Hours before the President will be giving a prime-time television address to the American public on Iraq, one of the large benchmarks the U.S. government established for the Iraqi parliament seems to be on the verge of collapsing.

A carefully constructed compromise on a draft law governing Iraq’s rich oil fields, agreed to in February after months of arduous talks among Iraqi political groups, appears to have collapsed. The apparent breakdown comes just as Congress and the White House are struggling to find evidence that there is progress toward reconciliation and a functioning government here.

Much of the recent turmoil comes from a deal Kurds have struck up with a U.A.E. company for oil production in their province. While Kurdish officials say this deal is within the bounds of the Iraqi constitution, others feel this is a push for sovereignty and are now backing out of the deal.

The Kurds say their regional law is consistent with the Iraqi Constitution, which grants substantial powers to the provinces to govern their own affairs. But Mr. Shahristani believes that a sort of Kurdish declaration of independence can be read into the move. “This to us indicates very serious lack of cooperation that makes many people wonder if they are really going to be working within the framework of the federal law,” Mr. Shahristani said in a recent interview, before the Hunt deal was announced.

However, some feel that the Sunnis left the table because such a compromise would have given credibility to the al-Maliki government--who Sunni militia groups have worked hard to undermine.

But the prime minister’s office believes there is a simpler reason the Sunnis abandoned or at least held off on the deal: signing it would have given Mr. Maliki a political success that they did not want him to have. “I think there is a political reason behind that delay in order not to see the Iraqi government achieve the real agreement,” said Sadiq al-Rikabi, a political adviser to Mr. Maliki. Mr. Rikabi was at Wednesday’s meeting.

With this as just another setback to an Iraqi government who has been struggling to establish itself as a viable vehicle to a post-Saddam democracy, the last remnants of hope seem to be dissolving. How Bush will address this last minute catastrophe in tonight's speech is yet to be seen; however, such a monumental setback cannot go without mention.