The US troop pullback in Iraq next week will serve as a test for the United States, which wants to move from a warlike to a diplomatic footing with Baghdad despite fears of militants and Iran.
Nonetheless analysts said the withdrawal of US combat forces from Iraqi cities will be less dramatic than it seems because the military, while less visible, can still intervene if Iraqi security forces appeal for help.
"We're getting to one of the major milestones of the security agreement," according to Chris Hill, the US ambassador to Iraq.
The pullback starting Tuesday is in line with last November's Status of Forces Agreement (SOFA), which sets out a timetable for a complete US troop withdrawal from Iraq by 2011.
"As we go forward with the security agreement, we will also be moving ahead on something called the Strategic Framework Agreement," Hill told reporters during a visit to Washington on June 18.
"And this is an agreement which will really govern our relationship for, we hope, decades to come, that will involve our educational exchanges, economic relations, various political exchanges," he added.
To boost regional stability, Hill urged more Sunni Arab states to renew ties with an Iraq that is now led by Shiites and not by Saddam Hussein, a fellow Sunni who was toppled in the 2003 US-led invasion and hanged in 2006.
In a memo this month to General Ray Odierno, the commander of US-led forces in Iraq, strategist Anthony Cordesman said non-military US support for the fledgling nation is now bound to be more effective than armed intervention.
His memo, which was published on the Center for Strategic and International Studies (CSIS) website, cautioned: "The US should not phase out aid too quickly in the areas where there are ethnic and sectarian fault lines.
"Limited amounts of aid can be used to enhance dialog (sic), to try and bridge differences, and lever the kind of positive action that can bring various sides together," said the strategist for the Washington-based CSIS.
The government in Baghdad is still struggling to reconcile Sunnis and Shiites as well as Arabs and Kurds in order to forge a functioning multi-ethnic democracy.
Analyst Michael O'Hanlon said next week's withdrawal is "probably not quite as significant as some people think" because some US troops will work with Iraqis inside the cities and larger US forces will be based in suburbs.
"This is an evolutionary process and not a radical one," O'Hanlon told AFP.
Noah Feldman, a Harvard University professor who once served as a US adviser in Iraq, said the pullback still represents the biggest test yet for coalition-trained Iraqi security forces.
"If the pattern of those insurgents who are still out there remains consistent, we'll see some tests after US troops pull back," said Feldman who warned of the risk of both Sunni and Shiite militant violence.
He told AFP that the Iraqi government could appeal for US forces to intervene even if it carries a "short-term political cost" in a country yearning for peace and an end to the US-led occupation.
"It's also a test of whether the Iraqi political situation has stabilized," he added.
A senior US defense official, who asked not to be named, acknowledged fears in Washington and in the region "that as we draw down, that the vacuum will be filled by Iran."
But he said such concern is overblown.
The government of Prime Minister Nuri al-Maliki, he said, showed its independence from Shiite but non-Arab Iran last year in both negotiating the SOFA deal with Washington and in crushing Iranian-backed militias in Basra.
O'Hanlon and Feldman agreed that Iraq shows signs of nationalism, and Feldman said Iran has no interest in sparking a civil war that could spill over the border.
In the long run, Feldman suggested, Iraq could become a relatively secular democratic "model" for Iran, which has been gripped by mass protests against the ruling clerics over contested presidential election results.