Going from bad to worse in Iraq With administration officials celebrating the "successful" withdrawal of American troops from Iraq, thanking antiwar groups for making that withdrawal possible, and proffering outrageous claims about Iraq's "stability," "sovereignty," and the "demilitarization" of American foreign policy even as Iraq collapses, it is hard to stay focused on America's interests and security requirements. Especially in an election year, the temptation will only grow to argue about who lost Iraq, whether it was doomed from the outset, whether the current disaster "proves" either that the success of the surge was inherently ephemeral or that the withdrawal of U.S. troops caused the collapse. The time will come for such an audit of Iraq policy over the last five years, but not yet. For the crisis in Iraq is still unfolding, and the United States continues to have a huge stake in the outcome. The question of the moment is not "Who lost Iraq?" but rather "Is Iraq definitely lost?" It certainly seems so. Prime Minister Nuri al-Maliki appears to be undertaking a deliberate and rapid strategy of driving the principal Sunni leaders out of his government and consolidating his personal control over parliament, the executive branch, and the security forces. He had been moving in that direction for several years, but generally with caution and occasional reversals. The impending withdrawal of U.S. military forces and the revelation of a plot to assassinate him at the end of November seem to have brought his normally conspiratorial mind to fever pitch. He appears to have dramatically accelerated this Sunni purge after his meeting with President Obama in Washington. Maliki has acted in the political realm with the same suddenness and determination with which he launched the military operation in 2008 that retook Basra from Iranian-backed Shiite militias. He has thus once again taken both Iraqis and Americans by surprise. Sunni crackdown He began the escalation of the crisis by sending tanks of the Baghdad Brigade, commanded by his son, to surround the residence of Vice President Tariq al Hashimi, arresting several of Hashimi's bodyguards and forcing confessions from them implicating Hashimi in terrorist plots--including one to assassinate Maliki. Almost before that news could be assimilated, he revealed an arrest warrant for the Sunni vice president and demanded a no-confidence vote in the Sunni deputy prime minister, Saleh Mutlaq. As Iraqi parliamentarians were mulling over that demand, Maliki let it be known that he had decided he had the power to fire Mutlaq without vote and that he had already done so. Mutlaq and Hashimi have both fled to Erbil, where the Kurds are sheltering them. Maliki wasted no time, however, in demanding that the Kurds hand Hashimi over for trial, thus escalating a sectarian conflict into an ethno-sectarian struggle. Events in the provinces are even more worrisome. Provincial councils in three of the four principal Sunni provinces (Anbar, Diyala, and Salahaddin) have declared their intention to form autonomous federal regions similar to the Kurdish Regional Government, in accord with the relevant provisions of the Iraqi constitution. Maliki has angrily denied that they have any such right, and has dispatched security forces to Diyala to prevent secessionist activities. Diyala has always been among the provinces most fraught with sectarian tension, and this political escalation is mirrored there by the reemergence of local militias, including Moktada al-Sadr's Jaysh al Mahdi, preparing for sectarian violence. With both the Sunni political leadership and local Sunni groups seceding from or being driven out of the government, the stage is set for a return to sectarian civil war. Obama unveils new defense strategy Wave of Iraq attacks as sectarian crisis deepens Terrorist groups seem to be seizing this opportunity to accelerate sectarian and political conflict, as they have in the past, to create openings in which they can operate freely. Sixteen bombings occurred in 11 neighborhoods of Baghdad on December 22, killing scores and wounding hundreds. Most of these neighborhoods had been heavily contested either as Al Qaeda in Iraq safe havens or as sectarian fault lines at the height of the 2006-07 conflict. It is unclear as of this writing who conducted these attacks, but their locations, along with the escalation of tensions in Diyala Province, are likely to be significant accelerants to the renewal of sectarian fighting. The reemergence of civil war in Iraq would be disastrous for the United States and its allies. It would be an enormous political and moral defeat for the United States and could rapidly expand to spark a regional conflict with the Sunni Arab states led by Saudi Arabia confronting Iran and its proxies in Mesopotamia. It would also very likely shock the oil market, which has been pricing in expected increases in Iraq's oil production that will very likely be delayed, possibly significantly. Considering that the Obama administration had accepted the European position against sanctioning Iran's Central Bank for fear that rising oil prices could undermine fragile economic recoveries, the prospect of falling Iraqi oil production should also raise concerns about the well-being of the global economy. State