For what it’s worth, this is what Paul Bremer had to say on the topic when I talked to him in January:
LOPEZ: What’s the biggest myth about your time in Iraq you want to set people straight about in this book?
BREMER: I suppose the myth that we made a mistake “disbanding” the Iraqi army. The facts are these: There was not a single Iraqi army unit intact in the country at Liberation. There was no army to “disband.” It had “self-demobilized,” in the Pentagon’s phrase. Hundreds of thousand of Shia draftees, seeing which way the war was going, had simply gone home. They were not going to come back into a hated army.
The army and intelligence services had been vital instruments of Saddam’s brutal regime. He had used the army in a years’ long campaign against the Kurds, killing tens of thousands of them, culminating in the use of chemical weapons against men, women, and children in 1988. The army had brutally suppressed the Shia uprising after the first Gulf war, machine gunning tens of thousands of Shia civilians into mass graves in the south. Together these two groups make up about 80 percent of the population.
So recalling the Iraqi army (which would have meant sending American soldiers into Shia homes, farms, and villages and forcing them back into the army under their Sunni officers) would have had dire political consequences. The Kurds told me clearly that they would not have accepted it, and would have seceded from Iraq. Such a move would probably have ended Shia cooperation with the Coalition and perhaps even led to a Shia uprising, initially against such an Iraqi army, and eventually against the Coalition.
But we knew we had to find a place in Iraqi society for the former army men. So we welcomed them back into the new army, including officers up to the level of colonel. And we started paying the other officers a monthly stipend, which continued right to the end of the occupation.