"The situation in Iraq is grave and deteriorating. There is no path that can guarantee success, but the prospects can be improved."

With that statement, the Iraq Study Group, a bipartisan panel made up of members of Congress, launches its examination of the U.S. policy in Iraq. It offers recommendations to the Bush government on how it can overhaul its policy in Iraq.

In its recommendations section, called "The Way Forward," the report calls for more emphasis on politics and diplomatic efforts in the country and in the region. With respect to the troops on the ground, it calls for a change in focus so Washington can start moving its forces out of the country "responsibly." One of its 79 recommendations includes a date for pulling back combat troops.

While there is much focus on what happens in Iraq, in government and in security, there is particular focus on developing a regional plan.

"There must be a renewed and sustained commitment by the United States to a comprehensive Arab-Israeli peace on all fronts: Lebanon, Syria, and President Bush’s June 2002 commitment to a two-state solution for Israel and Palestine," the report said.

Here's a recap of the 142-page report.

Internal approach

• The Iraqi government must send a clear signal to Sunnis that there is a place for them in national life.
• The U.S. and Iraq must make clear their shared interest in the orderly departure of U.S. forces as Iraqi forces take on the security mission.
• U.S. forces should focus on advising, training and supporting the Iraqis rather than combat functions in Iraq.
• By the first quarter of 2008, subject to unexpected developments in the security situation on the ground, all combat brigades not necessary for force protection could be out of Iraq.
• Even after all combat brigades are moved out, the United States will maintain a military presence in Iraq.
• Iraqi police forces require restructuring.
• The United States should assist Iraq in restoring and increasing oil production.
• U.S. economic assistance should be increased to $5 billion US a year rather than being permitted to decline. A total of $753 million was allocated in 2006. The Iraqi government needs help with government organization and job creation.

Flaws in other strategies

"We recognize that there is no perfect solution and that all that have been suggested have flaws."

Precipitate withdrawal
"A premature American departure from Iraq would almost certainly produce greater sectarian violence and further deterioration of conditions."

Staying the course
"Making no changes in policy would simply delay the day of reckoning at a high cost."

More troops for Iraq
"Sustained increases in U.S. troop levels would not solve the fundamental cause of violence in Iraq, which is the absence of national reconciliation."

Devolution to three regions
"Because Iraq's population is not neatly separated, regional boundaries cannot be easily drawn. All eighteen Iraqi provinces have mixed populations, as do Baghdad and most other major cities in Iraq."

External approach

"The United States must build a new international consensus for stability in Iraq and the region," the report said, noting that regional issues are linked to each other.

• The United States should look for regional support for supporting Iraq, stop other countries from intervening and secure borders.
• Get other countries involved in Iraq's rebuilding and set up an "Iraq International Support Group." This group should be made up of border countries, Security Council members and other nations that will help Iraq strengthen its sovereignty. For example, the Saudi Arabians "could use their Islamic credentials to help reconcile differences between Iraqi factions" while Turkey "can be a partner in supporting the national reconciliation," particularly its interest in Kurdistan. It says the UN could play a broader role, including designating a special envoy.
• The group pays attention to Iran and Syria. "U.S. relationships with Iran and Syria involve difficult issues that must be resolved," the report said, suggesting that resolving these problems would help stability.
• Iran: The country should play a role in Iraq. The group notes that the country is not likely to want to help support stability in Iraq, but that it should be asked to participate. On Iran's nuclear program, the group says it's an issue that should continue to be for the UN Security Council to resolve.
• Syria: The group said Syria can control its border with Iraq. The group notes that Washington's relationship with the country is at "a low point."
• Arab-Israeli affairs: The group says there is no solution to the conflict and that America won't abandon Israel." It said there should be a push for the "two-state solution" for Israel and Palestine through talks, with the eventual goal of a peace deal. The group recommends the return of the Golan Heights and that there should be consideration of establishing an "international" force on the border.
• Afghanistan: The group says that the U.S. should not lose sight of Afghanistan and the Taliban, so Washington should put more resources into the country as it pulls back from Iraq.

How things stand

• Security: Most military units have been in the country at least once and many of them are "under significant strain." About 100 troops are dying a month or about 2,900 deaths as of December 2006. The Iraqi Army is making "fitful progress," but it lacks leadership, equipment and personnel. And the Iraqi police are even worse off than the army.
• Politics: The group notes divisions between the factions. Shiite leaders should disarm militias, while Sunni Arabs should look to diplomacy rather than violence. The government is not providing people with services such as electricity, water, health care and education, while its own machine is rife with corruption, security concerns and sectarian divisions.

Consequences

• The effort has cost $400 billion or $8 billion a month and stability is "elusive" and getting worse.
• A collapse of the government would cripple the country and security forces could split. A humanitarian catastrophe could follow. There is a fear of "another strongman" emerging.
• Violence would seep into neighbouring countries and could spark a "regional war".
• Sunni-Shia clashes in the Muslim world.
• Terror could grow, the report said, citing an official who said "al-Qaeda is now a franchise in Iraq, like McDonald's." It could become a strong base for the organization.
• The U.S. reputation could suffer, including its influence in that part of the world.

Timetable: Key milestones set by the report

End of 2006 to early 2007	Set an election date and approve a variety of laws Increase security spending Raise interest rates and appreciate the dinar
March 2007	A referendum on constitutional amendments
April 2007	Iraqi control of the army
May 2007	Approval of amnesty agreement and completion of reconciliation efforts
June 2007	Provincial elections
September 2007	Iraqi control of provinces
December 2007	Iraqi security self-reliance (with U.S. support)
Early 2008	Military training and equipping mission complete U.S. combat troops begin withdrawal

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