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"Tribal elements and former insurgents may become disillusioned with lack of political progress, inadequate steps toward economic and social inclusion, and what they perceive as continued dominance by Iran and its Shiite proxies," said the first IGC report, "Iraq After the Surge I: The New Sunni Landscape."
So while the larger insurgent-U.S. battles and wider Sunni-Shia fighting have abated, the new, smaller, more subdivided groups continue to bump heads. The U.S. policy of tending to choose between these groups with either economic or military support, said the report, does not constitute meaningful steps towards political reconciliation.
The IGC report notes that the U.S. "divide-and-rule tactics" reinforce the new fault lines in society, and by benefiting only one group, create resentment among the others.
"Ultimately, stability will require that such rivalries be mediated neither through violence nor buy-off, but by functional, legitimate state institutions," said the report. That, in turn, requires the U.S. to support "a genuinely inclusive political system."
Another incident of U.S. favoritism that could lead to sharp divides and potential large-scale violence is the intra-Shia power struggle for control of southern Iraq.
Backed by U.S. airpower, an offensive by the two main power-sharing partners in the Iraqi central government, Dawa and the Islamic Supreme Council of Iraq, in the southern strongholds of militant anti-U.S. cleric Muqtada Al Sadr was designed to cripple Sadr and his Mahdi Army militia ahead of provincial elections scheduled for this fall.
When the advance was thwarted by Sadrist fighters, the ruling Shia parties took up a piece of legislation that was aimed at scuttling Sadr's bid in the elections by making it illegal for parties with militias to participate.
Council on Foreign Relations fellow Mohammad Bazzi wrote in the Washington Times that though Sadrists and the Mahdi Army were not named in the legislation, it is clearly a misguided attempt to isolate them -- noting that other parties such as ISCI are not hampered though they, too, have militias.
"It's virtually impossible to wipe out the Sadrist trend, which is a social, political, and military movement that enjoys wide support, particularly among young and poor Shi'ites," wrote Bazzi.
"The consequences of trying to isolate Sheik al-Sadr and his political movement are profound," said Bazzi, saying that the move would end a Sadr ceasefire and drastically increase violence aimed at both the U.S. and the central Iraqi government.
Noting the situation in the second report, "Iraq After the Surge II: The Need For a New Political Strategy," ICG recommends that the Iraqi government hold provincial elections on the original schedule of Oct. 1, 2008, and "ensure that these are inclusive of all parties, groups and individuals that publicly accept non-violence (rather than, at this stage, disband their militias)."
This runs contrary to the law before the Iraqi parliament, and would allow incorporation of Sadrists into above-board politics.
"If [the Sadrists are going to sweep the South], that needs to be allowed to happen -- so long as it's the result of a free and fair election and not at the barrel of a gun," Jason Gluck of the U.S. Institute of Peace (USIP) told IPS.
"If you want to talk about political progress, there are many justifications for confronting the armed militias, particularly the Mahdi Army," said Gluck. "But that confrontation must be coupled with political opportunity and engagement. The Sadrists need to be ensured that if they comply, there are going to be free and fair elections."
"My criticism would be that there has not been this olive branch -- this welcoming into the political process -- that's simultaneous with the military engagement," continued Gluck, who is a rule of law advisor with USIP. "It has not been made clear that while Sadr and the Mahdi Army must disarm, or at the very least disavow violence [as with the ICG proposal], if they do that they will be welcomed into the political process."
Gluck acknowledged that the dealings of Sadrist members of parliament -- in line with the general Sadrist Iraqi nationalism -- already show that they are capable of meaningful political engagement, most importantly across sectarian lines.
"We can promote that by encouraging Sadr to rely on the political process and not on the barrel of a gun," he said.
The IGC report on the new politics needed in Iraq reinforced the importance of the provincial elections as a stepping stone towards true reconciliation.
"If genuinely free and fair and carried out in a secure environment, these hold the potential of beginning to alter the political landscape by bringing a new generation and class of political leaders to the fore," it said.
Nearly all observers agree that action needs to be taken soon in the relative calm provided by the U.S. surge strategy.
"There is reason to fear this is only a temporary salve and that underlying issues will again come to the fore," said the IGC report. "Whatever political space the surge tore open is likely to narrow once again."
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