YWT: "If the government won't change, then let's empower the people."

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JIM CLANCY: Religion forcing its way onto the agenda of the American political scene, but there is an issue that is out there in the minds of American voters, and it certainly is number one in many's minds, the war in Iraq.

The top U.S. military commander there pointing to a drop in violence again. General David Petraeus cited a 60 percent decline in weekly attacks and civilian deaths over the last six months. He credits several factors to the drop in the violence. Petraeus says cleric Muqtada al-Sadr's call for his followers to honor a cease-fire one of the things, one of those factors that helped. The general also credits the U.S. efforts, including the troop surge and more aggressive operations against militias.

Well, despite the drop in violence, General Petraeus says he's not celebrating, no dancing in the end zone, as he said. He says 2007 has been the deadliest year for U.S. troops since the start of the war four years ago.

Michael Ware joins us now live from Baghdad.

All of this timed, all of this coming out -- yes, it's the beginning of the month when these numbers usually do come out, but also you've got the secretary of defense there. What kind of a message is it that we're hearing from Iraq today? And does that message jibe with what you see on the streets?

MICHAEL WARE, CNN CORRESPONDENT: Yes, it does, Jim. I mean, honestly, this is extremely old news.

Since October, we have heard the top U.S. commander saying that violence levels are back down to what they were before the Samarra shrine bombing in February 2006 which sparked a civil war. So, this is not a revelation.

U.S. commanders have been hammering and hammering and hammering this stunning success, and that's precisely what it is. More lives are being saved. Less Americans are dying. And more importantly, or just as importantly, less Iraqi innocent civilians are dying as well. That's women and children.

However, there's consequences. There's cause -- there's action and there's reaction.

Now, part of that is that America has built Sunni militias. Now, they're going to have to contend with that in the future.

Another part is that an accommodation has to be found with Iran. We now see American commanders saying Iranian activity is dropping, but we don't know why, yet we also believe they're still training Iraqis to come and attack us. So Iran still remains a huge mystery.

And the other thing is they're showing that they're tired of this government. The Americans are losing faith in this government's ability to deliver because all of the success, this 60 percent drop in violence, will be squandered, say U.S. commanders, if there's not real reconciliation by the time the 30,000 U.S. troops go home next summer, Jim.

There's always a price to pay for things.

CLANCY: Well, a lot of military commanders are saying that you can't just start pulling out troops because the numbers are down for precisely the reasons that you are talking about there. What do the Sunnis want? So many have joined these -- you know, the so-called local militias now being funded to the tune of $200 or $300 a month per man. They're functioning as police.

WARE: Yes.

CLANCY: The government though says we're not going to take them in. They want to save those police jobs, those salaries on the budgets, and hand it out to their own political supporters. In this case, the Shia Alliance.

WARE: Well, that's right. I mean, there's a lot of political patronage here. And that's really what we're talking about at the end of the day.

I mean, one of the major factions within this government, arguably one of the most dominant, was created back in 1982 in Tehran. Its armed militia is one of the most sophisticated in the country. And top American political analysts and strategists here on the ground say they don't know how to break the back of that organization.

Now, until you do, you're not really going to make headway toward reconciliation. Part of it has been cutting a deal with the Sunni Ba'athist insurgents, Saddam's former military and intelligence apparatus that America has been fighting all these years. The question is, why didn't they cut this deal three years ago?

And overlaying all of this is Iran, the Sunnis' fear of Iran and Iran's backing of the government that's not delivering to America. It's still a very complicated picture, and that's why General Petraeus is being told by his commanders, "It's looking good, sir, but it could turn on a dime and be back to the hellish numbers that we saw before."

And these troops are leaving anyway. We're simply going back to the numbers we used to have. It's not like a drawdown as a result of this stunning success -- Jim.

CLANCY: Michael, a final question, and that is about the government itself. There was a knockdown, drag-out once again inside the parliament with a Shia lawmaker saying that he had evidence that his Sunni counterpart was plotting against him. The lack of trust among the people that have to lead this country is making any progress impossible.

Is the U.S. here powerless to do anything to step in and force the Maliki government -- force both sides, really, to come together here? They still haven't decided on an oil law to share the wealth, they haven't set the borders of the provinces, shared -- none of it.

WARE: The main problem is, Jim, that the very institutions of power, or certainly those who hold them, the framework of political control in this country, is geared against all of America's interests. And America is finding it harder than it ever thought it would be to break those. So, now, more than ever, America is continuing to work with this Iraqi government, but it's looking for alternatives. It's turning to the people. People power.

If the government won't change, then let's empower the people. Let's give them the weapons. Let's allow them to patrol their streets. Let's fund them if the government won't. And let's erode this block on power that's preventing real reconciliation.

So, the very government America created, it's tried to coerce, it's tried to help, now it's starting to erode because it's becoming more of a hindrance than a help. Now, America has no set path, but nonetheless, the road ahead is still difficult and there's so many factors yet to be taken into account -- Jim.

CLANCY: All right. The casualties are down, the risks ever present.

Michael Ware from Baghdad.

As always, Michael, great to have you with us.