The fighting was a sign of how brutal the past few weeks have been for General David Petraeus, reports CBS News chief foreign correspondent Lara Logan, because she said, "he really was looking at a year where he had imagined to be quite successful in reducing violence, particularly in Baghdad and some of the surrounding areas."
Speaking with Bob Schieffer on Face The Nation, Logan said that the gains made by agreements with militias (including from Sunni tribes and some Shiite tribes) to work with the Americans have almost disappeared in the face of the recent violence which spreads so quickly from Basra in the south of Iraq.
"It's really about two things," Logan said. "It's a fight amongst the Shiites for power in Iraq - what the future of this country is going to look like, how the Shiites will divide Iraq among themselves - but perhaps even more importantly it's a fight between the U.S. (who backs the Iraqi government and Iraqi security forces) and Iran (who backs those militias).
"This is really the proxy war that everybody talks about behind closed doors but nobody wants to admit to in public."
She noted that many of the rockets and mortars fired against Baghdad's Green Zone were launched from Sadr City, the base of militant cleric Muqtada al-Sadr, whose militia was engaged in fierce fighting with Iraqi forces in Basra.
"General Petraeus really has a very difficult issue on his hands because Sadr City is home to the Mahdi Army and militia loyal to Moqtada al-Sadr, one of the most powerful and popular in the country. It's densely populated.
For the U.S., They are on the outskirts of Sadr City but for them to move deep into this area, they risk a potential bloodbath. Nobody wants to see that happening.
The U.S. has been looking for a political solution to that, trying to bring Moqtada al-Sadr on board. They've been successful to a degree but what has been seen in the last few weeks - and there were 20 people reportedly killed overnight in clashes between U.S. forces and the militia inside Sadr City - what you've seen is a very determined defense by these militias not wanting to give up the rocket launch sites, or any ground.
"In the words of the American commander who is in charge of Sadr City, he said this fight began as a fight for these launch sites. Now it's all about killing Americans."
According to Logan, "The U.S. is very careful to say that al Qaeda has been defeated but they are not gone, not by any stretch of the imagination. They know that al Qaeda is there. They're waiting for their opportunity to come back. They took advantage of the violence and the fighting amongst the Shiites. That's exactly what they'll do: Be looking for opportunities like that to turn around the security gains that General Petraeus was able to make."
While Logan said that al Qaeda was significantly hurt by the agreement made with the tribes - with the additional American "surge" troops brought into the country to try to force the Iraqi government to accept reconciliation measures within that nation's government - al Qaeda has moved north towards the city to Mosul. "It's very much now an Iraqi organization, predominantly."
In anticipation of the progress report to be delivered to the House and Senate this week by General Petraeus and Ambassador Ryan Crocker, Rajiv Chandrasekaran, national editor of the Washington Post, said the recent violence in Basra poses a tremendous challenge for the administration.
"In many ways, the violence in Basra is the most perhaps honest assessment of where things stand in Iraq today, where things stand in terms of the status of Iraqi security forces," Chandrasekaran told Schieffer. "There are very credible reports that more than 1,000 Iraqi soldiers defected rather than fighting against fellow Shiites in the south. It raises real questions about the progress we're making in training and equipping Iraqi security forces."
Also brought into question is the role of Iran, which it was reported helped broker the crease-fire in Basra through the intervention of a senior Iranian military commander. "Of course, it shows the ascendant role of Iran," he said.
Chandrasekaran also said the Basra violence shows the degree to which political reconciliation - a key benchmark that the United States is looking for in Iraq - "simply isn't happening.
"It's not just Sunni-Shiite lack of reconciliation, but it's intra-Shiite fighting," he said.
Chandrasekaran said Maliki moved is worried about Shiite political parties' fate in upcoming provincial elections, and so made the military moves in Basra in order to try to marginalize and contain Sadr. "All of this has to be looked at through the lens of domestic politics in Iraq," he said, "but what it says to us here in Washington is that efforts at reconciliation are not going as well as the Bush administration would like us to believe."
Nancy Youssef, chief Pentagon correspondent for McClatchy Newspapers, said the United States is in a precarious position with Maliki: "The U.S. military officials that I've talked to say that they were working with Nouri al-Maliki to craft a long-term, thoughtful plan" to deal with the security issues in Basra. It appears that what the U.S. didn't want was what happened, which was a very sudden, ill-planned attack that potentially put the gains of the surge in jeopardy.
"In this case, the U.S. says that it wasn't informed about what the plan was, and then had to rush and get air combat support in place when the Iraqi security forces couldn't handle the fighting."
Read the full "Face the Nation" transcript here.