The developments after 9/11 and the rise of neo-conservative thinking in United States accelerated a process that culminated in the US invasion of Iraq in 2003. The rapid collapse of Saddam Hussein’s regime marked a defining moment in international relations. ‘Operation Iraqi Freedom’ and its aftermath created an entirely new geopolitical context not only in Iraq but also in the wider West Asia. Huge challenges have emerged as a result of the invasion of Iraq, regime change, and the political reconstruction in Iraq. The dethroning of Saddam Hussein from power was comparatively an easier task than the construction of a democratic and federal post-Saddam Iraq. The US is facing a tougher challenge in the phase of occupation than the military invasion itself, primarily because its pre-war calculations failed to appreciate the likely postwar realities. While regime change has been widely popular among most segments of the Iraqi people, the externally driven process of reconstruction and democratization may ultimately drive Iraq towards civil war. If Iraq’s three principal communities – the Shias, Sunnis and Kurds – do not come to an agreement on the constitutional order and sharing of power, serious de-stabilisation may engulf the whole region with wider impact on energy markets and global security.