After two weeks of high-profile terrorist attacks in Iraq, insurgents launched parallel attacks on oil-industry pipelines and tanker trucks near Kirkuk on Monday.

Attacks on U.S. forces have dropped to a 12-month low and have the least impact on political and economic reconstruction. But serious attacks on Iraqi government personnel and civilians continue to prevent the normalization of the security climate in the country.

The 40 attacks and a total of 36 U.S. personnel killed in March compared to 140 attacks and a total of 107 deaths in January. Broad-based anti-occupation resistance by Sunni Arab insurgents is decreasing because of the gradual splintering of resistance groups and the political reintegration of the Sunni Arab community, combined with the increasing profile of Iraqi security forces and decreasing front-line visibility of multinational forces.

But those positive trends could reverse if, for instance, a revitalized de-Baathification drive by the new Iraqi transitional government signaled further political marginalization of the Sunni Arabs and reignited broader Sunni opposition. Furthermore, the reduction of attacks on multinational forces does not equate to a general improvement of the security climate in Iraq.

The Iraqi and multinational-force political and security strategy has reduced the Sunni Arab resistance to a smaller hard core of “rejectionist” insurgents who constitute a long-term threat to security in Iraq. This hard core cannot be integrated into Iraqi politics. It is composed of an increasingly interconnected mesh of Baathist and radical Islamist (or Salafist) terrorists who demonstrate a strong grasp of the intelligence required to target critical infrastructure — oil-industry and transport systems — at its most critical nodes and to infiltrate government facilities and track and assassinate government figures.

Although the number of attacks launched by such groups is small, each attack has a higher political profile than attacks on U.S. forces and can have a greater economic impact, giving the impression of an escalating pattern. In fact, such violence continues along the same broad pattern seen since summer 2003. The apparent increase in terrorist-type attacks may also have resulted from the slowing of government security operations caused by uncertainty and organizational friction concerning the future leadership of the Interior and Defense ministries.

Assassinations, kidnappings and bombings continue to constitute the majority of terrorist attacks. The campaign of intimidation against government officials continues, killing at least one senior provincial or central government official per week. Almost two dozen suicide bombings and scores of remotely detonated car-bomb and roadside-bomb attacks have been launched since mid-April.

Most bombs targeted multinational-force or Iraqi security-force convoys en route, with static multinational-force and Iraqi security-force locations the second most frequent target. Though most of those attacks caused few or no fatalities — suggesting reduced local access to munitions and disrupted bomb-making networks — they do prevent the normalization of the security climate.

Other recent terrorist activities suggest the beginning of a long-term downward spiral for terrorist groups in Iraq. Like other Salafist groups suffering from security crackdowns in the Persian Gulf region, Sunni Arab rejectionists in Iraq are also undertaking increasing numbers of desperate, futile attacks against relatively well-protected or difficult targets, regardless of the likelihood of a successful result.

The unsuccessful large-scale attack on the Abu Ghraib prison and the similarly sophisticated but costly attack against a U.S. military base near the Syrian border at Husaybah earlier this month are examples. Such attacks consume terrorist planning and logistical resources and result in heavy casualties for little gain.

The campaign of massacres against Iraqi security personnel, civilians and clergy (of all denominations) is an example of a phenomenon seen in Algeria during the 1990s: the identification of increasingly broad segments of the population as apostates and thus legitimate targets. This type of activity is typical in Salafist groups that see no long-term chance of success.

Nonetheless, it will be very difficult to reduce further the residual terrorist threat in Iraq, making bombings, assassinations, kidnappings and occasional assaults a permanent fixture throughout 2005. With money from inside and outside Iraq with which to hire impoverished Iraqis and criminals to undertake attacks, the insurgents can maintain a high operational tempo regardless of the political marginalization of the insurgency.

Alongside the threat from Sunni insurgents, there are other potential sources of political violence:

• In addition to sectarian tensions between Kurdish and Sunni Arab communities in the multiethnic swath of territory in northern Iraq (encompassing hotspots such as Kirkuk and Mosul), the risk of Shiite-Sunni clashes has been highlighted by intertribal clashes in the town of Madain, 20 miles southeast of Baghdad. The Madain area and the Salman Pak area nearby sit at one of the few points outside Baghdad where predominantly Sunni and Shiite areas abut. If Sunni Arab rejectionists accelerate their efforts to foment sectarian strife (the simplest type of operation to undertake), there is an increasing likelihood that the incoming Shiite-led Interior Ministry will respond with inflammatory measures that could once again broaden Sunni resistance.

• Muqtada al-Sadr’s recent mobilization of 300,000 supporters from Sadr City to undertake anti-occupation marches in Baghdad raises the specter of passive or active Shiite opposition to the U.S. presence. Other United Iraqi Alliance (UIA) factions, such as SCIRI, harbor strong anti-occupation sentiments, and Iraqi public opinion increasingly favors the development of a withdrawal timetable rather than the United States’ open-ended, conditions-based formula.

Combining parliamentary and street politics, Sadr is likely to exploit growing Shiite discomfort with the presence of the multinational forces, raising the possibility of a further armed challenge by Sadr’s Mahdi Army militia this year, probably taking the form of numerous minor local challenges to the authority of the multinational forces and the Iraqi security forces.

Political violence will affect three key issues in Iraq.

The terrorist-type violence carried out by rejectionist elements will distract the transitional government’s attention from the development of a constitution and impose strains on sectarian cooperation and provincial governance. It will also have tangible effects in key economic sectors — debilitating disruption of the oil and transportation industries — and intangible effects in others, notably the imposition of a security premium on the cost of doing business in Iraq (hard security and insurance costs) and the deterrence of foreign direct investment.

Terrorist-type intimidation and penetration reduce the morale and reliability of some formations of the Iraqi security forces. Interethnic violence, Shiite purges of the security forces and Shiite anti-occupation activism could each have dissolving effects on larger sections of the security forces.

That will depend on progress on the above two issues. As a combination of factors threatens to slow the realization of each of those goals in 2005, U.S. military withdrawal is highly unlikely to begin this year.

To conclude, although anti-occupation violence is decreasing, the personal security of Iraqi civilians and government personnel, as well as international workers, has not improved markedly. That means the reduction in violence does not significantly improve the outlook for stability or political and economic recovery this year.

Oxford Analytica is an international consulting firm providing strategic analysis on world events for business and government leaders.  See www.oxan.com