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By Magdi Abdelhadi
BBC Arab affairs analyst
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The lull in the fighting in Najaf has opened the way for negotiations that may end the week-long stand-off between Moqtada Sadr and the joint US-Iraqi troops.
The radical cleric's supporters are outgunned and outnumbered
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The interim Iraqi government has adopted a shrewd negotiating position, tough but not uncompromising.
It says Mr Sadr is free to go and set up a political party if he wants to, but his militia will have to be dismantled.
Should he reject both or insist on having a political movement and a militia, he is bound to be cast in the role of the intransigent one.
He probably knows that he is in a difficult position.
After initially adopting a tough stance, Mr Sadr is now making some conciliatory gestures.
He has felt the pressure of the joint US-Iraqi operation over the past week.
Political suicide
His militia is outnumbered and outgunned.
It is a fight that he knows he cannot win.
His options appear limited: either he agrees to dismantle his militia or the fighting will resume.
Mr Sadr has staked so much on retaining his Mehdi Army that agreeing to disarm them would amount to political suicide.
It is highly unlikely that he will emerge unscathed out of the current stand off.
Losing the battle in Najaf would represent a serious blow to him and the militant line that he represents, but will not mean the end of Shia militancy.
As for the Iraqi government, it cannot afford to let him leave Najaf with his heavily-armed militia intact.
If it were to do so, the damage to its credibility would be difficult to repair.