Boston, MA -- (SBWIRE) -- 11/14/2012 -- BMI's Iraq Defence & Security Report for Q3 2012 examines the country's strategic position in the Middle East and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the challenges it may face in the future.

The report examines the trends occurring in the country's current and future defence procurement, and the order of battle across its armed forces. The intention is to provide a clear and concise discussion of these issues. The report's general conclusion is that Iraq remains at serious risk of fragmentation, partly as a result of the failure of its political parties to work together, and also due to the increasingly bloody insurgency that continues to take the lives of hundreds of civilians each month.

Internally, the coalition government of Prime Minister Nouri al-Maliki is coming under mounting pressure, with even Maliki's Shi'a allies starting to turn against him. Nonetheless, Maliki has shown little interest in honouring the power-sharing agreements that enabled him to form a government in late 2010. The result is that the country faces nothing short of political turmoil in the second half of 2012. Iranian support for Maliki is likely to complicate this delicate situation still further.

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Meanwhile, the Iraqi security forces - now deprived of US support - remain incapable of holding back an al-Qaeda insurgency that has cost an estimated 1,400 lives since the American withdrawal. With many attacks being sectarian in nature, the worsening violence has the potential to fracture the Iraqi state, especially with the county's politicians currently so divided along the same ethnic lines.

The US still aims to support Iraq through arms sales and other programmes, but even this intention is being thwarted by Baghdad's failure to claim the vast majority of the funds that Washington has allocated for it.

Iraq is not yet a failed state. But failure could become unavoidable if significant improvements in its political and security situations are not achieved in the second half of 2012.

Over the last quarter BMI has revised the following forecasts/views:

- The latest developments in the Iraqi insurgency are discussed, including a string of al-Qaeda attacks against Shi'a civilians in early July. It was also revealed that Iraq-based al-Qaeda insurgents are crossing into Syria to stage attacks there.

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