Operations by Iraq's security forces in Basra in the past week are a signal of determination by the government to go after those outside the law, U.S. Ambassador to Iraq Ryan Crocker said Thursday.

Rather than being a setback for Iraq, Crocker said the latest firefight between government forces and the Shiite militia led by Moqtada al-Sadr shows Iraqi resolve to deal with a deteriorating security situation in Basra. The net result, he claimed, was a "positive step forward" for the government.

Crocker is set to appear before Congress next week with Gen. David Petraeus, head of Multi-National Forces in Iraq, to deliver their report on military and political progress there. Their appearance is expected to kick start the next debate over Iraq war funding and troop levels.

In a roundtable discussion with western reporters on Thursday, the ambassador acknowledged that Iraqi Prime Minister Nouri al-Maliki did not foresee the strength of the resistance in Basra and did not expect a major battle, but the evident shortcomings of the Iraqi military against the militia troops offered sobering lessons, including that there "always can be a case for more planning."

He pointed out that gains in Iraq are indeed fragile as demonstrated by the latest flare-up in violence, and what is different this time is the Iraqi government's action to take on the threat.

According to Crocker, Maliki had wide support from the political parties including Kurds, Sunnis and some of his Shiite allies for the action taken in Basra. Fighting has calmed since the cease-fire, which was agreed to after talks between Iraqi officials in Iran and Iranian lawmakers supportive of Sadr. However, isolated skirmishes are still being reported there.

Crocker said positive signs include Iraqi forces taking control of the three Basra-area ports, and volunteers continuing to sign up for security forces, as well as continued and support for the government from tribal leaders in the area.

Crocker denied the Basra fight was linked to any effort by the Maliki government to go after political opponents. Crocker also said Maliki maintains "very strong support" and the Basra fight has not politically weakened the prime minister.

As for Sadr, Crocker said the radical cleric is at a crossroads.

"Sadr has a dilemma. He can't have it both ways," Crocker said, indicating the cleric can either lead his followers into mainstream political life in Iraq or move closer to the extremist militias.

So far, Sadr is making reconciliation difficult. The militia fighting in Basra was the worst in a year. Since its end, he has called for a million-man style march on Baghdad — meant as a protest of the U.S. He has scheduled the march to take place on April 9, the date Baghdad fell five years ago.

Crocker unequivocally repeated the charge that Iran continues to support militias fighting the Iraqi government. He said the rockets fired last week into the Green Zone area housing U.S. diplomatic corps were "quite literally made in Iran," and were manufactured in 2007.

Crocker said Iran must decide whether "to support the state or the militias," and said Iraqis have a sense that Iran was involved in starting the Basra fighting. Crocker said Iran was not instrumental in bringing about the cease-fire agreement.