To address the challenges facing the U.S. intelligence community in the 21st century, congressional and executive branch initiatives have sought to improve coordination among the different agencies and to encourage better analysis. This report discusses these challenges and efforts the current and previous Administrations and Congresses have taken and are taking to address them. The report includes criticism of the intelligence community's efforts regarding Iraq, Iran, and other areas. Improved analysis remains a key goal in these discussions.

Iran is materially assisting all major Shiite Muslim political factions in Iraq, most of which have longstanding ideological, political, and religious ties to Tehran, and their armed militias. The Administration notes growing involvement by Tehran in actively directing training, and arming Shiite militiamen linked, to varying degrees, to hardline cleric Moqtada Al Sadr. Some analysis goes so far as to see a virtual "proxy war" between the United States and Iran inside Iraq.

This report discusses the Iran-Iraq conflict at its present state, which has become a war of attrition with neither side capable of achieving a decisive military victory over the other in the short term. U.S. policy concerns currently are threefold: first, that Iraq, despite moves to sustain its economic and military capacities, ultimately might suffer a destabilizing defeat to the detriment of U.S. interests in the Persian Gulf region; second, that future instability in Iran could open opportunities for Soviet exploitation; and third, that the conflict might expand beyond its present confines to threaten friendly regional states and the availability of their vast petroleum resources.