Why did Sadr fold?

Maybe because...

Some 210 gunmen were killed, 600 others wounded and 155 captured since the beginning of Operation Saulat al-Forsan (Knights’ Assault) in the province of Basra last week, the Iraqi interior ministry said on Monday.

As Ed Morrissey wrote, Sadr was quick to sue for peace:

"Did our media give anyone this context? No. They reported it as some kind of spontaneous eruption of rebellion without noting at all that a nation can hardly be considered sovereign while its own security forces cannot enter a large swath of its own territory. And in the usual defeatist tone, they reported that our mission in Iraq had failed without waiting to see what the outcome of the battle would be. "

Sadr now wants to disavow anyone with a gun. The Mahdis, which found themselves on the short end of the stick, have just watched their Fearless Leader surrender — again — and this time leaving them twisting in the wind. That isn’t the action of a victor. Perhaps our media would like to explain that in the context of their clueless reporting so far."

Along the same lines, General Petraeus has also challenged the British Press for its many inaccuracies:

...he said that reports that the Iraqi government is refusing to employ Sunnis are incorrect.”The National Reconciliation Committee just approved a list of over 3,500 names of Diyala Sons of Iraq for the Iraqi Police,” wrote General Petraeus in his email, a sign that more jobs integrating the Sunnis within the government’s security forces were forthcoming.

Petraeus also responded to a GuardianFilms video report for Britain’s Channel 4 on March 20 charged that Sunni militias in Iraq were not being paid by U.S. forces and were on the verge of staging a national strike because they were not getting jobs within the Iraq government.