Seeking to expand its role on the Mideast stage, it promised Tuesday to send more water to drought-stricken Iraq, which faces its lowest harvest in a decade.
Key challenges remain, including the discontent of former Sunni insurgents recruited by the US and credited with improving security.
As US prepares to withdraw troops from major cities, bombings in Baghdad and near Kirkuk have the country on edge.
The deal would be part of a reconciliation effort between Iraq's government and extremist Shiite groups.
In the southern Iraqi city, poetry and music have returned since Iraqi forces wrested control from Shiite extremists last year.
Iraqi governor talks about how to revive southern Iraqi city.
Tens of thousands of Sadr’s Shiite supporters expressed solidarity with Iraqi security forces while demanding an end to the US occupation.
Early returns from Saturday's provincial polls suggest that the Shiite prime minister's Dawa Party will be the big winner.
An emerging backlash against rule by religious parties gives opening to technocrats in Jan. 31 provincial elections.
Thousands of protesters are calling for the release of journalist Mundtadhar al-Zeidi.