Reuters brings us an interesting report on counterinsurgency in Sadr City.

SADR CITY, Iraq, Aug 11 (Reuters) – A strapping U.S. soldier, his flak jacket draped with weaponry and his rifle pointed at his feet, extends an application for a small business grant to Iraqi shopkeeper Warad Mutaab Qaataa.

Qaataa, a balding, soft-bellied man, watches nervously from across his tiny living room as Captain Beau Hunt tells him how to apply for up to $2,500 to enlarge the small shop he runs from his home in Sadr City, a sprawling Baghdad slum.

Not long ago, U.S. soldiers raided his home at gunpoint in the middle of the night. Now, they are back offering cash.

Qaataa says business is picking up slowly. “Of course, the situation is far better than it was,” he said.

The grant is one small part of the U.S. push to resurrect this mainly Shi’ite area that until a few months ago was in the iron grip of the Mehdi Army — the feared militia loyal to anti-American cleric Moqtada al-Sadr.

Sadr City has quietened down since fierce fighting this spring allowed U.S. and Iraqi troops to take control of the area, a major boost for the U.S.-backed government of Prime Minister Nuri al-Maliki …

U.S. troops say the best way to ensure that the fighters don’t come back is to improve life in Sadr City, where power flickers on a few hours a day and rotting trash piles on curbs.

A balance needs to be struck here.  TCJ has strongly supported the so-called concerned citizens program (later called “Sons of Iraq”), which involved payment for work (usually security) in order to prevent some portion of the Sunni insurgency.  But then again, the Sunnis were more than willing to work with the U.S., and most had no love for the radical al Qaeda brand of terrorism.

Poverty can foment insurgency, and this can be dealt with by traditional means.  But as we’ve pointed out before, Bangladesh is one of the poorest countries in the world and 90% Muslim, but without the radical Islamists.  Poverty doesn’t foment radical, militant Islam.  That’s just a myth.

The fighters of the Mahdi militia, following their religiously radical leader, Moqtada al Sadr, seem much more religiously motivated than the Sunni fighters were, and therefore less amenable to the methods and tactics used in Anbar.

Reconstruction, reliable power, business loans and other forms of good will and needed resources are good tactics to befriend the locals and obtain intelligence and reciprocal good will.  Thus this is a valid and needed part of counterinsurgency.  But as for the hard core fighters who won’t reconcile and the religiously motivated radicals, the best way to ensure that they don’t come back is to kill them.