Let’s put the bad news up front: Extremist elements in Iraq are vying for political and economic power and are seeking to take advantage of this delicate stage of transition in Iraq’s history. Sunni and Shia extremists are using brutal and provocative tactics against one another. Baghdad is the center of gravity for this increasingly sectarian conflict. The conflict is complex: There are also foreign terrorists infiltrating the borders, renegade death squads, an insurgency, and foreign governments who seek to exert influence on Iraqi politics. This, however, is only part of Iraq’s present story. The violence belies the gradual but...