Al-Sadr led the Mahdi army in the early years of the war on terror, using IEDs and machine guns to kill Western forces, O'Neill said.
The bloc led by Prime Minister Haider al-Abadi is trailing in third place in Iraq's parliamentary elections, according to partial results.
Yet, results suggest that there will be hung Parliament and the new government will likely be a coalition government.
Note: For more information on the open-ended United States involvement in Iraq, I have written a new article in the American Conservative, available here.
Strengthened by his apparent victory in Saturday's polls, black-turbaned Sadr could now push his nationalist agenda that has seen him pledge to curb foreign meddling in Iraq.
O'Neill warned that such a situation could be tenuous if America's former "enemy number one" is able to choose the next prime minister.
The Reformist Shargh newspaper wrote that the surprising results of the Iraqi elections may signal a greater Saudi influence in Baghdad.
The decline in voter turnout perhaps reflects the widespread dissatisfaction that many Iraqis still feel towards the current Iraqi political class.More news: One jawan dead in Pulwama encounter, militants escape
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However, his election could help to create a less corrupt and more technocratic government that helps the people.
We also can not deny that there remain a number of intrasectarian fragmentations in Iraq's current political climate and there is, as yet, no obvious outcome for government formation in the country.
The alliance is headed by Hadi al-Amiri, a former minister of transport with close ties to Iran who became a senior commander of paramilitary fighters in the fight against the Islamic State extremist group.
This coalition could be buttressed further with the inclusion of Ammar Al Hakim's Al Hikma Movement, which won 19 seats according to preliminary results.
The election came as the country deals with the disenfranchisement of the country's Sunni minority.
The front-runner in Iraqi elections, the populist Shiite cleric Moktada al-Sadr, wasted little time trying to prove to potential allies that he is serious about shaking up the government and cleaning up corruption as he worked to cobble together a governing coalition.
What exactly do the results show?
More than two million Iraqis are still displaced across the country and IS militants continue to mount deadly attacks despite having lost control of the territory they once held. "And we stand with the Iraqi people's decisions".
Adelle Nazarian is a politics and national security reporter for Breitbart News.