Without the involvement of regional powers, federalization will be futile and dangerous. Remember while Shiites and Kurds participated in the political process of the unity government, the Sunnis boycotted the elections. Iraq's Sunni neighbours and their proxy militia are encouraging this Sunni-Shiite skirmish, postponing America's hopes for the region. This is much like funding provided to Ba'athists in the Iran-Iraq war. The rump of Saddam's army and other unemployables have joined foreign thugs in this insurgency. They have full approval and funding from big players in no mood for democracy (or regime change) from Kuwait and Saudi Arabia to Yemen and other Arab states.

America and its narrow analysis of the region must be blamed for external interference in Iraq's affairs. Washington is intensely lobbied by Sunni regimes in the region that falsely label themselves "moderates and allies". The pro-Israel lobby and its anti-Iran voice is even stronger. Alas, the United States has no direct contact with Iran, the main regional Shiite power in the region. America cannot make an independent assessment. After 27 years, there is no one in Washington with experience in Iran.

So Washington simplifies the substance of it all, lumping Iran and Iraqi Shiite politics together. The U.S. capitol is permanently skewed with an anti-Shiite and anti-Iran bias. This works against he U.S.'s objective of achieving democracy in Iraq. More than 65% of Iraqis are Shiites, after all, and they cannot be avoided.

Devolution or not, Iraq cannot be stabilised on the cheap. A partition will be futile if the desperate economy of Iraq is not fixed. This chronic problem dates back to mid-1980s and the Iran-Iraq war, when Iraq incurred around $100 billion debt and received $60 billion in aid from Kuwait and Saudi Arabia to keep its economy on life support.

High oil prices and debt forgiveness plans leave $4 per day for every Iraqi in oil income -- a paltry sum on par with income in African banana republics. This pays for most basic foods, gasoline, cars, power plants, cement, steel, refineries and machinery. But just to put this in comparison, the Pentagon spends about $6 a day per Iraqi on its operations.

Meanwhile, Iran presently accounts for at least half of all Kurdish trade. Iranian Shiite pilgrims provide the second largest source of earnings for Iraq. Tourism directly affects more than 37 sectors in the value-added chain and it creates more employment than any other sector. This explains the calm in Karbala or Najaf; the fighting is concentrated in Baghdad.

This conflict is not about Sunni vs. Shiite or Kurds. A crude partitioning of Iraq will only serve as a cheap diversion from the economic disaster in progress. A failed state in Iraq -- be it in one or three pieces with lots of oil in the ground -- will always harm America, which will be blamed for blundering this war of choice.