What looked likely to become a proto-civil war between the Iraq Government (supported by its Western allies) and the Mahdi Army was undoubtedly the big regional story this past week. Certainly bigger than the non-event in Damascus, the Arab League Summit.

This was not because of the fire fight in Basra (30,000 Iraqis with air support against 6,000 ‘criminal elements’, leaving nearly 100 dead and 300 wounded by the weekend), but because of the way the conflict spread quite rapidly into other areas of Iraq.

The isolation of the initial targets as ‘lawless gangs’ broke down, both in fact and in rhetoric, as regular Mahdi Army units supported these alleged ‘criminals’.

The political dimension behind Al-Maliki’s attack (seen as an attempt to seize full control of the revenues of the Southern oilfields on behalf of a rival Shia faction) also threatened to overwhelm the official line - notably in a hard-hitting Financial Times editorial.

Militias seized control of Nasiriya. Heavy fighting was seen in Kut, Diwaniya, Amara, Hilla and Sadr City (Baghdad). There were sustained mortar attacks Hamas-style on the Green Zone. The total death toll is guessed at around 240.

The Iraqi Defence Minister had obviously not been well trained in ‘spin’. He admitted that “we supposed this operation would be a normal operation, but we were surprised by this resistance and have been obliged to change our plans and tactics”.

Analysts were soon admitting that the situation was ‘very serious’. Everyone was getting very confused about whether Al-Maliki was just taking on the criminal gangs - maybe this was a wider coup against more mainstream Sadrists in the South?

The potential grew by the hour for a direct armed confrontation between the seriously important Sadrist movement and pro-Western forces, which might now include many armed-to-the-teeth ‘converted’ Sunnis as well as middle class urban Shia with an eye to the main chance.

Our own unpopular theory (detailed only in our private client reports) was that Al-Sadr was complicit in a sin of omission rather than commission in the original limited action operation but that Al-Maliki profoundly misjudged the situation within the movement in the south.

Al-Sadr is actively seeking to transform a militant armed movement into the most significant constitutional participant in the democratic process. This is the classic reform/revolution dichotomy that will appears in all mass movements operating within fluid or anarchic political situations.

Our analysis seemed to be borne out by his actions in the last day or so. He asked his movement not to fight Iraqi Government forces although not at the expense of handing over its weaponry – at least not just yet.

The Mahdi Army and Iraq may have been pulled back from the brink but only because the former is led by a charismatic leader, a man with a plan. This intervention by Al-Sadr, if it holds, should save face all round. 

Because the Mahdi elements, criminal or not, have insisted that their actions have always been ‘defensive’, the initiative implies that Al-Maliki must back down on his core demand that weapons be handed over - or battle will commence again.

The blunt truth, well appreciated by Westerners caught up in the storm, is that the Mahdi Army were more than holding out, it was winning in pockets. It also punctured the myth of a safe Baghdad within a day or so of the conflict breaking out.

And it has now withdrawn before it could be tested, Fallujah-style, against the full might of the Allies.

For be in no doubt, Allied firepower could raze Sadr City to the ground if it so chose. It is just that a Republican would probably not be high in the polls afterwards and the faltering Peace Process would sink once again into the desert sands.

The West and the Iraqi Government were already ‘spinning’ victory this morning ('Al-Sadr gives way') but this situation is a lot more complex than that. There is no outright win for anyone in this extended chess game.

If there are any winners, it lies in those committed to the steady movement towards an effective constitutionalism (assuming that the bulk of the Mahdi Army obey Al-Sadr) within Iraq which is most everyone except the extremists. This is good.

However, there is another winner - this is the political authority of the Mahdi Army as prime representative of the Iraqi Shia poor. The probability is that we have a strongly anti-Western sub-Hezbollah in the making, one that will limit options for the West inside Iraq much as its counterpart does in Lebanon.

On balance, it is ‘Iraq’ that may have won, assuming that the Sadr command holds. Iraq is lurching in stages towards full sovereign status but, in the battle between the West (including Saudi Arabia), Iran and the ‘nationalists’, it is the West that has had to take a step backwards.

This has been another mishandled conflict to add to the list. It has exposed Western weaknesses outside the arena of naked force and it has reminded Iraqis that they are occupied with a quasi-puppet government existing in part on the availability of Allied fire power.

