On Tuesday 400 rioters in the southern Shia town of Kut attacked Iraqi police and Ukrainian soldiers with rocks and explosives, injuring one Ukrainian and four policemen, according to a police officer.
The mob was protesting against unemployment and poverty in the city, according to news reports, and the riot followed a similar one in the nearby Shia city of Amara on Saturday, in which six demonstrators were killed when Iraqi police and British soldiers opened fire on the crowd.
The violence served a powerful reminder of the risks of alienating the Shia community, which makes up a majority of the country's population, at a critical moment in Iraq's fragile political process.
On Sunday, Grand Ayatollah Ali Sistani, the supreme spiritual leader of Iraq's Shia, issued a fatwa or religious edict restating his objection to the US strategy aimed at returning sovereignty to Iraq in June.
He again called for members of a transitional national assembly - due to be in place by the end of May - to be directly elected, rather than selected by provincial caucuses as envisioned by the US plan.
For the last two months, coalition officials have been pressing ahead with the US plan, assuming that the elderly Ayatollah would change his mind. Instead, Mr Sistani's issuance of a a formal written ruling on the matter, which in Islam is tantamount to a law, all but ruled that out.
On Monday, Paul Bremer, the US civil chief in Baghdad, said he would press ahead with the original plan of holding caucuses to select members, calling it "the best way forward to return sovereignty to the Iraqi people".
But according to people close to the coalition, the caucus process will be modified to involve a degree of popular elections. It remains unclear whether this will satisfy Mr Sistani.
One of the ideas under consideration is that selected candidates to represent every province on the transitional assembly be approved in a "quick and dirty" election. Another possibility is to hold a referendum on the composition of the assembly.
Insisting that Mr Sistani's opposition is a problem but not an insurmountable obstacle, people close to the coalition said they sensed that his influence in the provinces was not as great as some analysts might suggest.
The US, however, cannot afford to risk a confrontation with Mr Sistani. The major victory of coalition policy in Iraq has been the goodwill of the Shia, who make up more than half of Iraq's population. Losing their support would be devastating to US policy.
The US administration is under pressure to show tangible progress on the political front before the US presidential elections in November. But the combined political demands of Iraq's three main ethnic and religious groups - Kurds, Shia, and Sunni Arabs - appear to be unravelling the carefully constructed political strategy set out in November.
Kurds have lately renewed pressure for guarantees that their northern region will be given some strong form of autonomy within a federal Iraq.
"There is no alternative to this decision... We will not wait, otherwise we will lose our chance," Ma'soom Anwar, of the Kurdistan Democratic Party, said on Al Arabiya television channel on Monday night.
Both Sunni and Shia Arabs, however, oppose an ethnic form of federalism, as demanded by the Kurds.
Meanwhile US officials hope they can use the transitional assembly to provide better representation for Sunni Arabs, and thereby cool the unrest throughout the so-called 'Sunni triangle'.
But this may cut into Shia dominance of the political process, until now formalised by an unofficial quota system that gives them a majority of seats in the cabinet and the US-appointed Governing Council.