Next week the Iraq Study Group — led by the former Secretary of State James Baker — will publish its recommendations for US policy on Iraq.

But what about British policy? I believe it is vital for us to have our own clear view. That is why I made my first visit to Iraq this week with William Hague, visiting our troops in Basra, and meeting Iraqi leaders, including Nouri al-Maliki, the Prime Minister, as well as the British and US Ambassadors, in Baghdad.

Nearly four years after the invasion the first thing that strikes any visitor is how difficult it has become simply to travel around the country. Getting into Baghdad requires a helicopter flight into the heavily fortified green zone, with the RAF Puma zigzagging at speed across Baghdad’s suburbs. In Basra, where our air station comes under regular rocket attack, it has become extremely difficult to get into the city by day. It was hard to escape a sense that the green zone and the rest of Iraq exist in two parallel worlds.

The facts of the security situation are stark: tens of thousands of roadside bombs planted in the first ten months of this year; a rising drum beat of sectarian violence between Sunni and Shias, which is now accounting for some 3,000 deaths a month. Whether or not you agree with Colin Powell’s view that this is now a civil war, it is clear that Iraq is teetering on the edge.

This is the intensely difficult and sobering environment in which our Forces are operating. To see their professionalism and commitment in the face of it is humbling. They have been paying a heavy price. As we know, 126 have lost their lives. But we hear less of the hundreds who have been wounded and will carry the scars of this conflict for the rest of their lives. The performance and bravery of our troops — including those I saw being treated for their wounds in the field hospital outside Basra — was truly inspiring.

But the deteriorating security situation casts a dark shadow over everything else. We owe it to our troops, just as we owe it to the people of Iraq, to be clear about the direction we should now take in Iraq.

That requires four things. First, we must be much more candid about the situation we are now dealing with. Sir Richard Dannatt, the Chief of the General Staff, did the country a service in taking the gloss off some of the more optimistic assessments we have been given. People want to be told the truth — good or bad. The security situation is dire, and there is no point in hiding it.

Secondly, we need to be more practical in the scale of our ambition in Iraq. It is just not realistic to talk of establishing a fully functioning Iraqi version of a liberal democracy. That process will take many years. Iraqis are crying out for a government that can give them security before anything else. They see every day that without order, there is no law, and no prospect of peaceful development that lasts.

Thirdly, it follows that we must give overriding priority to security, which means building up the Iraqi Army. It is the one institution in the country that appears to command a degree of respect and effectiveness — in contrast to the police, which is so heavily infiltrated by sectarians that some members are nominally police officers by day, but paramilitaries by night. The Iraqi Army has impressed coalition commanders in its ability to help to hold the ring. It fights well, but lacks critical logistical, intelligence and command and control capability. These deficiencies must be rectified urgently.

Fourthly, we have to accept that there is no purely military solution to Iraq’s problems. Lasting peace will depend on an internal political settlement between Arab and Kurd, between Sunni and Shia. That in turn will require the support of Iraq’s neighbours, who must be persuaded that their long-term interest lies in a stable Iraq at peace with itself and the region.

There is a great deal of discussion about the various models of federalism that might make sense for Iraq. But what matters more than the precise model of governmental structure is the need for a fundamental political accommodation between the different communities that will be required to underpin it. Without that, any structure, no matter how cleverly designed, will fall apart.

To achieve this, Iraq will require a great deal of external political support, both from its neighbours and the wider international community. This will require both honesty and humility on our part: honesty about the situation as it really is; humility in acknowledging the mistakes that have been made. That is why we have proposed the establishment of an international Contact Group for Iraq, bringing in members of the Security Council and others, including Iraq’s neighbours. This should not be a talking shop. Nor should it attempt to impose an outside solution on the Iraqis. To succeed, it will need to have Iraqi leadership prominent throughout.

Indeed, the one encouraging aspect of my visit to Iraq was the impatience of Iraqis to assume responsibility for their own destiny. We should respond to that demand, by constantly asking ourselves what more we can hand over to the Iraqis, and when.

No one imagines this will be easy. It would be wrong to set artificial timetables for the withdrawal of our troops. But equally it is right to make clear that theirs is not an open-ended commitment, and that our objective is to hand over responsibility just as rapidly as conditions on the ground allow. Indeed, I felt, in talking to Iraqi politicians, that they welcomed the sense that we are stepping up the pace of that transition, provided it does not get out of step with what Iraq’ s fledgling security forces can cope with.

We are entering a critical period now in Iraq. We need to get these decisions right, for the future of that country and of the wider region. And for the sake of the sacrifices that our service personnel have made there.

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