Forget failure, let's avoid catastrophe.

IF "SUCCESS" in Iraq means that the war's benefits outweigh the sacrifice of the American and Iraqi people, then it is no longer possible even to conceive of success in Iraq, let alone achieve it.

More than 22,000 Americans have died or been wounded, and the financial cost has passed $300 billion. Iraqi civilians are being slaughtered by the thousands each month--often by sadistic death squads that torture their victims first--while thousands more are being driven from their homes. Billions of dollars remain unaccounted for, even as such basics as fuel, clean water and electricity remain in short supply. Regionally, American influence is at its nadir; while our ability to meet other global interests--including waging war against terrorism--is also at a low.

It wasn't supposed to be this way. Before the war started, the Bush Administration fostered inflated expectations about what victory would bring. America would create a stable and unified Iraq with a representative, constitutional government that respected ethnic, religious and women's rights, which could repel foreign terrorists as well as interference from neighboring countries, and which would enjoy a growing, independent, free-market economy.

Three and one-half years after the American invasion, Iraq is none of these. Despite elections, the government has little power to stop the sectarian violence, end the insurgency or protect its borders. Corruption is rampant, the economy depends on huge American subsidies and fundamental political questions remain unresolved.

Nonetheless, despite the Bush Administration's failure to create a peaceful and prosperous Iraq, we cannot simply walk away and thereby expose ourselves to new threats throughout the world. The challenge going forward for U.S. policy-makers, then, is to salvage Iraq in a way that will enable us to protect our regional and global security interests--even as political support for the war continues to decline and our military continues to suffer.

The question on the table should be: What can the United States hope to achieve within a time frame and at a cost that is acceptable to both Americans and Iraqis?

Chasing objective measures of improvement--like electricity production, hospital construction and fuel prices--will never lead to success, since these can be shattered by a single IED. In order to achieve lasting progress, Iraq's political process must be made to work. To prove to the Iraqi people that their elected leaders--not militias and death squads--hold the key to their future, the Iraqi Parliament must achieve five political milestones in the next 18 months (if not sooner) in order for the country to survive.

The first is federalism. The Iraqi people must decide whether to cast their fate with the central government or to look to more local authorities to protect them. The central government's inability to stop the incessant violence, to provide many basic services, to act independently of the American and other coalition forces and to rebuild the economy has created doubts about its abilities to govern. This doubt, coupled with a deep anxiety about the widespread violence, has created a crisis of confidence that has denied Iraqi Prime Minister Maliki's government a mandate to take necessary, tough measures.

The Iraqi constitution provides a peaceful way for Iraqis to decide where to place their faith and loyalty. Section Five of the constitution permits Iraqis to form "governates" and larger "regions." Governates are supposed to enjoy "broad administrative and financial authorities", while regions are even more autonomous and have "the right to exercise executive, legislative and judicial authority."

One thing Iraqis have proven themselves good at is going to the polls. Having to vote whether to join a semi-autonomous region or to stick with current political arrangements would resolve a lot of uncertainty--as well as provide a new outlet for vying for power and settling disputes.

The Iraqi Parliament is deeply divided over federalism. Sunni and secular parties, along with lawmakers aligned with the Shi'a cleric Moqtada Sadr, oppose federalism, while the powerful Shi'a Supreme Council for Islamic Revolution party backs federalism. Opponents fear that the Shi'a will quickly form a nine-province region in the south--dooming the idea of national unity and depriving the rest of the country of southern oil revenues.

Opponents of federalism have been seeking to delay any vote for at least 18 months, hoping that the central government will be stronger by then. Some delay would be helpful. But after years of at least tacitly backing the insurgency, Sunnis must face the cost of continuing their support. Perhaps the prospect of a Shi'a region will finally prompt Sunni communities to take bolder steps to stop the violence. But if not, that need not mean Iraq's dissolution. Having Iraqis put their faith in more local government authorities--rather than clerical sects for services and militias for protection as many currently do--would still be a vast improvement and a significant step toward secularism and democracy.

For its part, the United States can play the role of honest broker--calming tensions, encouraging compromise, and buttressing the legal and constitutional process. Although a stronger central government might in theory be preferable from the U.S. perspective, resolving this fundamental dispute peacefully is the highest priority.

