It's complicated. It's very complicated. The current situation in Iraq might not be able to be answered without attempting to distill out political affiliations. The facts are that the war is much more complicated and expensive than originally thought. The situation is also much more fluid and dynamic than originally thought. At the outset of the war, the belief was that the removal of Saddam Hussein was the final destination and outcome of the war. Yet, it actually was only the start as the multiple forces that were repressed by Hussein emerged to battle for control of the nation. Multipolar tensions began to rise and seek to articulate their own vision and within this fray, democracy has proven to be a challenge. Adding to this would be the presence of al- Qaeda insurgents that have entered the nation, ones that were not as present with Hussein present. In the end, the situation in Iraq is poised between this situation of conflicting narratives with the vision of democracy attempting to be articulated along with political and social instability and a mounting economic and human life cost of the war.
The United States is in the process of drawing down the number of troops we have stationed there, although that is a slow process. American troops have handed over control of the major cities to the Iraqi Army, and violence, though still present, has decreased greatly.
The Sunni Insurgency has, for the past two years, agreed to fight al-Qaeda in Iraq instead of the US, and we have hired 80,000 of them as soldiers in what is called the "Awakening Councils". This was a spectacularly successful move, as they eradicated most of the terror group in Iraq in about four months in 2007.
The country is in the midst of elections, and the last vote was close, between the current Prime Minister Nouri al-Maliki and a challenger.
The Shia militias (The Mehdi Army) has disarmed for now, and are not pursuing violence, but instead are participating in the election process.
Two of the leaders of al-Qaeda in Iraq were killed by US forces there last week, as reported in the news, so gains are still being made.
The country is recovering, and there is now hope that a stable Iraq can emerge, but they have a long way to go. Most analysts expect an American troop presence of 30,000 - 50,000 for some time to come.