After uprooting Saddam Hussein from power, establishing democracy in Iraq has been declared among the most important objectives of the U.S.-led Coalition. However, the Coalition has encountered complex ethnic and religious relations and resentment of foreign intervention in Iraq. These reactions reflect decades, even centuries, of divisive and antagonistic policies whose impacts continue to complicate and threaten coexistence and civil peace. The immediate challenge of achieving stability and peace in Iraq, therefore, rests in the ability to foster a genuinely indigenous institutional political structure that can accommodate the different ethnic and sectarian aspirations. This article highlights the major potential shortcomings of the federal model established by the “Law of Administration for the State of Iraq for The Transitional Period.” It also examines the shortcomings of the List Proportional Representation system as presented by the United Nations for Iraq's transition, and alternatively proposes national electoral reform strategies, with the implementation of an Alternative Vote system with Minority Provision in the election to the National Assembly, as a means to strengthen Iraq's national unity