fracture or collapse in Iraq, finally, would create conditions favorable to the reemergence of both Sunni and Shiite militias and terrorist groups, including Al Qaeda in Iraq. The withdrawal of all American military forces has greatly reduced America's leverage in Iraq. U.S. military forces were a buffer to prevent political and ethno-sectarian friction from becoming violent by guaranteeing Maliki against a Sunni coup d'état and guaranteeing the Sunnis against a Shiite campaign of militarized repression. The withdrawal of that buffer precipitated this crisis and removed much of our leverage. The withdrawal is complete and unlikely to be reversed. Still, the United States maintains some leverage in Iraq and considerable leverage in the region. The Obama administration will have to use all of its skills to maximize the impact of what leverage it retains. The key players in the denouement of this political crisis will be the Kurds, who hold the swing bloc of votes in the Iraqi parliament. If the Kurds back Maliki, either explicitly or simply by refusing to vote no-confidence in him, then the prospect of any Sunni-Kurd alliance will evaporate, and the Sunni Arabs will very likely move toward federalism and, when Maliki opposes the partition of Iraq, violence. If the Kurds align with the Sunnis and threaten to vote Maliki out, more options open. A Kurd-Sunni alliance would have to resolve disputes in Nineveh Province, which is also central to Baghdad politics since the Nineveh provincial governor, Atheel Nujaifi, is the brother of the speaker of the Iraqi parliament, Osama Nujayfi. Such a Kurd-Arab deal could secure stability in Nineveh and possibly provide a more stable cross-ethnic base to create a soft landing for federalist movements in neighboring Salahaddin and Anbar Provinces. Such a Kurdish position could conceivably persuade Maliki to back away from the most extreme steps he has taken--causing the arrest warrant for Hashimi to be revoked by the "independent" judiciary that issued it, for example, and restoring Mutlaq to his position. If Maliki retreated in that way, the crisis would not be resolved--fundamental elements of trust have been shattered, and it is almost impossible to see a stable cross-sectarian government in Baghdad now with Maliki as prime minister. But it would open the way to negotiations both among the Shiites (who are by no means monolithically aligned with Maliki) and between the Shiite and Sunni leadership at both national and provincial levels. The United States does continue to have significant leverage on the Kurds, who still look to Washington as guarantors of their security in the event of a renewed ethnic civil war. Above all, the Kurds are extremely leery of the planned sale of F-16s and M1 tanks to an Iraqi military that could be attacking Kurdistan again should things go badly. Turkey has even more leverage with the Kurds, since Erbil sees Ankara as the alternative to the United States should a Kurd-Arab fight reemerge. U.S. policy should now be heavily focused on getting Erbil to play a constructive role in mediating the intra-Arab dispute rather than pursuing shortsighted attempts to capitalize on it. This requires the kind of "smart power" that this administration supposedly excels at, and it requires the full backing of the Congress and the full attention of the White House and the State Department. Now Obama "owns" Iraq We can relitigate the wisdom of the invasion, the course of the war, the success of the surge, and other important questions endlessly, but one thing should be perfectly plain. From the moment U.S. forces left Iraq, President Barack Obama owned the policy and its outcome. Yet the administration has never articulated a strategy or policy for Iraq after the withdrawal. It has focused on spinning the collapse of both U.S.-Iraqi negotiations and the Iraqi political settlements as success, and on throwing all responsibility for whatever happens next in Iraq on the Iraqis, who--the administration never tires of reminding us--are sovereign. Iraq is, indeed, a sovereign state, although possibly not for much longer if trends toward state collapse continue, and Maliki bears personal responsibility for his own actions and decisions. But Iraq's sovereignty and Maliki's personal responsibility do not eliminate Amerian interests in Iraq or relieve the administration of the obligation to pursue them. Like it or not, the timing of the moves against Hashimi et al. upon Maliki's return from Washington has created a perception in Iraq that these actions were authorized by Washington. The United States must counter that perception publicly and privately. Further, the administration must recognize that a return to the status quo ante is not tenable or desirable. Maliki has gone too far down his current path; besides, the political arrangement that emerged after the elections of 2010 was always fraught with problems. Now, Maliki has shown his true colors. If the president and his administration admit this, they may see policy options they previously hadn't considered or weren't willing to employ. Bio: Kimberly Kagan is president of the Institute for the Study of War. Frederick W. Kagan is a resident scholar at the American Enterprise Institute and director of AEI's Critical Threats Project.