By Lennox Samuels

Iraqi oil minister Hussain Al-Shahristani was expecting to score a second triumph on the day American combat troops withdrew from his nation's cities. But by the time bidding to develop eight Iraqi oil and gas fields ended, he had only one potential deal in hand. Shut out of Iraq's hydrocarbon industry for more than three decades, foreign oil companies nevertheless declined to pursue development contracts that were seen to be advantageous to Iraq, but not so good for them.

BP and CNPC of China agreed to produce oil at the 17-billion-barrel Rumaila field, accepting the government's offer of $2 a barrel for each additional barrel the consortium extracts. The joint venture had sought $3.99 a barrel. Reps from other companies, including Exxon, Shell and 30 others from 18 countries sat impassively, apparently underwhelmed by the potential payoff. Shahristani made clear that Big Oil would be paid a flat fee for their efforts and would be allowed no ownership stake in any field.

For some, the government's posture was hubris. Analysts said Shahristani provided oil companies little incentive to bid, asking companies to spend heavily on development for very little return. "They clearly went too far in not allowing any kind of reasonable profit," said Sam Ciszuk, an energy analyst with IHS Global Insight Middle East, in London. "There are huge risks - not only financial, but legal and political."

And life-threatening, he could have added. A just-released United Nations report states that most of Iraq's oil fields are mined. The Ministry of Defense bans non-military de-mining operations, meaning the oil companies will not be able to use civilian contractors to clear any land mines. "One wonders whether oil companies actually thought about this issue at all," a U.N. official told NEWSWEEK. "It might take years before they even set foot on the fields.

The companies' cool response could put a damper on Iraq's economic-development plans, which hinge on oil. Dependent on crude, Iraq has seen its budget decrease as per-barrel prices have dipped. The loss in revenue even threatens funding for the Army and National Police, which have inherited responsibility for security in urban areas with American combat forces gone. "They need to learn to make better deals," says a Western consultant to the Maliki government, who spoke on condition of anonymity.

Shahristani said he expected production on the eight fields to yield $1.7 trillion over 20 years. But the Western companies would realize only a fraction of that. Given the lack of enthusiasm, the oil minister ended Tuesday's session early. Matters could get worse still: Even the BP/CNPC is no sure thing. No contracts have been signed and there's no guarantee that the deal will go forward, Ciszuk told NEWSWEEK. "Nobody's popping champagne corks in London," he said.

At the opening of the session at Al-Rasheed Hotel, Prime Minister Nuri al-Maliki was bullish. "Today we - Iraq, the Iraqis - and the entire world will witness a round which might be unique of its kind in the region," he stated. It appears he and his cabinet should not count their oil barrels before they are filled.

By Lennox Samuels

After years of war and insurgency, Iraqis have become almost inured to carnage. But incidents such as the suicide truck bombing that killed 80 residents near Kirkuk on Saturday have alarmed even some jaded citizens. The reasons: the disputed northern city of Kirkuk remains a major flashpoint in Iraq's political future, and the assault comes just days before U.S. combat troops are scheduled to permanently leave the country's cities and towns.

The stunning attack in Taza refocuses the spotlight on the nation's underlying sectarian tensions and exposes lingering anxieties about what will happen once the Americans withdraw on June 30, and whether the Iraqi Security Forces can adequately replace them.

Taza's residents are mostly Turkmen, but it lies just south of Kirkuk, where Kurds and Arabs continue to jostle for control. The attack has left Arabs pointing fingers at Kurds, Kurds blaming Arab insurgents, the Baghdad government accusing Al Qaeda, and Shiite and Sunni Arabs eyeing each other with suspicion.

With American commanders as matchmakers, the arranged marriage between the Shiite-led Iraqi government and the largely Sunni Awakening movement is one of the country’s most tenuous and important pairings. It will take constant tending. American officers, who had encouraged a similar meeting last fall, lined the back of the hotel ballroom today. The 90,000-strong Awakening militias include many former insurgents who decided to turn and fight against Al Qaeda and with U.S. forces--who paid them salaries. The trick is to find enough of them jobs and a future--without dependence on the departing U.S. forces--to keep them from returning to insurgency. Last year they were put under the command and pay of an Iraqi government they trust little and has given mixed messages.

