The "war" in Iraq has come down to a competition between Sunni Arab and Shia death squads, to see who can rack up the highest body count. While most Iraqi Sunni Arabs fear for their lives, and continued ability to live in Iraq, the Shia radicals fear only Sunni suicide bombs. The bombing attacks increasingly target radical Shia militias, mainly those loyal to Muqtada al Sadr. Lacking the equipment and trained personnel to carry out an efficient counter-terror operations, Sadr has ordered his guys to just go out and kill lots of Sunni Arabs, any way they can, each time an Sunni bomb goes off in a Shia neighborhood. This has been going on for the last three months, leaving nearly 10,000 civilians dead. The Sunni terrorists and Shia death squads stay away from Iraqi and foreign troops and police. Even with al Qaeda crippled, there are still several Sunni Arab groups, mainly driven by a radical religious views ("Shia are heretical scum"), who believe that the Shia can still be terrorized into submission. Or, as some believe, a "civil war" can be triggered. This, so the myth goes, will arouse the Sunni Arab masses. Some radicals believe that the Sunni Arabs are actually the majority of Iraqis (actually, they are less than 20 percent, closer to 15 percent these days as more of them flee the country). Other radicals believe that, if Shia death squads kill enough Sunni Arabs, the Sunni Arab nations will be forced to invade and crush the upstart Shia once and for all. It's left rather vague exactly what the U.S. forces would do if Syrian, Jordanian, Kuwaiti and Saudi troops suddenly entered the country.
The government knows that there are only a few dozen, at most, gangs involved in all this killing. The current deal is for the Sunni Arab community to shut down their thugs, while the government takes out the Shia militias. The government has started carrying out their end of the deal, but the Sunni Arabs have moved more slowly. This is because the Sunni Arab thugs are paranoid, quick on the trigger, and willing to murder prominent Sunni Arabs. The Sunni Arabs fear trapped, caught between their own radicals, and the majority of Iraqis (Kurds and Shia Arabs), who would just as soon see Iraq free of Sunni Arabs. The hatreds go deep, Saddam's decades of brutality against Kurds and Shia Arabs saw to that. While pundits go on about Iranian desires to dominate Iraq, the reality is more about vengeance against Sunni Arabs for past sins. Nothing too complicated, but it's a fire that's very difficult to put out.
The Maliki "Diplomatic Offensive." The Israeli-Hizbollah war, with its implied threat of ever widening hostilities, may actually help further the cause of a more stable Iraq. With most Arab governments, largely Sunni in religious orientation, almost all blaming the conflict on Hizbollah, and by implication its Shia Iranian backers, Iraq's Shia Prime Minister, Nouri al Maliki, seems to be stepping up a personal "diplomatic offensive" which has already seen him meeting the leaders of several Arab countries (Saudi, Qatar, Kuwait, etc.), with more to come (notably Jordan). While Sunni Arab leaders are not necessarily thrilled over a Shia-dominated Iraq, a stable Iraq (with protection for the Sunni minority), would be a bulwark against Iranian ambitions in the region.