The Report notes the positive steps in Iraq's governance since overthrowing Saddam Hussein. "Iraqis restored full sovereignty, conducted open national elections, drafted a permanent constitution, ratified that constitution, and elected a new government pursuant to that constitution." Yet, while the Iraqi government is "broadly representative" of the population, it "is not adequately advancing national reconciliation, providing basic security, or delivering essential services."

"The Iraqi government is not effectively providing its people with basic services: electricity, drinking water, sewage, health care, and education. In many sectors, production is below or hovers around prewar levels. In Baghdad and other unstable areas, the situation is much worse." The report cites five main reasons for this:

• provision of government services "on sectarian basis"
• insurgents target key infrastructure
• "corruption is rampant"
• lack of compentent bureaucratic/technocratic population
• weak judiciary

"The composition of the Iraqi government is basically sectarian, and key players within the government too often act in their sectarian interest. Iraq's Shia, Sunni, and Kurdish leaders frequently fail to demonstrate the political will to act in Iraq's national interest, and too many Iraqi ministries lack the capacity to govern effectively. The result is an even weaker central government than the constitution provides."

The three main ethnic groups present in Iraq:

Shia/Shiite:
Represent the majority of the population. In the present government a broad Shia coalition has "gained power for the first time in more than 1,300 years. Above all, many Shia are interested in preserving that power." The coalition has a "reluctance to reach a political accommodation with the Sunnis or to disarm Shiite militias."

Sunni:
"[F]eel displaced because of the loss of their traditional position of power in Iraq [under Saddam Hussein]. They are torn, unsure whether to seek their aims through political participation or through violent insurgency." They oppose the U.S. presence but also rely on U.S. forces to "protect them against Shia militias."

Kurds:
Support a democratic federal Iraq "because an independent Kurdistan would be surrounded by hostile neighbors." Their own security forces number about 100,000.

The Iraqi constitution provides for a largely autonomous Kurdistan region, and "allows other such regions to be established later." It is important to note that the oil reserves geographically are such that "there is no economically feasible 'Sunni region.'"