For starters, the Iraqi government continues to hold in jail about 17 Awakening (also called Sahwa or Sons of Iraq) leaders and arrested another just last night. U.S. Maj. Gen. J.D. Johnson, overseeing the program, says that’s out of a total of about 800 leaders. But each arrest casts a chill over the other leadership. The fear is that government forces are settling scores or view the militia commanders as rivals. The government says some of them have committed crimes, abusing their positions. Some have. But some have also been released after U.S. officers investigated and found the charges to be bogus. “Once we know about [an arrest], we start tracking it very closely,” Johnson said. His answer appeared to acknowledge another complication: Sometimes the Iraqis are making the arrests without U.S. knowledge.

There’s also a multitude of problems with the cumbersome management of the diverse local groups. It’s rarely clear if salaries are delayed by government opposition or simply problems in reconciling the many lists of fighters with payrolls. It almost doesn’t matter in the end. “The slightest bureaucratic error becomes interpreted as something greater than that,” Johnson said.

While Iraqi Prime Minister Nuri al-Maliki has repeatedly promised to integrate the fighters into the government, their presence angers members of his own Shiite constituency who worry about coddling former Baathists or insurgents. About 13,000 have been brought into the Iraqi security forces so far, a slow pace endangered anew by a government budget crunch.

Some Awakening leaders see the end of their influence coming as their men fold into the government. Whether they were in it for the money, the power or out of patriotic duty, these tribal leaders and neighborhood elders are the ones who encouraged their followers to switch sides. The decision came with risks. “They should support us. We are targeted by Al Qaeda , by IED’s, by snipers,” pleaded Gen. Abdel Razaq, an avuncular, retired commander who leads a group of fighters in western Baghdad. “We support the government.”

The Pentagon today announced that the soldier, Sgt. John M. Russell is in custody facing a charge of aggravated assault and five counts of murder. After being flagged by commanders for stress problems about a week ago, the military said, Russell was ordered to a combat stress clinic at Camp Liberty (abutting his home base, Camp Victory). His weapon had already been taken from him. According to published reports, he apparently had an altercation with someone there and used another person's gun to kill two officers who were staff members in the clinic and three soldiers who happened to be there at the time. It’s the worst reported case of a soldier attacking his own troops since the war started. In addition to the criminal investigation, the Army has ordered a complete review of its mental health system.

The mental health infrastructure in Iraq has been growing throughout the war. The shooting yesterday took place at one of four “restoration centers” in Iraq, where soldiers can bunk temporarily or get outpatient care along with therapy. There are about 40 other combat stress teams on location with troops around the country. Their phone numbers are posted on bulletin boards, handed out by chaplains and commanders. But commanders acknowledge the system has problems, different doctrines and techniques have been tried.

As an Army psychologist explained to me a few years ago, there are competing interests between mental health and war fighting. One of the biggest is that soldiers and officers still look at therapy as a sign of weakness. Secondly, the goal is “unit cohesion,” that is, keeping the soldier at work rather than sending him or her home. Medicines can be prescribed but, as soldiers are sent back to the field, they don’t have the follow-up they need to monitor their condition--or make sure they don’t hand out the pills to others.

The hope for the troop was that as the violence in Iraq subsided and tours of duty were shortened, stress would decrease. But in some cases, simply being connected through the Internet to family back home has been enough to cause problems--the psychiatrist told me of one case in which a wife back home had posted photos of her and her new boyfriend on the Web to torment her soldier husband. And a recent USA Today story posited that boredom may increase stress.

The psychiatrist told me that it was especially hard to get officers to seek help because they feared it would impede their career or undermine their reputations. He tried to argue that it would help them avoid career-ruining incidents. The words seemed apt today as Maj. Gen. Daniel P. Bolger talked about the military’s efforts to get people to go for help. “It’s particularly challenging for a fellow like Sgt. Russell. He’s a non-commissioned officer,” Bolger said. “He’s in a leadership capacity and to make that trip down there is a tough decision for him or his chain of command to make, but we’re willing to make it.”

