It is tempting to see the so-called handover of power from the US to the Iraqi interim government on 28 June as a fake. The few who attended the ceremony at which sovereignty was legally transferred had had to pass through four American checkpoints. Iyad Allawi, the new prime minister, worked for years for MI6 and the CIA and is kept in power by 138,000 US troops. The ministers in the new government live in palatial villas inside a secure compound. Many of them have spent most of their lives outside Iraq.

The pre-trial hearings of Saddam Hussein and his henchmen had a similarly artificial flavour – not allayed by US censorship, which removed pictures of Saddam in chains from the footage, as well as the legal submissions of 11 of his senior lieutenants. The censors tried to excise Saddam’s claim that ‘Bush is the real criminal,’ failing only because they didn’t understand how the sound equipment worked. US officials made little effort to hide the fact that they were running the trial, and that the target audience wasn’t Iraqi. The only foreign reporters allowed in were American and the hearings were timed to coincide with US breakfast TV. If George Bush can pretend for four months that he has Iraq under control he may well be re-elected. If disasters from Iraq continue to dominate the front pages he will probably lose. In April 125 soldiers were killed: the White House needs to show voters that casualties are on the way down.

The appointment of Allawi is itself a demonstration of how far the balance of power has swung against the US. Twelve months ago Paul Bremer, the US viceroy, was blithely talking about continuing the occupation for two years. His first act on arriving in Iraq was to disband the Iraqi army and security forces. The state machinery was dismantled. Direct imperial rule seemed feasible to Washington. Young Republicans were sent off to rule Iraq like the offspring of British gentry dispatched to loot India in the 18th century. A 24-year-old Republican who applied for a job at the White House was instead sent to Iraq to reopen the Baghdad stock exchange. It stayed shut. At first even such a tame organisation as the Iraqi Governing Council was to have a merely advisory role.

Inside the heavily protected Green Zone, the US enclave in the heart of Baghdad, Bremer and the uniformed American military were cut off from what was happening on the ground. US generals at their briefings claimed that the number of hostile incidents was falling. I began to wonder why, if there were only 15 or 16 attacks a day on American soldiers, I seemed to see at least a quarter of them whenever I drove out of Baghdad. Then American soldiers in the field told me that they no longer reported guerrilla attacks unless there had been US casualties. It was a bureaucratic hassle to make out the reports and their commanders were keen to hear that resistance was petering out.

By November it was impossible to conceal the bad news. I was in the dusty truck-stop city of Falluja, west of Baghdad, when we heard that a giant Chinook helicopter had been shot down. We drove across an old iron bridge over the Euphrates to look at the wreckage. On the way we saw a burned-out vehicle that had been hit by a rocket; the American contractors inside had been killed. On the far side of the river, farmers were handing round twisted pieces of metal from the helicopter’s fuselage: 16 soldiers had died. Shortly after that incident, the White House began making its plans to dilute full imperial control by installing the interim government.

The Americans made unnecessary problems for themselves. Iraqi politics revolve around the relations between the three main communities: Sunni Muslim Arabs, Shia Arabs and Kurds. By disbanding the army and persecuting members of the Baath Party, Bremer alienated the Sunni, who make up 20 per cent of the population. The US occupation could have survived without them if they had been prepared to give power to the Shia (60 per cent of the population); they already had the Kurds (20 per cent) in their corner. But the US didn’t really want to share power with anybody.

Bremer and his Coalition Provisional Authority didn’t seem to see that their political strength was diminishing by the month. In April the US took two disastrous decisions which led to simultaneous confrontations with the Sunni and Shiite communities. Four American private security contractors had been killed, their bodies burned and hung from the bridge at Falluja; US marines quickly besieged the city. Six hundred people were killed. With ludicrously bad timing, Bremer had also decided to pursue Muqtada al-Sadr, the radical Shiite cleric whose father had been martyred by Saddam in 1999. Both ventures failed. The marines didn’t dare to storm Falluja for fear of a general Sunni uprising. Sadr had retreated to the holy cities of Kufa and Najaf but the US couldn’t send its tanks into Shiite shrines. In both Falluja and Najaf American soldiers were forced to withdraw.

