On January 13 an emerging Sunni-Shiite nationalist bloc in Iraq signed a groundbreaking agreement aimed at ending Iraq’s civil war, blocking the privatization of Iraq’s oil industry and checkmating the breakaway Kurdish state. It’s a big step forward, and it could change the face of Iraqi politics in 2008.

For the past two years, Iraqi nationalists–opposed to the US occupation, opposed to Al Qaeda and opposed to Iran’s heavyhanded influence in Iraqi affairs–have struggled to assert themselves. The nascent coalition contains the seeds of true national reconciliation in Iraq, but it has emerged independently of the United States. Unrelated to the constant American pressure on the government of Prime Minister Nuri al-Maliki to meet various reconciliation “benchmarks,” the new coalition is designed either to sweep Maliki out of office or force him to join it.

Enormous obstacles stand in the way of the Sunni-Shiite coalition, and Iraq is just as likely to descend into a new round of intense civil war as it is to stabilize under a new ruling bloc. Still, it could work, but there’s a big if–if the United States steps back and gets out of the way.

Since the rigged Iraqi elections of 2005, the United States has supported a shaky and now utterly discredited four-party coalition in Iraq. Two of those parties are the ultra-religious Shiite parties, the Islamic Dawa Party and the Islamic Supreme Council of Iraq (ISCI), both strongly supported by Iran. The other two are the Kurdish warlord parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK). During that time, Iraq’s two prime ministers, Ibrahim Jaafari (2005-06) and Maliki (2006-2008)–both from Dawa–have staunchly refused to open the door to increased Sunni Arab participation in the government. But now that coalition is falling apart, and its partners are increasingly at odds with one another.

The potential collapse of the Shiite-Kurdish pact that has ruled Iraq under the American occupation has created a freewheeling search for competing alliances among the myriad political factions that have emerged since Saddam Hussein’s overthrow.

Partners in the new, twelve-party alliance include nearly all of the Sunni Arab parties, including the Sunni religious parties and the secular National Dialogue Front; the secular Iraqi National List of former Prime Minister Iyad Allawi, a secular Shiite; two big Shiite parties, including Muqtada al-Sadr’s bloc and the Fadhila (Virtue) Party; a faction of the Dawa Party; and assorted smaller groups, including independents in Iraq’s Parliament. Among its goals, say its leaders, are to ensure that Iraq’s “oil, natural gas, and other treasures [remain the] property of all the Iraqi people,” opposing both the proposed new oil law that would open the door to privatization of the oil industry and the illegal oil deals signed by the Kurdish regional government. Another goal, they say, is to block the Kurdish takeover of the oil-rich region around Kirkuk in Iraq’s north. And, they say, the new coalition will “overcome the narrow circle of sectarianism” by uniting Sunnis and Shiites.

What’s more, there are reports of talks involving the remaining Sunni resistance groups–those that have not joined the American-sponsored Awakening movement and the so-called Concerned Local Citizens groups–in a broad-based national reconciliation effort. According to the Arab press, six Sunni resistance factions have been meeting in England in preparation for a proposed conference in Cairo with representatives of the Iraqi government and political parties. A parallel effort is under way at meetings in Beirut. And French President Nicolas Sarkozy, currently touring the Middle East, has renewed his country’s offer to bring Iraq’s warring political factions together. Sarkozy suggested “hosting in France, far from the heat of passions and on neutral ground, inter-Iraqi roundtable talks that are as large as possible.” It’s unclear whether Sarkozy’s proposed conference would include representatives of the armed resistance, but it’s possible. (An earlier offer by France to host similar talks got the cold shoulder from Maliki and no encouragement from the United States.)

The fact that Sadr’s bloc opted to join the opposition bloc is critical. Not only does Sadr command thirty-two seats in Iraq’s Parliament but on the ground in Baghdad and in the south his Mahdi Army militia is a formidable force. The Fadhila Party, too, has great power in and around Basra, Iraq’s second-largest city, which controls the bulk of the oil industry and Iraq’s exports.

A wild card in any political realignment in Iraq is the attitude of the powerful new Sahwa (Awakening) movement, the 100,000-strong paramilitary force whose backbone is Iraq’s tribal leaders. Currently, the Sahwa movement is strong in Anbar, Diyala, Salahuddin and Nineveh provinces to the west and north of the capital, as well as in Baghdad itself and in the suburban belt south of Baghdad. Though Sahwa is not a party (and thus has no seats in Parliament), it is a power to be reckoned with, and it is being courted assiduously both by the new nationalist coalition and by Dawa and ISCI. If forced to choose, the Sahwa movement would be far more likely to align with nationalists than with Shiite sectarian parties, since the tribal leaders regard ISCI, in particular, as an agent of Iran.

So far, the United States has continued to prop up Maliki’s shaky regime, despite its growing unpopularity. US officials fear that if Maliki were to fall, the results would be unpredictable–especially in an election year. Besides, the nationalists would be far less likely than Maliki to sign the proposed long-term extension of the American presence in Iraq that Maliki and President Bush intend to ink by July.

A hint of how entrenched the American presence in Iraq might be came this week, when Iraq’s defense minister, Abdul Qader Mohammed Jassim, came to the United States for an extended visit, during which he met with long-range planning staff at the Pentagon. During his visit, Jasim declared that a significant number of troops would have to remain in Iraq for another ten years, until 2018.

The passage, on Saturday, of the so-called Accountability and Justice Act by Parliament was widely hailed by US officials, including President Bush, as a sign that at least one of the benchmarks laid out at the start of the surge a year ago had been met. That act was supposed to have eased the draconian anti-Baath party rules that excluded hundreds of thousands of Iraqis from government service and jobs.

The act was passed by a half-empty Parliament, with only 140 of the 275 elected members of the body in attendance. It was widely condemned by the very people it was designed to help, including several Sunni and secular parties and former Baathists, and it appears that the new law could trigger a purge of Iraq’s defense ministry, interior ministry, army and police, forcing many thousands of former Baathists out of the security services–in other words, precisely the opposite of its ostensible purpose. Indeed, because Sadr’s bloc is so bitterly anti-Baathist, it is possible that Maliki chose this moment to force passage of the law in an attempt to use the divisive issue as a wedge to split Sadr away from potential partners in the new alliance.

In the end, Iraq is still a shattered nation. Its economy is a shambles. The sectarian civil war has eased, but violence is everywhere. In the past week, two major US military actions–a sweeping offensive just north of Baghdad and one of the heaviest aerial bombardments of an area south of the capital–killed scores. The situation around Kirkuk is explosive. And intra-Shiite violence in Basra and other cities in the south simmers just below civil war levels. Even without US interference, it might still take a miracle for a stable Iraqi coalition to take root.