Of all the leftover business for the Obama administration as U.S. troops prepare to leave Iraq at the end of the year, nothing is more symbolic of the continuing threats there -- and throughout the region -- than the case of a Lebanese Hezbollah operative named Ali Mussa Daqduq.

Daqduq has been one of Iran's top covert operatives in Iraq, according to U.S. officials. He was captured in March 2007 by U.S. forces in Basra who had evidence he had plotted (with Iranian help) a kidnapping in Karbala that January that resulted in the deaths of five American soldiers. U.S. satellite photos showed the Iranians had even built a mockup of the Karbala facility inside Iran to practice the kidnapping.

Daqduq is now a prisoner at Camp Cropper, a U.S. detention facility near the Baghdad airport. Thousands of other detainees have already been released, and the U.S. must close Camp Cropper by year-end, under the status-of-forces agreement negotiated by the Bush administration. The detainees will be handed over to the Iraqis (who would likely free many of them) unless they are transferred elsewhere.

Herein lies the Daqduq conundrum, which has been the subject of weekly interagency meetings this summer: The White House is leaning against releasing a prisoner who has American blood on his hands. But how should he be prosecuted?

The administration is weighing several options. First, Daqduq could be tried by a U.S. military commission, presumably at Guantanamo Bay, under the laws of war. A second option is to try him in a civilian court. The case -- surprise! -- has become something of a partisan political squabble. On July 21, 20 Republican Senators wrote Defense Secretary Leon Panetta urging him not to release Daqduq to the Iraqis and arguing that he should be held at Gitmo and, if possible, tried by a military commission. "If he is released from custody, we firmly believe he will seek to harm or kill more American servicemen and women," the senators wrote.

In a May 16 letter, Republican senators had warned Attorney General Eric Holder against trying Daqduq in a civilian court. "His actions clearly defy the laws of war," they argued.

I'm no legal expert, but I do know that Daqduq represents the sharp end of the spear that Iran is pointing at Iraq and other Arab nations. He was part of Hezbollah's special operations unit. A dossier on Daqduq was presented in July 2007 by Brig. Gen. Kevin Bergner, then U.S. military spokesman in Baghdad. In 2005, Hezbollah sent Daqduq to Iran to help train Iraqi extremists for the Quds Force, the covert-action arm of the Iranian Revolutionary Guard Corps. Tehran later ordered Daqduq to organize "Special Groups" of Shiite extremists that would operate like Hezbollah fighters. According to Bergner, Iran was, at that time, funding the Special Groups with $750,000 to $3 million a month, as well as training them to use "Explosively Formed Projectiles," the sophisticated roadside bombs that have killed so many U.S. troops.

At a time when Iranian-made weapons are killing a rising number of U.S. troops who remain in Iraq, U.S. senior military commanders have warned the White House that releasing Daqduq would send what one calls "a horrible message." The Obama administration seems to agree -- and is weighing how to try this Hezbollah operative. I favor a trial, but not in the heart of Manhattan. The al-Qaida threat may be waning but not that posed by Hezbollah.