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One of the main problems in Iraq that was making the sense of re-building it as a nation more difficult was not the attacks by insurgents, but the civil war that was breaking out. Death squads, sectarian conflicts, neighborhoods getting cleaned of one sect, etc was the main issue threatening to spin the situation out of control.
The 2 month old ’surge’ in Iraq, where the idea was to stabilize the strife torn capital, Baghdad has had its up and downs. The car bombs are still happening, and they take an awful toll in terms of lives. But one other measure (and I would think a more significant measure) is the sectarian conflict. That seems to be down now. One no longer hears of mass pulling out of people from communities and buildings by death squads. It may sound very dastardly, but terrorism (by insurgents) is something that can be controlled, while civil war between communities breaks a nation down.
The new US commander in Iraq believes that the surge is working to bring the strife under control:

The top U.S. commander in Iraq, Gen. David Petraeus, told reporters Wednesday that sectarian murders in Baghdad have been reduced by about one-third since the beginning of the year. “That is an important development, because sectarian murders can be a cancer in a neighborhood,” he said.

Bringing down the sectarian strife in Baghdad is extremely important. When sects start to war with each other, the building blocks of society start to break down.

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