Jaish al Mahdi (JAM) essentially had its beginnings in June of 2003.  Since then, they have grown, developed and embedded themselves into Iraqi Shi’ite culture more efficiently than the mafiosi, and their thugery, control and violence is rivaled only by their analogue in Lebanon, the Hezbollah.

A Muslim imam dropped his cloak to the sidewalk. It was a signal for the gunmen to move.

They surrounded the top Iraqi security official in a north Baghdad district. Iraqi military vehicles – commandeered by other Shiite militiamen – screeched into a cordon, blocking his exit. A gun was put to his head.

Brig. Gen. Falah Hassan Kanbar, a fellow Shiite, managed to escape when his bodyguards pulled him into a vehicle that sped down an alley.

Details of the Aug. 5 ambush emerged this week in interviews with Kanbar, U.S. military and intelligence officials. It remains unclear whether the thugs sought to kill Kanbar or simply intimidate him, but suspicions over the source of the brazen assault pointed in just one direction: the powerful Shiite armed faction known as the Mahdi Army and its increasingly unpredictable trajectory.

The vast Mahdi network – ranging from hardcore fighting units to community aid groups – is emerging as perhaps the biggest wild card as Iraq’s U.S.-backed government stumbles and the Pentagon struggles to build a credible Iraqi security force to allow an eventual U.S. withdrawal.

Just a few months ago, the Mahdi Army and its leader, firebrand cleric Muqtada al-Sadr, were seen as reluctant – but critical – partners with Iraq’s leadership. Al-Sadr agreed to government appeals to lessen his anti-American fervor and not directly challenge the waves of U.S. soldiers trying to regain control of Baghdad and surrounding areas.

But now, the once-cohesive ranks of the Mahdi Army are splintering into rival factions with widely varying priorities.

Some breakaway guerrillas are accused by Washington of strengthening ties with Iranian patrons supplying parts for powerful roadside bombs – which accounted for nearly three-quarters of U.S. military deaths and injuries last month. The devices suggest that Shiite militias could replace Sunni insurgents as the top threat to American troops.

Other Mahdi loyalists are seeking to expand their footholds in the Iraqi military and police, frustrating U.S. attempts to bring more Sunni Muslims into the forces as part of national reconciliation goals.

And in many Shiite strongholds across Iraq, Mahdi crews are trying to shore up their power and influence. The pace has picked up with the sense that the Shiite-led government of Prime Minister Nouri al-Maliki’s government could be irrevocably damaged after political mutinies by Sunni and Shiite Cabinet ministers.

The Mahdi Army, meanwhile, appears to be going through its own leadership crisis. Al-Sadr has been unable to rein in the renegade Mahdi factions. On Friday, a U.S. military commander said al-Sadr had returned to Iran, where he spent several months earlier this year. Al-Sadr’s top aides called the claim baseless.

But there is no dispute that Mahdi Army operatives are busy planning for the future.

The militia is working behind-the-scenes to solidify control of rent markets, fuel distribution and other services in Shiite neighborhoods – taking a page from other influential groups across the region, such as Hezbollah, that have mixed militia muscle and social outreach.

The JAM uses force to control the supply of ice in Baghdad, a non-trivial thing at this time of year.

Each day before the midsummer sun rises high enough to bake blood on concrete, Baghdad’s underclass lines up outside Dickensian ice factories.

With electricity reaching most homes for just a couple of hours each day, the poor hand over soiled brown dinars for what has become a symbol of Iraq’s steady descent into a more primitive era and its broken covenant with leaders, domestic and foreign. In a capital that was once the seat of the Islamic Caliphate and a center of Arab worldliness, ice is now a currency of last resort for the poor, subject to sectarian horrors and gangland rules.

In Shiite-majority Topci, icemakers say that Moktada al-Sadr’s Mahdi army militia issued a diktat on the first day of summer ordering vendors to set a price ceiling of 4,000 dinars, or $3, per 25-kilogram, or 55-pound, block of ice – 30 percent less than they charge in areas outside Mahdi army control.

Everyone complied, delivering an instant subsidy to the veiled women and poor laborers who are the radical Shiite cleric’s natural constituency. The same price is enforced in his other power bases, like Sadr City.

We have discussed both the counterinsurgency victory by the Marines in the Anbar province, as well as the expansion of this model into other areas of Iraq (e.g., the Diyala province).  Some senior military officers are advocating the position that the Shi’ite militias have replaced al Qaeda as the most significant threat.  “The longer-term threat to Iraq is potentially the Shiite militias.”  In addition to Sadr’s army, there is another with which to contend, perhaps even more deeply embedded into Iraqi culture and with deeper roots and history.

The two largest militias, Sadr’s Mahdi Army and the Badr Organization of the Supreme Iraqi Islamic Council, are tied to prominent Iraqi families whose rivalries date back generations. Both militias have infiltrated the security forces.

Badr, which has never openly battled American forces, generally gets credit for being the more astute player of the two. “The Badr corps understood the game from the beginning and incorporated itself into the security forces,” Iraqi Foreign Minister Hoshyar Zebari said.

A senior U.S. military official described American support for Badr — an Iranian-funded organization that many think still conducts targeted assassinations — as the only option since many of its members have been absorbed into the Iraqi security forces.

“Badr has decided to join the government, and they gave up their weapons and became part of the state,” the senior military official said.

Note the excuses and unwillingness to excise the Badr corp from the ISF.  But these main stream media reports about the JAM splintering, while having a kernel of truth, are probably exaggerated.  Omar Fadhil has noted the power of Moqtada al Sadr.  “While Al-Qaeda poses a serious security challenge in some provinces, Sadr threatens the future of the whole country. He can paralyze or disrupt the proper functioning of whole ministries and provinces.