Some of the main points, written in the typically understated voice of the United Nations Assistance Mission for Iraq (UNAMI):

Now, talk shows in Baghdad tend to attract the same kind of opinionated callers as shows in the United States, and this one was on Baghdadiya TV, one of the stations more critical of the government (and home of shoe-throwing reporter Muntather al-Zeidi). Still, these were the sounds of confidence draining from the security bubble of the last several months.

More than 150 Iraqis have died and at least as many have been injured in two separate bombings Thursday and this afternoon. The targets have been Shiite Muslims, including pilgrims coming from Iran yesterday and worshipers on their way to a Shiite shrine in Baghdad today. It’s the kind of violence that struck over and over from mid-2003 until Shiites started fighting back in horrific street attacks and kidnappings in 2006.

U.S. officials stress that the overall numbers of attacks are still down from 2003 levels. So far 14 U.S. soldiers have died this month, up from 9 in March and lower than the 17 in February, according to the Website icasualties.org. The site reports that civilian deaths are running about the usual rate of between 200 to 300. (An Associated Press story yesterday reported a new Iraqi tally showing nearly 90,000 killed since the start of 2005)

But U.S. commanders have expressed frustration at not being able to stop the “spectacular” attacks we’ve been seeing lately. The attacks–two coordinated in a usually secured location today, six in one morning on April 6–also show a degree of organization that belies claims that Al insurgents are desperate or on the run. In fact, they appear to be able to strike some of the city’s most patrolled areas.

The bombs have shaken the city and threaten the tortuously slow political reconciliation that most Iraqis and Americans agree is needed to bring real stability and to keep the country from splintering into chaos again. People are calling for action and resorting to old, usually ethnic, animosities. Some of what could happen next if things turn for the worse:

• The bombings could scuttle plans for a conference in the coming weeks that would include Sunni Baathists interested in recognizing the Shiite-led government. Shortly after the bombing today, influential Shiite cleric Sadr al-Din al-Qubanchi blamed Baathists for the attacks and warned politicians that, “winning over 1,000 Baathists will lose you 100,000 of the people's votes.”
• Iraqis who fled the violence for other countries, including badly needed doctors, engineers and civil servants, will be less likely to return.
• The government of Prime Minister Nuri al-Maliki, which won recent local elections and touts security gains, could lose the people’s trust and even face parliamentary attempts to unseat it–which would likely lead to months of leaderless stagnation. Maliki quickly called for an investigation into security breaches at the bombings Friday.
• Iraqis could lose confidence in the fledgling security forces or the Americans training them, which would reduce their desire to risk providing all-important intelligence on threats.
• Worst of all, and so far not occurring, government forces or rogue Shiite militias could try to exact the kind of street vengeance that made 2006-7 so horrendous and required the American troop surge just to get things to where they are now. But now, the U.S. is trying to withdraw troops. That kind of violence could even cause the splintering or collapse of some of the new security forces.

   
On the other hand, this could end up being a test the new Iraqi security forces are up to handling. Today’s bombing was in the Kazimiya district of Baghdad. I was there a couple times last week and was struck by two things. First, it’s one of the cleanest, most pleasant areas of the city. Large homes line the banks of the Tigris River and the sumptuous gold dome of the shrine floats above the busy shops and mosques like a crown.

Second, the security at the checkpoints controlling all the entrances was lax. Iraqi troops waved an electronic wand by passing cars but let them go one after another with little more than that by way of inspection. After the bombing, NEWSWEEK talked to an employee at the shrine who said today’s attack was near the site of a smaller bombing last week and insisted the police are not doing their jobs. Despite the fact that attacks are still frequent, there’s a complacency that may be creating an opening for insurgents. Friday, Abdel Mehdi al-Karbalai, a prominent Karbala cleric, warned that the government has to end its infighting and keep the security forces on the alert. Local media reported that Maliki suspended top security officials in Kazimiya.

