  We show that the combined effects of spin-orbit, monoclinic distortion, and
p-d hybridization in tetrahedrally coordinated Fe in LaOFeAs invalidates the
naive Hund's rule filling of the Fe d-levels. The two highest occupied levels
have one electron each but as a result of the p-d hybridization have very
different on-site repulsions. As a result, electrons in the upper level are
more itinerant while those in the lower level are more localized. It is the
xy-projection of the spin in the lower level that orders antiferromagnetically
as the z-components of the spins in the two levels is shown to be vanishingly
small in the ground state. The resulting magnetic moment is highly anisotropic
with an in-plane value of $0.25-0.35\mu_B$ per Fe and a z-projection of
$0.06\mu_B$, both of which are in agreement with experiment. As a consequence,
we arrive the minimal model that describes the electronic properties of
LaOFeAs.
