Abstract : The situation in Iraq is grave and deteriorating. There is no path that can guarantee success, hut the prospects can he improved. In this report, we make a number of recommendations for actions to he taken in Iraq, the United States, and the region. Our most important recommendations call for new and enhanced diplomatic and political efforts in Iraq and the region, and a change in the primary mission of U.S. forces in Iraq that will enable the United States to begin to move its combat forces out of Iraq responsibly. VVe believe that these two recommendations are equally important and reinforce one another. If they are effectively implemented, and if the Iraqi government moves forward with national reconciliation, Iraqis will have an opportunity for a better future, terrorism will he dealt a blow, stability will be enhanced in an important part of the world, and America's credibility, interests, and values will be protected. The challenges in Iraq are complex. Violence is increasing in scope and lethality. It is fed by a Sunni Arab insurgency, Shiite militias and death squads, al Qaeda, and widespread criminality. Sectarian conflict is the principal challenge to stability. The Iraqi people have a democratically elected government, yet it is not adequately advancing national reconciliation, providing basic security, or delivering essential services. Pessimism is pervasive. If the situation continues to deteriorate, the consequences could be severe. A slide toward chaos could trigger the collapse of Iraq's government and a humanitarian catastrophe. Neighboring countries could intervene. Sunni-Shia clashes could spread. Al Qaeda could win a propaganda victory and expand its base of operations. The global standing of the United States could be diminished. Americans could become more polarized. During the past nine months we have considered a full range of approaches for moving forward. All have flaws. Our recommended course has shortcomings, but