Secretary-General Ban Ki-moon said Monday there were encouraging signs of progress in Iraq, but urged the Iraqi people to avoid seeking revenge and warned that the process of national reconciliation "remains delicate." Government officials indicate that Iraqi security forces are capable of taking over from the departing US-led multinational force, but al-Qaida and other extremists remain a problem and continuing attacks are a stark reminder of the ongoing security challenge, Ban said in a report to the UN Security Council. While insurgent activity across the country has dropped in the past year, "there are still armed groups determined to incite sectarian violence and undermine public confidence in the government's capability to provide effective security," Ban said in the report, issued three weeks before the June 30 deadline for US troops to withdraw from urban areas. Ban stressed that "national reconciliation remains the main priority in Iraq." When Baghdad was at the brink of all-out civil war in 2007, the U.S. brought in more troops and stationed them in Iraqi neighborhoods to protect civilians, which was key to ending the sectarian slaughter. As part of the strategy, the US recruited Sunnis to turn against the insurgents and join self-defense paramilitary groups known as Awakening Councils, or Sons of Iraq. They proved critical in helping curb insurgent violence in Sunni areas of Baghdad and elsewhere. But the Shiite-led government was deeply distrustful of such armed paramilitary groups, whose ranks included many former insurgents. Recent arrests of Awakening leaders and problems with receiving salaries have left many of the 90,000 members demoralized - and there are fears of a renewed insurgency. "The reconciliation process remains delicate," Ban said, citing "discontent" among elements of the groups regarding the non-payment of salaries and the incorporation of their members into the Iraqi security forces and other government structures. He said declining oil revenues and the arrest of Awakening leaders have contributed to the problem. "I urge all Iraqis not to succumb to the politics of mistrust, intimidation, fear or revenge, but rather to work together to build on the positive achievements made so far," Ban said. He said resolving key issues, including the sharing of power among different regions, the sharing of natural resources including oil, and disputed boundaries "could serve as a means to achieving lasting peace." "The delivery of essential services will also be critical to improving the lives of the Iraqi people," Ban said. He noted that 13 percent of Iraqis have a monthly per capita income of less than US$51, including 26 percent in rural areas, 71 percent of Iraqis have no municipal garbage collection, and only 12 percent of household water connections are considered reliable.