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And here's what strikes us as the key paragraph:

• The Iraq conflict has become the cause celebre for jihadists, breeding resentment of US involvement in the Muslim world and cultivating the global jihadist movement. Should jihadists leaving Iraq perceive and be perceived, to have failed, we judge fewer fighters will be inspired on the fight.

Also:

Al-Qa’ida, now merged with Abu Mus’ab al-Zarqawi’s network, is exploiting the situation in Iraq to attract new recruits and donors and to maintain its leadership role.

Also:

United States-led counterterrorism efforts have seriously damaged the leadership of al-Qa’ida and disrupted its operations; however, we judge that al-Qa’ida will continue to pose the greatest threat to the Homeland and US interests abroad by a single terrorist organization.