The remarkable drop in violence in Iraq over the past few months has been hailed by the US as positive progress towards damping sectarian bloodshed in the country. Insurgent attacks and casualties among US troops and Iraqi civilians have fallen sharply since September, but can this trend be sustained, critics wonder.

Political observers are sceptical and warn that the recent success in Iraq may create a new set of challenges for 2008.

The three main challenges identified are national reconciliation, the potential return of hundreds of thousands of Iraqi refugees to their homes and mixed neighbourhoods and what will be Iran's next move and manipulation of its Shia allies to drive the Americans out of Iraq.

Inside Iraq this week looks at the critical turning points in Iraq this year and discusses the main issues it faces in 2008.

Watch part one of this episode of Inside Iraq on YouTube

Watch part two of this episode of Inside Iraq on YouTube

This episode of Inside Iraq aired from Friday, December 28, 2007

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Source: Al Jazeera