It's all about trends. In Iraq, the trends are going against the terrorists. Take IEDs (roadside bombs). There are fewer of them, and more of them are being detected before they can hurt anyone. Thus U.S. casualties from IEDs are down 80 percent compared to last Spring. Overall American casualties have not been this low since May, 2003, right after the fall of Saddam's government. Iraqi military and civilian casualties are also down over 70 percent, compared to last Spring. Most of this was due to so many Iraqis finally taking control of their own security. Iraqis, particularly Sunni Arabs, have basically said "enough!" Over 60,000 Iraqis have volunteered to help with security. This generally consists of manning checkpoints, and knowing who is who. Many more Iraqis are passing on information about terrorists. That has crippled terrorist operations, as can be seen in the sharp decline in IED and suicide bomb attacks.
But now the threat has shifted from the Sunni Arab minority to the Shia Arab majority. The Shia Arabs hate the Sunni Arabs. Shia Arab political parties and militias compete with each other in coming up with new ways to stick it to the Sunni Arabs. The depth of this hatred doesn't really get communicated accurately in the West. It is a "we will kill you all" level hatred that is restrained mainly by U.S. troops, and an Iraqi leadership that wants to avoid international condemnation for presiding over mass murder and large scale ethnic cleansing.
The hatred is most intense in Baghdad and its suburbs, where Saddam's thugs were at their worst. Many of those secret police operatives, and their extended families, still live in the area. But probably not for long. But as you get farther away from Baghdad, the rural communities are more likely to contain Sunni and Shia that have always gotten along, and been equally screwed by the central government in Baghdad.
Up north, there is still hostility between Kurds, and Sunni Arabs Saddam had imported for over a decade, to water down the Kurdish majority around the northern oil fields. The Kurds are reversing this, and many Sunni Arabs don't want to be moved. The central government doesn't want to mess with the Kurds, mainly because the Kurds are better fighters and many of the best units in the army are Kurdish, or largely Kurdish. With the Kurds, the government is willing to negotiate. With the Sunni Arabs, less so.
But the Kurds have problems of their own. A radical Turkish-Kurd separatist organization, the PKK, has largely been driven out of Turkey and has set up camp inside Iraq, along the Turkish border. The other Kurds up there admire the PKK, and leave them be. But the several thousand PKK fighters have been crossing the border to kill Turks, and now the Turkish army is camped out on the border, threatening to come across in force before the end of the year, unless the Kurdish government, or someone else in charge, eliminates the PKK. The Kurds in northern Iraq have a real problem here, because no one, not even the Americans, can stop the Turks if they decide to cross the border. Memories of the Turks run long and scary in this part of the world. While the Turks have been out of the empire business for over 80 years, they are still fearsome soldiers. The Turkish troops have a reputation, and they live up to it. No Kurdish government wants to be responsible for killing or arresting PKK "freedom fighters." But letting the Turks do it is worse. Or is it? The Kurds have to decide before the end of the year.
Meanwhile, in Baghdad the decision has already been made to screw the Sunni Arabs, in as many ways as possible. No oil for those bastards, and not many government jobs either. It they are lucky, maybe we'll let them live.