Does this mean the Iraqi Government is Failing?
Considering what that country has gone through over the last century, I see it as to be expected. I believe that it will take a long rough period of time to convert that nation over to a fully democratic society. You have to remember that other than us and England, nobody wants to help them at all.
I think there is no negotiating with some fundamentalists, so I don't see that as a failure. We obviously can't negotiate with UBL/OBL.The only reason they are in charge of that city is that we are still attempting to fight a relatively sterile war (yes I know no war is sterile). We don't want to inflict more civilian casualties than we have to and we don't want to invade the holy site. That is a good thing, but I don't think you should give the militants too much credit. Militarily, they did the stupidest thing they could by clumping in one spot. They should have stayed in guerilla(sp?) bands.