Let's start 2007 with some good news from Iraq. Its boom time, in the nicest sense of the word, in Baghdad and Basra.
Newsweek has just described this growth as " the mother of all surprises". The invasion unleashed not only a vast market in the free media, which persists, but also a massive amount of economic activity which the sectarian bloodshed has not crushed. According to Iraq the Model, one of the best unofficial blogsites in Iraq, there were just 8,000 officially registered companies in Iraq under Saddam. Now there are over 34,000 and another 286 were created in November alone - despite the rising violence in that month.
Despite the ceaseless terrorist attacks on the country's infrastructure and particularly its crucial oil industry, the value of the Iraqi dinar has continued to rise - in November, from D1410 to the dollar to D1480. That is obviously good for the vast majority of people whose pay comes in dinars. And civil servants' pay has just been raised.
Unemployment is still one of the country's worst problems - 30-50 % in some places and the unemployed can be seduced into joining militias. But the much mocked government is beginning to liberalise the centralized economy of Saddam. In the last two years mobile phone subscribers have increased from 1.4 million to 7.1 million and Iraqna, the leading phone company, is expected to have revenues of some $520 million this year - more than a third higher than last year. House prices and other real estate are soaring, in both poor areas and rich. . Construction is doing well. So are retail and trade. All of which suggests, as Newsweek says, "that Iraqis are more optimistic about the future than most Americans are".
The killing campaigns in Iraq, both Sunni and Shia are designed above all to reduce western optimism further. They have been so successful that the main question being asked of Iraq at the beginning of 2007 is Will we stay or Will we go ? Will domestic political pressures, here and in the United States, force such a cut back in our commitments to Iraq that the place dissolves into such awful civil war as to make today's sectarian killings seem like a honeymoon ?
In Washington the long awaited Baker-Hamilton Study Group on Iraq produced one of the most uselepieces of "bipartisan consensus" ever. Filled with tired orthodoxies and wishful platitudes, it was a disgrace. But it did Bush and Blair a back hand service. Baker's pieties - "Syria, should, Iran should, Israel must" - would have shamed King Canute, but they proved that no one else in Washington was any wiser than Bush.
There is now talk that far from cutting forces along the Baker lines, Bush may instead "surge" combat troops into Baghdad to impose security there. And at the same time he may well announce far greater emphasis on US training of Iraqi officers and men. This is absurdly late already. There should be thousands more US soldiers embedded with the Iraqi army. The same goes, on a smaller scale, for the British. We run "the Sandhurst of the Desert", the Al Rustimayah school for Iraqi officers in Baghdad. It's a marvelous facility but we have not given it enough resources - and its absurd that we have only trained a handful of Iraqi officers in Britain. There should be thousands training here all the time. The fact that they are not here, now, suggests, alas, that the Ministry of Defence is not committed to succein Iraq, but is thinking instead of what officials now call "accelerated transition".
The worst service that the Baker clique performed was not in Washington but in Iraq itself. There the report was reported as the perceived wisdom of the American political claand the signal that America was definitely on the way out - by early 2008, according to Baker's petulantly repeated demand. It was seen as proof of Osama bin Laden's description of America as "a weak horse" on which no one should depend.
Amir Taheri, one of the most seasoned commentators on the entire middle east, agrees. He has just returned from Basra, the centre of British control. This Shiite slum on the Gulf, deliberately neglected for decades by Saddam, is beginning to prosper at last, he says. As in Baghdad, the shops are full of televisions and other consumer goods, many of them imported from China. Gucci shoes apparently move fast.
Taheri insists that what is happening in Iraq is not sectarian warfare but "war of the sectarians" intended to drive the coalition away. They kill people to have an effect on public opinion 10,000 miles away so that each can pursue their separate ambitions to re impose dictatorship on Iraq.
The best hope for Iraq now is that despite all the bloody militia efforts, the parties can still win out and create a workable federalism. For that to work, the federators still need more time - particularly to agree on an oil revenue sharing legislation and they need the insurance that the coalition still offers. American officials in Baghdad find that different factions often use them as a broker. In Basra, says Amir Taheri, the same applies to the British, who are often called "Abu Naji" or "Father of Safety" . People see them as arbiters who guarantee the balance of power between the three principal Shi-ite factions which have divided Basra between themselves.
The third alternative - partition - would almost certainly lead to invasions by greedy or nervous neighbours. Iran's power in Iraq is already too great and the Saudis are now making noises about arming the Iraqi Sunni as a counterweight to Iranian backed Shia. Each will increase its brutal assaults on the others if the coalition leaves too soon.
If we have to set a timetable for running down our troop presence, it should be linked to the end of the next round of national elections, due to be held in January 2009. The 2005 elections ans referendum were the freest ever held in the Arab world and were a triumph for the Iraqi people (as well as for the organisers). I suppose that these first elections could be dismissed as an imposed aberration - a third election four years on would establish a pattern which will be a huge boost not only for Iraq but also for the region, which still needcs helping out of despotism. Tony Blair was absolutely right to say on his recent trip to the Middle East. "We have to wake up. These forces of extrremism based on a warped and wrong-headed interpretation of Islam arent fighting a conventional war, but they are fighting one against us."
Blair has been phenomenally brave over Iraq. He is about to go. It is not clear what the attitude of Gordon Brown will be. But if the Conservative Party is wise it will see that continued commitment to Iraq means a commitment to the region. It is a conservative policy in the best sense of the word. It shows that, despite everything, we are "the strong horse" that can be relied upon. The alternative, to cut and run or walk, will be unbelievably destructive.