The government has finally gotten several large foreign oil companies to agree to rebuild and expand major oil fields, and more than double output to six million barrels of oil a day. The government also approved a $67 billion budget for next year. About a quarter of that would be for investment in infrastructure (which Saddam neglected for over two decades). Last years budget was $58 billion. As oil production expands, so will income, as oil is the main source of government revenue. A primary activity of government officials is to steal as much of that oil money as possible. Politicians use as little of that money, as possible, to keep voters from rebelling against the theft. This is how it works in just about every undeveloped nation with oil, or other natural resource, wealth.
Another government survey shows that at least 85,000 civilians were killed after the 2003 invasion. Most of these were killed by Islamic terrorists. The slaughter reached a peak in 2006-7, as Shia death squads moved on Sunni areas in a big way. The initially killing got started, towards the end of the 2003, when the Sunni Arab minority (about 20 percent of the population, since reduced to about half that) decided that a terror campaign would drive the Americans out and prevent the Shia majority from taking over. This failed, and did so in a spectacular fashion when the Shia increasingly used the same terror tactics against the Sunnis. The Shia controlled the security forces, and took to wearing uniforms while slaughtering Sunnis. The U.S. "surge offensive" put enough American troops into Iraq to provide the Sunni Arabs protection (in payment for turning on the terrorist groups, and assisting in whipping al Qaeda and company out). A few thousand diehard Sunni Arab terrorists are still at it, but they are losing strength each week. The Sunni sun has set in Iraq.
The remaining Sunni Arab terrorists are exploiting the fears of the Sunni Arabs in cities like Mosul (on the border between Arab and Kurdish areas) that the Kurds will succeed in their plan to drive Arabs out of areas that Saddam had, over several decades, driven Kurds from and replaced them with Arabs from the south. The Kurdish minority, in its largely autonomous northern enclave, remains deadlocked with the Shia dominated national government over where the border is, and who shall control the northern oil fields. This still has the potential of escalating into a civil war.
Iraq is also having a hard time adapting to democracy. The entire Arab world is still stuck in an older period of human history, where it was believed that the people could not rule themselves, and that only a dictator, backed by unrestricted force, could do so. Many Arabs still believe in that approach, and Iraq is the example of how Arabs can deal with democracy. Earlier attempts (Lebanon, Egypt, Algeria, etc) did not work out so well.
October 16, 2009: The U.S. cancelled plans to send a combat brigade of 3,500 troops to Iraq. The security situation in Iraq continues to improve, and American troops there have little to do.
October 12, 2009: Violence plunged nationwide in September, to the lowest rates since May. Violence in September was about half what it was in August.