SINCE WE last wrote for The National Interest--in the Winter 2003/04 issue ("Scoring the Iraq Aftermath"), presenting data on security and economic trends in Iraq from the fall of Baghdad through autumn 2003--the news coming out of Iraq has worsened.

In our article, we observed:

A successful counterinsurgency must have security and economic dimensions. In the security sphere, it is necessary to try to assess progress in the counterinsurgency: namely in neutralizing resistance forces, reducing crime rates and building Iraqi security forces.

And here, the news appears to be bad More Americans have died in Iraq in the six months from November 1, 2003 through April 30, 2004 (371 in total) that in the preceding eight. April 2004 was deadlier for American forces than even the invasion months of March and April 2003. And death totals among Iraqi security personnel have been roughly comparable in number.

Central Command's current estimate of the number of hardened insurgents still facing U.S. troops has not diminished even after six months during which more than 10,000 Iraqis have been arrested or killed by U.S. forces. And while coalition military forces are getting better at finding improvised explosive devices before the detonate, insurgents are getting better at building the explosives and at using car bombs, meaning that casualty rates have not declined but have gone up--way up.

The above will not surprise most Americans. Excepting the capture o Saddam in December, the daily new from Iraq has been almost uniformly bad in recent months. American troop levels, once scheduled to diminish this spring, are now greater than anytime since last August, with scant signs of greater troop contributions from coalition partners. Indeed, there has been a gentle trend in the opposite direction, with the announced withdrawal of forces from Spain, Honduras and Costa Rica.

Compounding the problem is the woeful lack of training for both the new Iraqi military and police force. By April 2004, only some 6 percent of the number of soldiers expected to staff a new Iraqi army had been trained. Only 22 percent of Iraqi police had even started an eight-week training course.

In the end, there can be no successful Iraq strategy without better security--and increasingly the Iraqi people sense it. April's scenes from Fallujah of American forces bringing down an Iraqi city to save it caused the coalition significant strategic damage, whatever tactical benefit might have been gained. The horrific prisoner abuse scandal has also not helped matters. Moreover, the insurgents' willingness to target Iraqi "collaborators"--a trend that has accelerated in 2004--is also a major worry. But politically motivated violence is not the only security threat. For nearly all Iraqis, the biggest concern remains being affected by "routine" crime in their normal lives. Since 2003, crime rates (for theft, murder and so on) have declined somewhat, but Iraq is still among the more dangerous countries in the world.

IS THERE any good news at all? Thankfully, the answer is yes. It is not enough to counter the above, and does not change the overall story that Iraq has gone much worse in recent months than expected. But it does provide welcome reason for some optimism that success may still be achievable, especially if the political transition process now underway in Iraq proves acceptable to the Grand Ayatollah Ali Al-Sistani and the bulk of his countrymen. Leaving aside the politics--too much a moving target for an article like this that must he written weeks before it is read (and in the run-up to the June 30 handover of sovereignty)--there are a fair amount of welcome developments on the economic and quality of life fronts.

Here is the tally on where we have gotten to date. First, Iraq's moves towards greater economic self-reliance continue--even if Deputy Secretary of Defense Paul Wolfowitz's aspiration of last spring that Iraq would soon fund its own reconstruction remains as unrealistic as ever. Crude oil production is now almost 2.5 million barrels per day (in contrast to late Saddam-era levels that were closer to 3 million barrels, but up from the 2.1 million barrels per day in October 2003). Exports are now over 1.5 million barrels a day. There is concern about whether the new pace of production is sustainable and whether wells are being properly maintained, but the overall story is still good.

Quality of life indicators are also improving, albeit slowly. Availability of motor fuels is up by almost 50 percent since late last summer and is within 10 percent of the stated coalition goal. Cooking and heating fuels are also about 50 percent more prevalent than last summer. Improvement in nationwide electricity production remains sluggish--up only 15 percent since last summer, and still only 60 percent of the target--but the real key is whether it will take a big leap in time for the summer heat.

Potable water and telecommunications availability both exceed their prewar levels. Schools and hospitals are virtually all open, even if three-fourths of the former still need a lot of renovation and 10 to 20 percent of the latter do not have even as many supplies as in the late Saddam Hussein period.

So there is a growing economic base of solid, even if not spectacular, news. This comes despite the fact that only a very small fraction of the $18 billion appropriated by the U.S. Congress for Iraq for 2004 had been spent by mid-spring, as of this writing. Remarkably, red tape and bureaucratic procedures had prevented more than about $1 billion being spent by the end of April. Some 2003 money and Iraqi funds were also available, meaning that the flow of resources was not quite as limited as the $1 billion figure suggests, but it was still quite limited.

The slowness of spending aid dollars is a serious indictment of the American budgetary system, even if it gets better fast in the coming

months. It has also kept unemployment rates distressingly high--probably still close to 50 percent, down somewhat from last summer but much higher than in Ba'athi days and much too high to offer any real hope of a stable security environment: Angry, unemployed young men tend not to throw flowers at the feet of foreign occupying troops. But the slowness of the disbursements to date also makes the positive economic news out of Iraq to date more impressive. As large sums of money finally start to flow into the country, the good news should accelerate.

Recent polling in Iraq reflects these schizophrenic realities (a worsening security situation alongside positive economic signs). We have reached a point where more Iraqis now think the invasion of their country has done more harm than good--yet half still think it has at least marginally improved their own lives. A majority now favor a quick departure by the coalition even if, paradoxically, they also say they--would feel less safe if coalition forces promptly left. And what is most worrying is that some 70 percent now view coalition troops as occupiers more than liberators. This raises the specter we outlined in the winter issue of The National Interest, that the United States could "mishandle the operation" in Iraq "to make anti-Americanism that rallying ideology" behind the insurgency.

The only dependable ways to turn around these numbers are to complete a successful political transition process in Iraq this summer, autumn and upcoming winter; to employ the huge numbers of Iraqis now unemployed; and to dispel the impression among most Iraqis that the country's towns and villages are ungoverned and unsecured. We wrote last winter that "If this mission does eventually show signs of failure, we must react and adjust our policies promptly, because failure in Iraq is not an option." The United States has already taken too long to make progress on most of these matters. The next few months will be critical for whatever remaining prospects for success we still possess.

Michael O'Hanlon is a senior fellow at the Brookings Institution. Adriana Lins de Albuquerque is a research assistant at the Brookings Institution. Their "Iraq Index" tracking data trends can be accessed online at www.brookings.edu/iraqindex.