Constitutional reform is the second milestone. At the same time that the Parliament began debating federalism, it formed a 27-member committee to consider amending the constitution. Just as the prospect of a federalism vote would please many Shi'a lawmakers, so too Sunnis, Kurds and other minorities are heartened by the chance to "fix" a document that many believe enshrined Shi'a dominance. And unlike during the original drafting process, where the United States adopted a hands-off posture, the United States should be very aggressive about encouraging trade-offs to help all sides reach compromises that might otherwise elude them. The United States should also advocate forcefully for greater protection of women and minorities and a secular judiciary with minimal clerical power to overturn laws.

A third issue is the disposition of the oil revenues. Apart from the future structure of the Iraqi government, one of the most significant sources of discord and uncertainty is the distribution of government revenues. In addition to outright oppression, Saddam Hussein deprived his enemies and non-Sunnis of basic needs and development. In recognition of this legacy, the constitution guarantees "an equitable share of the national revenues" to regions and governates. But there is nothing to ensure implementation of this principle.

A public formula for distributing revenues throughout the country, guaranteed for the next five years, would demonstrate the central government's commitment to fairness. While such budget rigidity will come at a cost, it would underscore the importance of the political process and give people a stake in protecting oil and gas facilities.

The fourth milestone would be the development of a regional forum. Not all of Iraq's political or security challenges are internal. Iraq is beset by regional interference--from Turkish intimidation to Saudi funding to Iranian arms. These outside actors are protecting their interests, pursuing their ambitions and striking out at their adversaries covertly. Far from dealing with the Iraqi government and each other directly in a structured format, they exert their power and influence through violent proxies.

One need not assume benevolence on the part of Iraq's neighbors in order to believe that an ongoing forum for these actors, the Iraqi government and representatives from the coalition forces will lead to some common ground. Even if cooperation and compromise prove elusive on many issues, such a forum would at least allow for dearer communications and a chance for mutual progress on some matters. Maliki's trip in September to Iran, and the prospect of more economic deals between the two countries, may encourage greater Iranian cooperation.

Finally, there is the fate of the militias. With a more revitalized political process tackling tough internal and external challenges alike, thereby shifting power from the streets to the Parliament, the Iraqi government can start to disarm militias.

Countries with political parties that control their own paramilitary forces are weak, unstable and violence-prone. As long as Iraqis can more immediately (and effectively) resolve disputes through violence or the threat of violence, the political process will be superfluous and garner little popular support.

Raiding militia strongholds and weapons caches, reclaiming territory and reestablishing government control will be difficult and could spark more violence--especially if some ethnic groups feel disproportionately targeted. Military disarmament will require strong support from U.S. military forces, although Iraqi forces should take the lead whenever possible.

But to be successful, there also must be a political process in place to reinforce the military effort with appropriate incentives and punishments. The Iraqi Parliament must pass legislation offering militia members broad amnesty and, in appropriate cases, a chance to be trained and join Iraqi military forces. Conversely, continued militia activity must bring not only criminal punishment, but also civil forfeiture of property in order to reduce the financial incentives of militia participation.

As for the political parties that support militias, disarmament will only occur if militias become a political liability instead of an asset. Given that numerous Iraqi political parties are more an extension of militias than the reverse, severing militias from their political wings may be as difficult as military disarmament. But unless and until militias cease being a political force and a security threat, Iraq will never enjoy peace, its government will never exercise exclusive power and the political process will never gain popular trust and respect. Here, too, criminal penalties and property forfeiture should apply to political parties and militia leaders in order to sever those ties.

EXCEPT FOR the disarmament of militias, which would include military action, these goals can be achieved politically--without the use of U.S. hard power and the expansion of violence.

These milestones may seem quite modest in contrast to the Bush Administration's utopian rhetoric about Iraqi democracy. But compared to the other possible outcomes--Iraq's sectarian violence descending into a full-fledged civil war and even escalating into a regional war; an Iraqi government unable to roll back the foothold Al-Qaeda has achieved; Iraq fragmenting into smaller statelets; Iran gaining a puppet state in the south and further influence over the entire Persian Gulf--they offer a reasonable chance of peace and stability.

If not, the result will not simply be "failure" or even a larger strategic blunder; it will be a human tragedy that haunts the United States for years to come.

Peter Charles Choharis is an attorney in Washington, DE, as well as a visiting fellow at the Center for Strategic and International Studies and visiting scholar at The George Washington University Law School. He served as the executive director of the 2004 Democratic Platform.