(1) lacks a monopoly on the legitimate use of physical force within its borders.i think it's pretty clear that iraq currently meets every one of those elements. indeed, iraq is listed as an example of a failed state on the wiki page.
(2) does not have effective control over all of its territory.
(3) is unable to uniformly enforce its laws within its borders.
(4) is unable to insure security or foster development.
i guess it's easier to call iraq "on the verge" of something than just saying it is that something. plenty of people have declared iraq to be "on the verge of collapse", but the collapse never quite happens. and so iraq never quite arrives at any state. it never fails or collapses. it just teeters there on the edge.
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1- the full report cited by the wapo is here (pdf). oddly the line quoted by the newspaper is in the introduction, not the conclusion. the study itself doesn't make any attempt to determine whether iraq is a failed state or not.