Power was already seeping away from the US before it was nominally handed over to Allawi. A year after Bush declared major combat in Iraq over, insurgents have their own capital in Falluja. In April, I was caught in an ambush of US petrol tankers at Abu Ghraib. The US military, unwilling to recognise that they had lost control of the road, were still sending convoys down it. By early June the road to the airport, the main US base near Baghdad, was no longer safe. Four security men who had been staying two floors above me in the Hamra Hotel were killed as they drove to the airport by men armed with machine-guns and grenade launchers. I have often travelled with Dan Williams of the Washington Post, who was almost killed when his car was attacked on the road between Falluja and Abu Ghraib. Gunmen in another vehicle fired AK-47 rounds into his car at point-blank range. He was saved only because his car was armoured, had bullet-proof glass, and his driver kept going even after the two back tyres were shot out.

Suicide bombers, car bombs and rocket attacks have paralysed Baghdad; the US bases are defended by increasingly elaborate fortifications. The 14 July Bridge over the Tigris, which leads into the Green Zone, is blocked by sandbags and razor wire. A notice hanging from the wire reads: ‘Do not enter or you will be shot.’ US soldiers in Baghdad are trigger-happy and they like Iraqis to know it. All over the city, streets are closed, sometimes cutting off whole districts, by concrete blocks intended to defend buildings that house American troops, foreigners, Iraqi police and Iraqi officials.

Twenty years ago I used to go to the open-air restaurants that lined Abu Nawas Street to eat mazgouf, fish from the Tigris grilled over a wood fire. The restaurants were badly affected when Saddam, to bolster his Islamic credentials, banned the public consumption of alcohol. After his overthrow, the owners hoped their customers would return. These days, Abu Nawas is deserted even in the middle of the day and used mainly by military vehicles. The street can be entered only from one end and there is a checkpoint intended to protect the Palestine and Sheraton Hotels, both of them full of foreigners, who know that Abu Nawas is too dangerous for them.

I talked to Shahab al-Obeidi, the manager of the Shatt al-Arab restaurant on the bank of the Tigris. Dark grey fish swim in a pool decorated with blue tiles (the river is polluted now and the fish come from fish farms). Shahab says business isn’t good: three-quarters of his customers used to come in the evening but now he shuts at 6 p.m. because the nights are unsafe. Once he stayed open because he had a large table of customers who seemed to be enjoying themselves. ‘When I gave them the bill,’ he said, ‘they laughed and took out their pistols and fired them into the ceiling and through the windows.’ He pointed to the numerous bullet holes.

Foreigners in Baghdad and other cities all now live in the Green Zone or other mini-Green Zones. The concrete blocks, razor wire and guards spread in all directions. I no longer carry a camera in Baghdad because anybody taking photographs is suspected of carrying out reconnaissance for an attack. Paranoia runs high. A member of a newly arrived French camera crew caught in a traffic jam idly took a photograph of the enormous concrete blockade defending the street leading to the Baghdad Hotel, which Iraqis believe to be the CIA headquarters. Iraqi guards immediately arrested the crew and kept them in a prison cage for two nights.

The Baghdad Hotel is close to Saadoun Street, one of the city’s main arteries. A few weeks ago the road was narrowed from four lanes to two in the section near the hotel. There is now a permanent traffic jam, and around thirty shops inside the hotel’s cordon sanitaire face closure. ‘My business has completely disappeared,’ Nadim al-Hussaini said, sitting outside his empty shop. ‘First 30 to 40 per cent when they put up the concrete barrier, and 100 per cent when they closed the road.’ Next door, the regulars at Zuhaar Tuma’s café still come to smoke hubble-bubble pipes and play dominoes. ‘I don’t want to get blown up any more than the Americans do,’ he says. ‘But the real solution is simply for the Americans staying at the hotel to leave.’

Neither the suicide bombers nor the US army care very much how many ordinary Iraqis get killed. The entrances to the Green Zone provide no protection for Iraqis queuing for jobs or to have their documents checked. They are frequently caught in bomb blasts. On 17 May a suicide bomber assassinated Izzedin Salim, the head of the Iraqi Governing Council, as his fleet of cars was waiting to enter the Green Zone. An Iraqi minister told me that Salim might have survived if US soldiers at the gate had not delayed the convoy by complaining that some of the documents were not complete. There is an Iraqi conspiracy theory which sees foreign suicide bombers and the US acting in unison to prevent Iraq regaining its independence.

The suicide bombers have gone some way towards discrediting the resistance, which ought to be helpful to Allawi’s interim government. Most Iraqis see the blue uniformed Iraqi police in their elderly white and blue patrol cars as a defence against crime rather than as allies of the occupation. The attacks on police stations are not popular. Even al-Sadr told his militiamen to co-operate with the police in Sadr City, ‘to deprive the terrorists and saboteurs of the chance to incite chaos and extreme lawlessness’. Some resistance groups in Falluja complain that they are losing support because the bombers are killing Iraqis rather than Americans. Ministers in the new government speak of restoring order by ‘cutting off the hands’ and ‘slitting the throats’ of the insurgents. This is the sort of rhetoric once used by Saddam.

