that dilemma reminds one not of the British in Iraq, but of the United States in Vietnam.