The Los Angeles Times reports a successful U.S. led raid into Sadr City to capture or kill terrorists believed to have ties with Iran angered Iraqi Prime Minister Nouri Maliki:

July 1, 2007 – BAGHDAD — A U.S. search early Saturday for fighters allegedly linked to Iran turned into a battle in which the military said it killed 26 militants. The Iraqi government rebuked the Americans for carrying out the raid in a Baghdad neighborhood without its permission, and local leaders said many innocent bystanders had been hurt.

The raid could stir further difficulties for Prime Minister Nouri Maliki, whose relationship is already rocky with Shiite cleric Muqtada Sadr. Maliki, in charge of a fractious coalition government, is locked in a confrontation with Iraq’s leading Sunni bloc, which holds 44 seats in the 275-member parliament, over an arrest warrant for Iraq’s culture minister, who is a Sunni. The Sunnis have withdrawn from the Cabinet over the warrant for Asad Kamal Hashimi in the slayings of two sons of an independent Sunni legislator.

The military could face a backlash from Maliki’s government over the early morning raids in Sadr City, the bastion of Sadr’s Al Mahdi militia and home to more than 2.5 million people. A failure to stand up to the Americans might further erode backing for Maliki’s fragile coalition government among the general Shiite population, which forms the bulwark of his support.

Maliki, who has been in a tug of war with U.S. commanders over raids in Sadr City, quickly issued a statement criticizing the Americans for not clearing the operation with the Iraqi government. He said the government “refuses” to permit the U.S. to “carry out any military operation in any Iraqi province or city without first acquiring permission from the leadership of the Iraqi forces.”

The U.S. military said the 26 militants who were killed had attacked soldiers with small arms, rocket-propelled grenades and roadside bombs. The troops also detained 17 militants during the operation against extremists with “close ties to Iranian terror networks,” the military said.
…
Maliki has signed off on raids in Sadr City on a case-by-case basis, but this time he seemed unwilling to back the targeting of Sadr’s militia.

Last fall, Maliki blocked the Americans from carrying out raids in Sadr City. But with the start of the U.S. troop buildup in February, the military secured a guarantee from Maliki to be allowed to go after Sadr militiamen if they were considered “rogue members” affiliated with Iran.

With Maliki in danger of a Sunni withdrawal from the political process, the prime minister might be rethinking his strategy toward the Sadr loyalists, whose six Cabinet members quit in April and whose 33-member bloc started boycotting parliament two weeks ago to protest the bombing of a Shiite shrine in Samarra.

In other developments … In south Baghdad, an armor-piercing bomb believed to have been manufactured in Iran killed a U.S. soldier and wounded three, the Army said.

While the Associated Press reports civilian deaths dropped by 50% last month and the surge is making progress, casualties among both Iraqi and U.S. forces remain high:

July 2, 2007 – Baghdad — Iraqi civilian deaths dropped to their lowest level since the start of the Baghdad security operation, government figures showed yesterday, suggesting signs of progress in tamping down violence in the capital. But American casualties are running high as U.S. forces step up pressure on Sunni and Shi”ite extremists in and around Baghdad.

At least 1,227 Iraqi civilians were killed in June along with 190 policemen and 31 soldiers, an officer at the Iraqi Interior Ministry”s operations room said. The officer spoke on the condition of anonymity because he was not authorized to release the figures.
…
June’s figures were the lowest monthly tally this year. In January, President Bush ordered nearly 30,000 troops to Iraq in a major push to stabilize the capital so that Iraq”s leaders can hammer out power-sharing agreements for a lasting peace.

The Baghdad security operation began in mid-February, although the last of the American reinforcements arrived in Iraq only last month… the figures suggest a downward trend, which may be a result of U.S. military pressure on insurgents in Baghdad and the surrounding areas, as well as a shift in focus by extremists toward American targets.

The commander of U.S. forces in Baghdad, Maj. Gen. Joseph F. Fil Jr., told reporters on Friday that American and Iraqi security forces now control 48 percent to 49 percent of the 474 neighborhoods in Baghdad, up from 19 percent in April
.