Corruption is still a major problem, as is tribalism, religion and ethnicity. While the new economic rules make it easier to entrepreneurs to start a business, tribal and regional groups still join together and try to monopolize business operations, or just make it difficult for those not part of the group to operate. This has caused difficulty, for example, with setting up a nationwide cell phone service based on many independent operators. It is feared that, once the Iraqi government has more control over economic decisions, the old custom of bribing your way to economic success will prevail, and overall economic growth will suffer.

Democracy may provide a cure, but maybe not. Democracy is taking root at the local level, with towns, cities and rural districts electing local officials. Not surprisingly, large extended families (the basis for the still vibrant tribal organizations) are voting as a block. Then again, every democracy is different, and most of them work. But national politics is a different matter, with the Iraqi experience being one of contending political parties adopting a winner take all philosophy, and falling back on terror and force as they reach for absolute power. Thats how the Sunni Arab Baath Party took power, with Saddam Hussein in charge. There were no free elections after that. 

Its generally unreported, but the education and social welfare systems have been rebuilt, and are now operating at a level of efficiency not seen in decades. This has attracted thousands of highly educated Iraqi exiles to return home, with money and skills acquired abroad. Economic activity in most of the country is flourishing, with employment and income way up. Imports of consumer goods are up as a result. Oil sales so far have put over $9 billion into the Iraq Reconstruction Fund. So far, the money is being spent with, by Iraqi standards, a minimum of corruption. Outside of the Sunni Arab areas, and a few cities where the al Sadr militias are still active, foreign reconstruction workers operate in safety, as do the many more Iraqis working with them. 

The Sunni Arabs have begun to notice all this economic and social progress and are becoming increasingly vocal about wanting in on it. When the marines put Fallujah under siege, senior officers made a point of meeting with Sunni Arab leaders, including many who had held senior positions in Saddams government, and pointed out that if the Baath Party and Islamic radical gangs were pacified, the prosperity would come to the Sunni Arabs as well. This led to the current deal to patrol Fallujah with marines and armed Iraqis operating together. The same approach is being used in many other Sunni Arab cities and the gunmen are on the defensive. But the Baath Party militias see no future for themselves in a democratic and prosperous Iraq, so it will eventually come down to the Sunni Arabs sorting this out themselves. They know they must do it, or within the next year or so, the more numerous, and heavily armed Shia Arab and Kurd soldiers will do the pacification. 

Iraqis are most concerned with security and jobs. The Iraqi police and security forces can handle the common criminals, including most of the powerful criminal gangs. But the majority of Iraqis, including the police, still fear groups of armed Baath Party thugs. These are the guys who terrorized them for decades. While they are upset with the stories of American troops brutalizing Iraqi prisoners, they also note that Saddams prison guards killed far more than they humiliated and beat. Unfortunately for Iraq, they have a long tradition of power being exercised by guys backed by a bunch of heavily armed thugs. This is as familiar to Iraqis as it is alien to Americans.

Coalition troops have pushed back al Sadr gunmen to the most sacred Shia shrines in Karbala, and al Sadr gunmen are firing machineguns from inside one of the mosques. The Shia religious leadership has demanded that all armed men leave Karbala and Najaf, and that no armed men enter the holy places. But al Sadrs gunmen have been in the mosques for months and stockpiled weapons there. It's expected that it will be left to armed Shia, loyal to the clerical leadership, to actually clear the al Sadr men out of the mosques. It's considered bad manners for a non-Moslem to do such work.