The plans to hold a permanent military presence on bases inside Iraq - much as they exist in the UK and Germany - are vulnerable to an elected Government that represents popular Islamic nationalism. The Mahdi Army contains the seeds of such a determination.

The effects on the West of the worsening situation are dire. The UK Government has already had to abandon plans to cut troop numbers in Iraq to 2,500 this year.

The reduction of mortar attacks on Basra base had fallen by 90% since an ‘alleged secret deal’ between the British and the Mahdi Army. Now this 'alleged secret deal' is distinctly wobbly. If war starts up again, the chances are high that the British may be drawn into the conflict.

The US, on the other hand, did get dragged into the ‘war’, not only with air strikes (somehow airpower is presented as if it was not intervention at all) but obliged to send reinforcements to help Iraqi security forces in the South. 

The President raised the heat by calling the Iraqi Government’s action a ‘defining moment’ which only meant that the US was not about to let Al-Maliki fail. It will seize, reasonably enough, on this crisis as a step towards acceptance of democracy.

The Sunni (excepting what remains of Al-Qaeda) must be minded to wait and watch on events so the more mainstream Sadrist and non-aligned Shia forces would have had some hard thinking to do about how far to assist their radical and poorer class comrades if things had got much worse.

It also seems as if Al-Maliki did not consult very many people before acting – the President may have been kept in the dark, certainly the full Cabinet and even more certainly Parliament.

And if the Allies themselves seemed non-plussed at times on details on implementation, it may be because not everyone who should have been told was told about what was planned, by whom and when.

Evidence from last week’s Times does suggest, however, that Iraqi police officers in Basra knew about the assault a couple of weeks ahead of time, enough to allow some to abscond with their guns to the other side and to pre-prepare the militants for the assault.

This is either intelligence failure or another example of one part of the western effort not speaking with another - either way, it reproduces a pattern of incompetence that seems to be par for the course within Western political operations in zones of conflict.

But something really stinks here, as if people have been positively misled. It is as if Plan A (the assertion of Government sovereign authority in a limited way and with political bases at home squared) had been used as cover for a poorly considered Plan B (a political assault on a rival Shia faction on the assumption that allied firepower would always back up the incumbent government if things went wrong).

If so, a police action with probable senior Sadrist acceptance of the inevitable could easily have degenerated into a civil war in which not only the full force of the Mahdi Army may have been engaged but also an edgy Sunni militia, barely kept on their leash by bribery and guns.

We were already back in the world of civilian deaths from air strikes (the bane of any acceptance of the West as liberating force from Baghdad to Kabul) and of curfews in the capital city.

It was a reminder to many wishing to forget it that – whatever the definition of Western Governments of what an occupation is or the fact of ‘elections’ – Iraq remains, to many Iraqis, as occupied as Germany was in 1946. If only (think the Americans) the Mahdi Army were as small-scale and as easily defeated as the Werwolves of that time.

The US could probably ‘win’ a ground war with Sunni and SCIRI allies in the long run, but Mahdists are not going to go down without a fight.

We would see dreadful scenes of violence by both sides, high casualty rates, a further deterioration in US standing, opportunities for intervention by third parties, possible destabilization of some Gulf states and, worst of all, if the matter deteriorated into a ‘Vietnam situation’, probable direct confrontation with Iran - with appalling consequences to regional political stability and global economic prospects. Grim stuff!

The only good news before Al-Sadr's announcement was that crude flows were restored through the Southern pipeline system quicker than expected, pushing prices back down from $108 to $105.

And yet rebels now know that their threat in itself represents a couple of dollars on the global price of crude while the actuality of sabotage can add another $2 for as long as a pipeline is closed. Imagine what a general conflagration could do … 

However, amidst all the ‘spin’ from every side, there were two abiding messages to take away. 

The first was of deep American and British unease at the actions of the sovereign state they supported. The second was of the grim and enthusiastic blood-and-soil determination of youthful militants who were beginning to welcome the relief from the tension of inaction.

As usual, it was the non-aligned civilians who were caught up in a mess that increasingly looked like a miscalculation. Let us hope that Al-Sadr continues to command the allegiance of his movement ...

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