People in predominantly Shiite Kazimiya are conservative merchants, not looking for a fight and craving stability. I remember being there after a large bombing scarred a holy day in March, 2004. Residents gathered in an impromptu meeting and some called for indiscriminant blood against Sunnis until one man calmed them with reminders that they must follow their clerics, mainly Grand Ayatollah Ali al-Sistani, and he was urging patience. Most of Baghdad doesn’t have the cool tempers they do in Kazimiya, where people have so much to lose if things turn to mayhem. The city’s patience is being put to the test.

With Saad al-Izzi and Hussam Ali.

The 14 local councils elected will now have to form coalitions and choose who will serve as their governors – powerful posts with widespread authority over local budgets and security forces. It’s complicated – many provinces had more than seven different parties win seats – and the local deals could be tied to agreements on the national level.

The vote showed support for nationalist parties over parties favoring strong local powers. Parties seen as less religiously led did well (though secular liberals like Ayad Allawi still struggled). Those who lost significant power were the Iraqi Islamic Party (Sunni) and the Islamic Supreme Council of Iraq (Shiite), both which are religious and seen as backing local power over central government. Iraqis increasingly want a strong national state.

Here are some of the choices for the pols in the month ahead.

A Move Against Maliki?

Maliki was the biggest winner and is at the center of all the activity. For example, his list won a controlling 28 seats on the crucial 57-seat Baghdad province council. But that has unsettled his rivals. Kurdish leaders, who want to protect their region’s autonomy, have chafed at Maliki’s efforts to strengthen the central government’s control on the armed forces and oil resources. He’s also worried his previous Shiite coalition partners ISCI, who had been the dominant power in the Shiite south.

Though their numbers in the provincial councils are now lower, the Kurds, ISCI and the Iraqi Islamic Party are still formidable in the parliament (which is not up for election until January) and are supposedly discussing ways to curb Maliki’s burgeoning power. One way would be to hold a no-confidence vote that could turn Maliki into a weakened, caretaker prime minister. But that could also backfire, allowing Maliki to blame his opponents for the government’s failure to provide services, like electricity and water.

The parliament could also try to invoke more of its powers to examine and investigate the prime minister’s offices. It already cut his budget. Any of this could be alarming to American officials, since it could cause paralysis and friction as U.S. troops begin to pull out.

Maliki’s Countermoves

To keep his momentum, Maliki has clearly been seeking to broaden his alliances. After using government forces last spring to pound into submission illegal militias led by renegade Shiite cleric Muqtada al-Sadr, he has been reaching out to Sadrist politicians in parliament, negotiating top ministry positions he could offer to their partisans.

He has also made deals with former Sunni adversaries in forming coalitions on the local councils. One is Saleh al-Mutlaq, a parliamentarian whose slate won new local seats. If they can make local deals, it could also win the support of Mutlaq’s parliamentary block in preventing a no-confidence vote.

Increased Cross-Sectarian Coalitions

With Maliki talking to Mutlaq and the ISCI talking to the IIP, it raises the possibility that Iraq will not forever be about ethnic politics, Sunnis banding against Shiites. This is something U.S. officials encourage. It could form reconciliation between the sects and weaken the influence of Shiite Iran, which can exert its will easier when Iraqi Shiites are united.

Iran vs. the United States

The countries fighting for influence in pivotal, oil-rich Iraq will be watching how politicians ally and divide in preparations for the big national elections to be held by the end of January.

One rumor going around the Green Zone is that when former Iranian President Akbar Hashemi Rafsanjani recently visited Baghdad, he urged Maliki to run in the national vote as part of the broad Shiite bloc he ran with in 2005. Maliki is reputed to have answered that he would consider it if his Islamic Dawa Party leads the ticket – last time it was headed by the more Iranian-linked ISCI.

The Western media's financial downfall has been felt sharply in Baghdad, where the number of American reporters has dropped significantly over the past year and bureaus are laying off Iraqi staff.

The word has gotten around. I recently met with a leader of one of the Awakening, or "Sahwa," militias, the Sunni tribesmen who fought Al Qaeda and allied with U.S. forces. Abu Azzam lives in the Green Zone's Rasheed hotel now. He was a businessman in the United Arab Emirates before returning to Iraq to lead forces in the Abu Ghraib area and apparently still follows the markets. When I handed him my Newsweek business card he asked in Arabic, "Has this newspaper gone bankrupt yet?"

