Al Qaeda has released a video where Ayman al-Zawahiri mocks the increased troop presence in Iraq, asking Bush “why send 20,000 only – why not send 50 or 100 thousand? Aren’t you aware that the dogs of Iraq are pining for your troops’ dead bodies?.â€?

The Sadrists have hinted that they will not engage U.S. forces in direct combat unless provoked.  One mid-level commander is quoted as saying that “our top leadership has told us to lay low and not confront the Americans. But if Sadr City is attacked, if civilians are hurt, we will ignore those orders and take matters in our own hands. We won’t need orders from Sheik Muqtada.”

In recent news, combined U.S. and Iraqi forces have detained more than 600 Mahdi militia in recent action, and combined Iraqi and US forces have carried out 52 operations in the past 45 days focused on the JAM, or Mahdi Army, and 42 operations targeting Sunni extremists.

AQI is leaving Baghdad and surrounding areas and is headed towards the Diyala Province.  Al-Masri has sent unequivocal orders for their retreat, adding that one of the lessons from the Fallujah campaign was that Americans have learned how to prevail in house-to-house fighting. Masri said that remaining in Baghdad was a ‘no-win situation’ for the terrorists.

In spite of the fact that Ahmadinejad’s days may be numbered because of political problems at home, Iran is strategically deploying its forces in Iraq for a battle with U.S. forces and the Sunnis.  Anonymous sources inside the Defense Ministry had told the Fatihoon website that the Badr Brigade is on high alert under orders from Abdul Aziz Al-Hakim in anticipation of a U.S. assault after the detention of two Iranian officials in Erbil and the closure of the Shalamcha border crossing. The sources alleged that dozens of Iranian Intelligence officers were taking positions around Baghdad, in Salman Pak, Hilla and Kut, in preparation for an attack to drive out the remaining Sunni population from districts on the Rusafa side, east of Baghdad, in order to assume full control by Shi’ite political parties loyal to Iran.

It is alleged that U.S. intelligence has convinced Maliki that the Mahdi militia is infiltrated by death squads, and Sadr has been said to have ordered his bloc of ministers back to work.  This might be an attempt by al Sadr to parse support within the Maliki administration, stalling U.S. and Iraqi intervention into the affairs of the Mahdi army until coalition forces stand down months from now.

The U.S. continues tough talk towards Iran, as a U.S. State Department official ruled out talks with Iran and said Tuesday that a second U.S. aircraft carrier strike group now steaming toward the Middle East is Washington’s way of warning Tehran not to challenge America.  The John C. Stennis Carrier Strike Group deployed to join the Navy’s 5th Fleet on Saturday and is expected to arrive in the region in mid-February, bringing an additional 5,600 personnel and 85 aircraft to the Persian Gulf area. The USS Stennis flagship and its four to six auxiliary vessels will join the Dwight D. Eisenhower Carrier Strike Group that has been patrolling the region since October 2006. In total, Central Command, soon to be headed by Admiral William J. Fallon, will have approximately 150 aircraft at its disposal.

Iran believes that a U.S. attack on its nuclear facilities is a likely as not, and preparation for such an event continues unabated.  Even though Ahmadinejad is currently sustaining domestic criticism of the approach he has taken to defending the nuclear program, the criticism has not gone so far as to deny that Iran has a right to pursue such a program.

The situation on the ground in Iraq is dynamic and complex.  AQI has fled to safer locations in Iraq, choosing to live and fight another day rather than take on U.S. forces house-to-house.  The Sadrists are standing down and rejoining the political scene, in the hopes that they can wait out the U.S. forces.  Iranian intelligence officers have taken up positions to sustain and increase Iranian influence, probably with the Badr Brigade at their disposal.  Ansar al Sunna still operates in the Anbar Province, recently graduating snipers from their sniper brigade school in Haditha.  It is not obvious what the disposition of 600 members of the Mahdi army will bring, as all levels of the Iraqi government have been compromised by sectarian loyalties.  Further, with AQI fleeing to Diyala and the Sadrists standing down (and melting into the population) unless there is a direct attack on Sadr city, the strategy for confronting them is questionable.

The situation in the region is no less complicated, with the Syrian and Iranian borders still open and porous, and with both Iranian intelligence officers and the Badr Brigrade on the loose inside Iraq’s borders.  Iran has recently conducted war games, and continues preparations for strikes on its nuclear facilities, while the U.S. warns Iran – to no avail – to stop meddling in the affairs of Iraq.

The year 2007 will see the resolution of the counterinsurgency in Iraq (win or lose), the end of the effort to bring stabilization to Iraq, and the disposition of the issue of overt Iranian influence in the region.  It will be a remarkable and significant year.