Following are some of the challenges Iraqi Shi'ite Prime Minister Nuri al-Maliki faces, five years after the U.S.-led invasion toppled Saddam Hussein.
-- Violence is down 60 percent since last June, but the U.S. military commander in Iraq, General David Petraeus, says the security gains are fragile and easily reversed. Some 20,000 extra U.S. troops that were sent to Iraq in 2007 to help curb sectarian violence will be withdrawn by July. With a smaller U.S. military operational footprint, the test now will be whether Iraq's security forces can hold on to those gains.
-- The International Monetary Fund expects higher oil output to push Iraq's gross domestic product up to over 7 percent this year, from just 1.3 percent in 2007. But there is still high unemployment and little inward investment, and the United Nations estimates that 4 million Iraqis are struggling to feed themselves while 40 percent of the country's 27 million people have no safe water.
* SUNNI ARAB INSURGENCY
-- The Sunni Arab insurgency against Maliki's government has waned sharply after Sunni Arab tribes and some nationalist insurgent groups joined so-called Awakening Councils last year and took up arms against Sunni Islamist al Qaeda, a resilient enemy that the U.S. military calls the greatest threat to peace in Iraq. Despite being largely driven from Baghdad and western Anbar province, al Qaeda militants have regrouped in the north and continue to stage large-scale suicide bombings.
* CONCERNED LOCAL CITIZENS
-- Maliki's Shi'ite-led government has kept at arm's length concerned local citizen groups, mainly Sunni Arab men tasked by the U.S. military to man checkpoints and guard residential areas. Analysts warn that the groups -- which include former insurgents -- could rebel against the government if it does not do more to incorporate them into its security forces or give them other jobs. So far, it has agreed to integrate about 20 percent of the 80,000 volunteers into the police force.
* MEHDI ARMY
-- Shi'ite cleric Moqtada al-Sadr has committed his feared Mehdi Army militia to a ceasefire through to August. An initial truce was credited with helping to reduce rampant sectarian violence, but there are rumblings among the Mehdi Army rank and file who accuse U.S. forces of exploiting the ceasefire to target them. If they feel they are being pushed too far and take up arms again, Iraq could be plunged into renewed bloodshed.
* PROVINCIAL ELECTIONS
-- Iraq is due to hold provincial elections later this year that Washington hopes will increase the involvement of Sunni Arabs, who boycotted the last polls in 2005, in the political process. But there are fears that the elections could intensify the struggle for power between rival Shi'ite factions in Iraq's oil-rich south and trigger a new wave of violence.
* LEGISLATIVE PROGRESS
-- After months of deadlock, and under U.S. pressure, Iraqi political parties passed a series of laws earlier this year that are viewed as important for national reconciliation. But any progress has proven tenuous. Iraq's presidency council refused to approve a provincial powers law, key to holding provincial elections, and sent it back to parliament. It is also unclear, how, if or when a law relaxing restrictions on former members of Saddam Hussein's Baath Party holding public office will be implemented. There is also still no agreement on an oil law to lay a legal framework for foreign companies to operate in Iraq and determine how revenues from vast oil reserves are shared.
-- Iraq has been hard-hit by a brain-drain that has robbed it of much-needed doctors, engineers, scientists and other skilled professionals. They are among 2 million people who have fled the country. The United Nations estimates that only 36,000 people have returned since security improved. There are also 2 million people displaced internally.
-- The fate of the oil-rich city of Kirkuk, claimed by Kurds, Arabs and Turkmen, is a potentially explosive issue that many Iraqis fear could spark bloodshed. The government failed to hold a constitutionally required referendum by the end of 2007 to determine its status. Iraq's largely autonomous Kurdistan region has agreed to a six-month delay while the U.N. special envoy to Iraq tries to move the referendum process forward.
(Writing by Ross Colvin; Editing by Samia Nakhoul)