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 Update No: 036 - (28/04/06)

The impasse is broken
Due to the main factions' continuing inability to reach an agreement over the formation of the new government and in particular over the name of the Prime Minister, until mid-April it appeared that the political crisis was bound to deepen rather than ease, as the Shiite coalition, whose candidate PM has been refused by prospective coalition partners, showed its readiness to retaliate by opposing the Sunni coalition's choice of a parliamentary speaker. However, having come under increasing pressure even from within his own alliance, the Shiite candidate, Jafaari, conceded in mid-April that the alliance might discuss about choosing an alternative. The strongest candidates for the job were Ali al-Adib and Jawad al-Maliki, both from Jafaari's own party Daw, and the final choice fell on Maliki, who has a reputation of a strongman and Islamic activist. His selection appears to have broken the impasse, as the main groups in parliament approved it and declared their readiness to proceed with the formation of a government, but it is not clear whether he will be able to provide effective premiership in the future. In order to ease the process leading to a coalition government, in March the National Security Council was established, likely to be presided over by former PM Allawi, who in this way would receive a senior job without being part of government. By the end of April the parliamentary groups are expected to start discussing the list of ministers, where more controversy is expected.

US-Shiite flirt definitely over
At the end of March, following an incident in which US troops killed several Iraqis, the Shiite coalition demanded that control over security be returned to the Iraqi government. US popularity with the Shiites appears to have completely gone, following what the latter describe as 'intolerable interference'. President Bush wrote a letter to Al Sistani, the leading Shiite religious authority, which he reportedly did not even open. Shiite dignitaries in Najaf refused to meet US Ambassador Khalilzad, who had actively been campaigning against Jafaari. 
The US probably expect the forthcoming talks with Iran to address this issue, but the announcement of direct US-Iran talks has not been welcomed by everybody in Iraq. Sunni Arab leaders were the most hostile to the talks, accusing Iran of interference. There are also fears that Iran might offer a Iraq-nuclear program trade off and that the Americans might accept it, sacrificing Iraq for the greater good of the freezing of the Iranian nuclear program. The Kurds, on the other hand, are either favourable to the talks or neutral, but some of them argue that Iraq should be represented at these talks, a position upheld by Allawi's secularists too. Among the Shiites, the most nationalist part of the Alliance, including Muqtada as-Sadr, opposes the talks on the ground that they would amount to recognition of Iran's interference. 

Economic prospects worsen
Whatever the composition of the new government will be, it will not have an easy life on a number of fronts, not only because of the worsening violence, but also because of rising economic worries. In March it was confirmed that the US will not spend any more money in the reconstruction of Iraq. The Bush Administration expects other countries to make up for the loss, but it is not clear how many are willing to deliver aid money as long as the level of violence remains this high. There are more worries on the oil front. In March oil production continued close to the level reached in February, at about 1.3 million bpd, but very worrying signs appeared of a shrink in actual production, which averaged around 1.8 million bpd. Sources within the Oil Ministry expressed the fear that production might decline even further over the coming months. 

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