The State Department's Bureau of Intelligence and Research (INR), which arguably has the best track record for producing accurate intelligence assessments, last year estimated that AQI's(Al Qaeda in Iraq) membership was in a range of "more than 1,000." When compared with the military's estimate for the total size of the insurgency—between 20,000 and 30,000 full-time fighters—this figure puts AQI forces at around 5 percent. When compared with Iraqi intelligence's much larger estimates of the insurgency—200,000 fighters—INR's estimate would put AQI forces at less than 1 percent. This year, the State Department dropped even its base-level estimate, because, as an official explained, "the information is too disparate to come up with a consensus number."
How big, then, is AQI? The most persuasive estimate I've heard comes from Malcolm Nance, the author of The Terrorists of Iraq and a twenty-year intelligence veteran and Arabic speaker who has worked with military and intelligence units tracking al-Qaeda inside Iraq. He believes AQI includes about 850 full-time fighters, comprising 2 percent to 5 percent of the Sunni insurgency. "Al-Qaeda in Iraq," according to Nance, "is a microscopic terrorist organization."
The view that AQI is neither as big nor as lethal as commonly believed is widespread among working-level analysts and troops on the ground. A majority of those interviewed for this article believe that the military's AQI estimates are overblown to varying degrees. If such misgivings are common, why haven't doubts pricked the public debate? The reason is that alternate views are running up against an echo chamber of powerful players all with an interest in hyping AQI's role.

Quoted here: http://www.washingtonmonthly.com/fea....tilghman.html