What would it take to create peace in Iraq? Why not ask Iraqis? That's exactly what a delegation of American citizens did in August 2006. The Iraq Reconciliation Plan is an "aggregation of preconditions for bringing peace to Iraq". In other words, it's not everything, but it's at least a start.
Iraq Reconciliation Plan: Ten Points
1. End the occupation of Iraq.
2. Create a timetable for the withdrawal of American troops that is synchronized with the implementation of the Iraq reconciliation plan.
3. Disband the militias created after the occupation.
4. Revise Bremer's Orders and allow the Iraqis to rebuild their army.
5. Rewrite the Iraqi Constitution.
6. Keep Iraq as one state and do not partition into multiple states.
7. Begin the promised reconstruction of Iraq. Employ Iraqis and not foreign workers or contractors.
8. Acknowledge Iraqis' right to resist the U.S. occupation, negotiate with the resistance, and give amnesty to Iraqis resisting the occupation.
9. Investigate all the crimes that were committed by the new Iraqi Government and by the occupation forces in Iraq.
10. Make a fair distribution of oil income and natural resources.
More information here and here.