Iraq now has the keys, but do they work?

Iraq handover - Lindsey Hilsum in Baghdad learns where to buy a CD-Rom on how to make a bomb, and ar

Brigadier General Mark Kimmitt was congratulating any Iraqi he could find. "I'm so happy for you," he kept saying, as he seized the hands of Iraqi cameramen queueing up to interview him on the occasion of America's symbolic handover of sovereignty. Kimmitt was the face of the US occupation - the handsome, grey-haired military man who stonewalled at daily press conferences, claiming that every suicide bomb was proof that the "terrorists" were on the run.

Last Monday, when he had stopped glad-handing, he was more frank. "We expect the security situation to continue to be fairly dreadful for the next few days or weeks, as these people try to test this new government," he said, listing four insurgent groups seen as the major threats to US interests in Iraq. Kimmitt's press conference partner, Dan Senor - well-known among colleagues for jogging in a "Bush Campaign 2000" T-shirt - had already left town within hours of the hurried handover ceremony. Kimmitt would be leaving in a few days. "We know we're associated with the occupation. People need to see someone new," he said.

And so the US presence in Iraq will have an Iraqi face. The interim prime minister, Iyad Allawi, is surrounded by British and American advisers who attend cabinet meetings and are carefully crafting his public image. On day one came the public announcement that Saddam Hussein was to be handed over to Iraqi custody (legally, not physically) and arraigned before an Iraqi court. Expect more headline-grabbing announcements and frequent, televised appearances at the sites of bombings. Soon, Allawi is likely to advertise some carefully chosen public disagreements with the new US ambassador, John Negroponte. The advisers sent by America and Britain know that he must distance himself from the occupying powers.

However, the insurgency that Iraq faces is more serious than the Americans or the British predicted, and no amount of media management will change this. Four days before the handover, masked men took over two police stations in the northern town of Mosul and briefly captured government buildings in Baqubah, north of Baghdad, before being driven out by the Americans. They handed out leaflets telling Iraqis to stay home "because these days are going to witness campaigns and attacks against the occupation troops and those who stand beside them". Their yellow bandanas were inscribed "Battalions of the Unity and Holy War". This is the group led by Abu Musab al-Zarqawi, a Jordanian militant who, US intelligence believes, is affiliated to al-Qaeda. While the core of the group is thought to be made up of foreign fighters - Saudis, Yemenis, Syrians - Iraqis are now working closely with Zarqawi, and have adopted the international jihadi agenda.

"These people simply want to martyr themselves," said a source close to the rebels. "They are fanatics." The suicide bomb is their weapon of choice, but the commando-style raids show a chilling new ability to operate as disciplined armed units.

The Americans have named several other groups that may be affiliated to Zarqawi's network. One group is based at the Mother of All Battles Mosque, which Saddam built after the Gulf war in 1991, and another works out of a radical Sunni mosque in Adhamiya, in central Baghdad. A few months ago, foreigners could visit these areas with no problem - now they are off-limits, except to those who are known to the insurgents. While the British and Americans say Iraq has become the front line in the war on terror, the jihadis see Iraq as the front line in their war against the infidels. The occupation provided them with a new cause, an opportunity to muster support in a country that had previously been impenetrable because of Saddam Hussein's tight security system. A website posting on the day of the handover described the new interim Iraqi government as "servants of the Crusaders". Another singled out Iyad Allawi as a target.

Unemployment fuels the insurgency, providing numerous recruits. Weapons are plentiful, and you can buy a CD-Rom with instructions on how to make a bomb at the Thieves Market in downtown Baghdad.

In Fallujah, the centre of the insurgency, the Saddam-era general hastily appointed back in April by the US to keep control appears to tolerate if not support the jihadis. Policemen are often seen in the street chatting to gunmen. "It was a tactical solution reached by the field commander in Fallujah, who was a military guy. He has no political background," said Sheikh Ghazi al-Yawar, Iraq's new interim president. "Fallujah was given a painkiller not a treatment at that time, so it's still an open issue."

The president says that, now sovereignty has been handed back to Iraqis, they can take the lead in dealing with the insurgency. "Whoever has to provide law and order has to depend heavily on intelligence information. You cannot infiltrate bad elements in Iraq with someone who has blond hair and blue eyes and speaks English," he said. Both he and Allawi have stressed that it is the duty of any patriotic Iraqi to provide such information to the new security forces.

Allawi has offered an amnesty to anyone who has supported the insurgents by supplying weapons or spreading propaganda, but not carried out attacks. He knows that his best hope is to co-opt those who are drifting towards the rebels, but might be convinced otherwise if they believe this really is a sovereign Iraqi government, not a stooge regime. Already some of the American de-Ba'athification, in which middle-ranking members of Saddam Hussein's Ba'ath Party lost their jobs, is being reversed. Former army officers are being recruited once more. "We are still paying the price for the mishaps of last year," said President Yawar, referring to the Americans' decision to disband the army.

Those Iraqis who do not support the insurgency simply long for law and order. Many callers to local radio phone-in programmes said that the first thing they wanted Iraq's new interim government to do was to impose martial law. In an on-air poll, they voted overwhelmingly that they had confidence in Iraq's policemen; the only problem was that there weren't enough of them. The new interior minister's recent statement that the government might "slit a few throats" was popular, as was the new defence minister's suggestion that they should "cut off heads".

"They like to use colourful language," said a British diplomat, laughing nervously. "I don't think you should take it literally." But many Iraqis want drastic measures. These days, foreigners lurk in their hotels and leave only for appointments in parts of town deemed reasonably safe. Among Iraqis and foreigners, the conversation is about crime and violence. Apart from the gangs which attack the Americans and all who work with them, there are kidnap gangs, murder gangs and robbery gangs. One man talks of his wife's nervousness after the armed robbery at their house. Another confides that he has sent his family to Jordan for a while. A third frets about his wife and children after a neighbour was kidnapped.

A former civil servant, who has developed a nervous twitch since the war, is frustrated with foreigners talking of democracy and human rights. "Iraqis are like a bird that has been caged for decades," he said. "If you free the bird, he flies out, but he cannot find food and may become prey to other creatures." He sees the insurgents as the creatures preying on the struggling bird.

Whenever bombs blow up police stations or convoys of foreigners, the evacuated vehicles are looted by crowds of unemployed youths, who then torch the remains. No one stops them; no one arrests them. At the fork in the road to Najaf and Hillah, south of Baghdad, street vendors and cigarette sellers tip off insurgents if they see foreigners - they get a few pence, the insurgents find a target, and another foreigner is killed or kidnapped.

Iyad Allawi knows he will gain popularity only if he is seen to be dealing with the insurgency and the crime wave. He will remain in power until elections in January, so his campaign platform is the security of Iraq. Many Iraqis seem prepared to support him, although he has no electoral legitimacy, and was chosen primarily by the US and the United Nations, having lived in exile in Britain for 30 years. "We must use our heads and not be guided by our emotions," said a middle-aged man. "So Allawi seems more British than Iraqi. So what? It's good. Saddam Hussein only left Iraq once and then he refused to look out of the windows of his plane! Look where he got us - three wars and an occupation. We'll give Allawi and his government a chance."

Lindsey Hilsum is international editor of Channel 4 News