ibility of Sunni-Shia clashes across the Islamic world.
Many expressed a fear of Shia insurrections--perhaps fomented by
Iran--in Sunni-ruled states. Such a broader sectarian conflict could
open a Pandora's box of problems--including the radicalization of
populations, mass movements of populations, and regime changes--that
might take decades to play out. If the instability in Iraq spreads to
the other Gulf States, a drop in oil production and exports could lead
to a sharp increase in the price of oil and thus could harm the global
economy.

Terrorism could grow. As one Iraqi official told us, "Al Qaeda is now
a franchise in Iraq, like McDonald's." Left unchecked, al Qaeda in
Iraq could continue to incite violence between Sunnis and Shia. A
chaotic Iraq could provide a still stronger base of operations for
terrorists who seek to act regionally or even globally. Al Qaeda will
portray any failure by the United States in Iraq as a significant
victory that will be featured prominently as they recruit for their
cause in the region and around the world. Ayman al-Zawahiri, deputy to
Osama bin Laden, has declared Iraq a focus for al Qaeda: they will
seek to expel the Americans and then spread "the jihad wave to the
secular countries neighboring Iraq." A senior European official told
us that failure in Iraq could incite terrorist attacks within his
country.

The global standing of the United States could suffer if Iraq descends
further into chaos. Iraq is a major test of, and strain on, U.S.
military, diplomatic, and financial capacities. Perceived failure
there could diminish America's credibility and influence in a region
that is the center of the Islamic world and vital to the world's
energy supply. This loss would reduce America's global influence at a
time when pressing issues in North Korea, Iran, and elsewhere demand
our full attention and strong U.S. leadership of international
alliances. And the longer that U.S. political and military resources
are tied down in Iraq, the more the chances for American failure in
Afghanistan increase.

Continued problems in Iraq could lead to greater polarization within
the United States. Sixty-six percent of Americans disapprove of the
government's handling of the war, and more than 60 percent feel that
there is no clear plan for moving forward. The November elections were
largely viewed as a referendum on the progress in Iraq. Arguments
about continuing to provide security and assist