The report emphasizes that these factors do not operate in isolation, but are interrelated.

According to the Armed Forces Press Service, the DOD's public relations arm, signs of political progress include the Iraqi parliament's approval of three national security ministers and Prime Minister Nouri al-Maliki's introduction of a national reconciliation plan to the Council of Representatives, which began tackling legislation, particularly in the economic area; suggesting a national government which includes leaders of all the major communities is functioning.

These are indeed positive developments. Nevertheless, history has shown that governments less fragile than this one can dissolve in a matter of days when security or economic conditions deteriorate.

Evaluating economic activity, the report concludes that "the Iraqi economy continues to show progress, but still needs to overcome serious challenges." As an example of this progress, it states that "crude oil production for the second quarter improved 18 percent to 2.2 million barrels per day, or bpd, and exports improved by 20 percent, to 1.6 million bpd." Since oil accounts for 90 percent of all Iraqi revenues, it is instructive to compare these numbers with other published reports.

The Congressional Research Office of the Library of Congress stated in its April 24, 2006 report that 2005 Iraqi production peaked at 2.4 million bpd. The Department of State's Iraq Weekly Status Report for March 23, 2005 reports mid-month production of 2.05 million bpd. Using these numbers, oil production decreased from 2005 or increased from March 2006 by only seven percent.

Honest people can debate the meaning of progress, but it remains a fact that broader economic and quality of life development in Iraq is clearly linked with the success of its oil industry, which -- according to the CRS -- accounts for 11 percent of the world's proven reserves and is capable of producing up to 6.5 million bpd. This is equivalent to $120 billion annually at a price of $50 a barrel.

The Congressional Budget Office estimates that the Pentagon is spending $6 billion a month on the war in Iraq. Full Iraqi production could help offset these costs, but not pay for the war in its entirety. Of course, nothing nearly this positive can happen without an improvement in the security situation in Iraq.

The most disturbing aspect of the DOD report deals with the security environment, where "the average number of weekly attacks increased 15 percent over the previous reporting period average, and Iraqi casualties increased by 51 percent compared to the previous quarter." This increase in the level of violence affects "all other measures of stability, reconstruction, and transition."

The report emphasizes that ethno-sectarian violence is the greatest threat to security and stability in Iraq, specifically in the Baghdad area, which has raised concern in recent months about the possibility of civil war.

There have been an increasing number of executions, kidnappings, and attacks on civilians. According to United Nations estimates, 22,977 families and 137,862 individuals have been displaced in Iraq since Feb. 22, 2006.

Breaking this cycle of violence and its consequences by countering the groups, like the militias, and the conditions that contribute to the violence, like unemployment and quality of life conditions, needs to remain an immediate goal.

Clearly U.S. efforts to create a stable and democratic Iraq will continue to be hampered as long as the security situation remains tenuous. It is also important to note that our ability to deal with Iran is directly linked with success or failure in Iraq. The two are strategically linked and it is a zero sum game. As Iraq grows weaker, Iran's regional influence grows stronger, making a confrontation with Iran more, not less, likely.

Next: The long term strategy the U.S. needs in Iraq

(Lawrence Sellin, Ph.D. is an Army Reservist and a veteran of the war in Afghanistan. He can be contacted at [email protected])

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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