Iraqis are desperate for the return of some sort of security. Among the better-off there is a pervasive fear of kidnapping. Over the last year this has become a local industry, now so common that new words have been added to Iraqi thieves’ slang: for example, a kidnap victim is al-tali, or ‘the sheep’. I visited Qasim Sabty, a painter and sculptor who owns a gallery, to ask him about an exhibition he’d held of work depicting the torture at Abu Ghraib, but the first thing he spoke about was kidnapping. ‘So many of my relatives have been kidnapped,’ he said. ‘I fear I am going to be next.’ He mentioned another gallery owner who had just paid $100,000 for the return of her son. A businessman friend living in Jordan has just paid $60,000 to have his brother-in-law returned. Doctors are a favourite target. Operations are postponed because surgeons have fled the country. The owner of the dilapidated Shatt al-Arab restaurant had disappeared to Syria after his son was kidnapped. I asked Lieutenant-Colonel Farouk Mahmoud, the deputy head of the police kidnap squad, the best way to avoid being kidnapped. ‘Go abroad!’ he said brightly, to laughter from his officers.

It isn’t only the well-off who feel threatened. Gangs of thieves hop on and off buses in Rashid Street in the city centre and rob passengers at gun and knife-point. Ali Abdul Jabber, a bus-driver, has been robbed three times. ‘On the last occasion,’ he said, ‘the thieves jumped on board because the doors have to be open in this hot weather. Two of them stood guard at the back while two others walked down the bus looking in people’s handbags and stealing money and jewellery.’ Jabber didn’t dare turn round: he thought that if the thieves suspected he could identify them they would kill him. Nobody went to the police. ‘The passengers didn’t even discuss it among themselves because this sort of thing is so much part of daily life in Baghdad.’ Most of them thought he was in league with the gang.

After the disasters of the past year the Americans know they cannot occupy Iraq, even in the short term, without the support of local allies. The problem is that most Iraqis would like Allawi and the interim government to get rid of the suicide bombers and kidnappers – and of the US occupation as well. But the US shows no sign of abandoning its plan to keep Iraq as a client state. It would have a weak army, devoted entirely to counter-insurgency. It would have no tanks, aircraft, missiles or artillery and would resemble a Latin American state of the 1960s with an army and security forces controlled largely by Washington. This was the message brought by Paul Wolfowitz when he turned up in Baghdad in June – accompanied by Kevin Tebbit, the permanent under secretary at the Ministry of Defence – just before the supposed handover of power. The US will allow Iraq to rearm, but only against its own people.

It was a tellingly low-profile visit. Wolfowitz and his entourage kept away from tall buildings. When he visited the city nine months ago he stayed in the al-Rashid, a tall hotel dominating the skyline. Guerrillas interrupted his sleep by firing a volley of rockets from an improvised launcher into the building’s upper storeys, killing an American colonel and sending Wolfowitz stumbling down an emergency staircase to safety. (Despite this some of the American pundits accompanying him wrote that the occupation seemed to be on track and the forces of resistance in retreat.)

If he is to survive, Allawi needs to convince the Iraqis that he is not an American stooge. He has to persuade the US to withdraw within a year, although he is, at least for the moment, wholly dependent on the American army. The difficulty he will have in facing both ways was made clear when his spokesman announced earlier this month that guerrillas who had fought the Americans before the transfer of sovereignty would be eligible for amnesty since their actions were legitimate acts of resistance. A Kurdish member of the government, known for being close to the US, said he found this outrageous. At the same time, Allawi was negotiating an amnesty for al-Sadr, the Shiite leader, whom the US was trying until a few weeks ago to kill or capture.

The struggle for Iraq is only beginning. The Shia want elections and real power. The Sunni want the US out and will not accept being marginalised. The Kurds want a greater measure of autonomy than the Iraqi Arabs will give: in fact, they want something very close to independence. The Islamic resistance think the US is vulnerable in Iraq as the Soviet Union was in Afghanistan. The nationalist guerrillas will not stop killing American troops. Above all, the US is still not convinced that it has lost its great gamble to keep control of Iraq, a country it made the test-case of its power as the world’s single imperial overlord.

5 July

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