"The political environment here (in the United States) impinges directly" on what happens in Baghdad, especially talk of withdrawing troops, the official, speaking on condition of anonymity, said.

The Iraqi perspective is dominated by the security issue, the official said.

"Fundamentally it is how any individual, Iraqi citizen or family, live day to day, their chances of survival and being productive, how closely they come to normalcy," the official said.

Iraq's struggling government will be judged by the U.S. Congress in September, when President Bush is to present a report on how well Baghdad has achieved a host of progress markers. Many of those markers relate to security and easing the sectarian standoff. But Congress also took up Bush's proposal that Iraq's government be measured by its ability to pass a law governing the vast oil reserves.

"Here in Washington a great deal of weight has been assigned to legislation in Iraq. I think that's unfortunate," the official said. "I think the legislation is going to be the hardest to deliver on," adding doubts it will be approved before the Parliament takes an August recess.

"Legislation itself does not solve the problem," the official said. "I'd rather adopt something like how many families come back to their homes as a key indicator of progress."

Iraq produces 2 million barrels of oil per day; it produced 2.6 million bpd before the war. Oil sales last year paid for 93 percent of Iraq's federal budget.

The official said the debate over the oil law falls back on the constitution and varied interpretations of whether the federal government or the regions and governorates are due control over the reserves.

And, the official said, "how much you give foreign companies as a stake in the development."

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Ben Lando, UPI Energy Correspondent