Not all Iraqis want to let the shoe thrower off the hook and some even agree with the harsh three-year jail sentence Muntadhar al-Zeidi received today from an Iraqi court.

Granted, it's a minority. Zeidi was lauded in street demonstrations in Baghdad and other capitals when the 30-year-old television reporter zinged his two shoes past a ducking President George W. Bush in a press conference here Dec. 14. Iraqi Prime Minister Nuri al-Maliki, at a lectern next to Bush, vainly tried to block the flying leather. Iraqi security wrestled and pummeled Zeidi and whisked him off to jail.

Zeidi later told the court that he couldn't bear listening to Bush claim success in Iraq while all the reporter could think of was the monumental human loss and suffering of the last six years. He said he viewed Bush as an occupier. Iraqis and other Arabs have hailed him as a national hero. It's probably the majority view, but there's a nuance, too.

Many think he broke an important Middle Eastern and especially Iraqi code that requires hospitality for even reviled guests. It's a little like American Southern hospitality--if someone is in your house, you treat them well as a sign of your own good upbringing and honor. "[Bush] was a guest and a guest should be respected and not humiliated," said a construction worker who wanted to be identified just by his first name, Fawad. "It's our duty to respect him, not because we love Americans but because we love our country. In our tradition as Arabs, even if you see your enemy at a meeting you should greet your enemy as a sign of respect for that meeting."

Zeidi's lawyers made a compelling argument that the sentence was too stiff. They said he should not have been charged under the law against attacks on a foreign leader but rather a lesser crime of insulting a foreign leader.

"Muntadhar would not have dared to throw his shoe at President Bush if Saddam had been receiving Bush, not al-Maliki," said Sabah Shakir Majhool, a university student. "The three years is a fair sentence for his bad behavior." Another man, an engineer, noted that if he had a complaint about Bush, Zeidi could have used his platform as a journalist to express it.

Others may feel more like Ahmed Saad, a 37-year-old grocer who expressed the same anger as Zeidi about the American-wrought chaos of the recent years. "They should honor him instead of punishing him," he said. "He has done what every Iraqi should have done against the criminal Bush, who destroyed the country and caused the killing of young people and children." Or like mechanic Abdullah Mustafa who said, "It's not fair to put a good guy who loves his country and people in prison just because he has done what all Iraqis wish to do. Zeidi's protest did give voice to Iraqis who felt ignored."

Zeidi has already spent three months in jail and, according to family members, has been badly beaten. Even with good behavior, he might not get out for about two years. Elections are scheduled for early next year. Perhaps the Iraqi leadership could show the same nuance as the people have and commute his sentence before then.

--With Hussam Ali, Saad al-Izzi and Salih Mehdi in Baghdad.

By Lennox Samuels

Karim Kadim / AP

Iraq has opened a prison that its operators say will be an example of enlightened and modern incarceration. The freshly painted walls are almost sunny and the facilities include a library, gym, computer room and health care center. It is hard to imagine that this lockup, called Baghdad Central Prison, was previously Abu Ghraib, a global symbol of abuse and human rights violations.

Five years ago TV and newspapers flashed images around the globe of U.S. soldiers gleefully assaulting and sexually humiliating Iraqi detainees in the prison on the western edge of Baghdad. The photos, circulated in April 2004, stunned the world, deepened anti-American sentiment in Iraq and stiffened opposition against the war. The prison closed in 2006.

The renovated facility, opened at the weekend with something akin to fanfare, seems more like a minimum-security detention center than a warehouse for hardened criminals or terrorists. That was the intent, say Iraqi officials, who have assumed control from the U.S. Indeed, Mohammed al-Zeidi, an official with the Iraq Rehabilitation Department suggests that it is almost resort-like. Spokeswoman Fayha Shukri talks about the detainee-to-room ratio the way school principals talk about student-to-teacher ratios. Rooms will have eight beds, compared with 30 beds in the Saddam Hussein days, she says.