Iraq

Concerns over security, sabotage and smuggling are fading as the government in Baghdad takes control of oil-rich areas that were run by rogue Shiite militias just a few months ago. This month, the Iraqi government expects 10 major foreign oil companies — including ExxonMobil, Shell and Chevron — to sign modest contracts that could be a first step toward bigger investments. However, any major jump in Iraqi oil production is probably years away, analysts say. Still, the stakes are enormous for both Iraq and the global economy. With the world's fourth-biggest crude reserves, Iraq could provide the world's best hope for a medium-term solution to record-high prices of around $130 a barrel, which have pushed gas prices above $4 a gallon for American drivers.

The decisive battle of the Iraq war is shaping up — not in the streets of Baghdad but in the halls of government where the future of America's role across the region is on the line. American and Iraqi officials have expressed new resolve to hammer out far-reaching deals that would allow U.S. forces to remain on bases across Iraq once the U.N. mandate expires at year's end. The stakes in the talks are enormous. The outcome will shape not just Iraq for years to come — but, more important, America's strategic position all across the oil-rich Persian Gulf at a time when Iran's influence is growing. The U.S. maintains substantial air and naval forces elsewhere in the Gulf but few ground troops except in Iraq. A pact also would assure Arab allies that Iraq would not fall under domination by Iran, which is pressuring the Iraqis to refuse any deal that keeps U.S. soldiers here. But critics in the United States fear it will tie the hands of the next president when millions of Americans are anxious to bring troops home. Many Iraqis, in turn, worry the deal will allow American domination of their country for decades. With so much in the balance, the Iraqi government said Wednesday that both Washington and Baghdad recognize the need to finish the talks by July's end "to avoid any legal vacuum that may arise."