U.S. Hands Authority To Iraq Two Days Early

President Bush, speaking in Istanbul at a NATO summit meeting, called it "a day of great hope for Iraqis and a day that terrorist enemies hoped never to see."

"The Iraqi people have their country back," Bush declared. "We have kept our word."

British Prime Minister Tony Blair, who dispatched the second-largest military contingent in last year's U.S.-led invasion, struck a more circumspect tone, saying in Istanbul that the transfer of power was "an important staging post on the journey of the people of Iraq toward a new future."

U.N. Secretary General Kofi Annan issued a statement welcoming "the state of Iraq back into the family of independent and sovereign nations."

On the streets of Baghdad, reaction was muted. While many people praised the transfer of authority, they also voiced doubts about whether it would result in improvements to their lives.

"I feel happy about this handover of authority," said Ghazwan Ali, a sidewalk fishmonger. But he questioned whether Iraq's sovereignty would be "complete and genuine."

"Genuine sovereignty means reconstruction, development and true independence," he said.

A few doors down, Khalil Mohammed Dawood, a 72-year-old retiree, insisted that sovereignty was "not complete as long as American soldiers are on our land."

Under an agreement with Allawi's government, U.S. forces will continue to conduct military activities across the country, although commanders have promised to have their troops adopt a less prominent posture and a more deferential style. The relationship that develops between U.S. commanders and the interim government, which has asked to be consulted before major operations are undertaken, could prove crucial in shaping public support for the new administration.

Despite the restrictions on his government, Allawi has promised to use his new authority to take more aggressive actions against insurgents. He said he would announce new security measures in the coming days. He and some of his cabinet ministers have suggested that a state of emergency may be declared in violent areas, allowing local authorities to impose curfews, ban public demonstrations and take other steps to restore order.

"The security of the country lies in our hands," he said.

But his ability to do more than make declarations will be limited at the outset. Iraq's new army has only 4,000 soldiers, and tens of thousands of policemen still have not been trained and properly equipped. That means that the responsibility for fighting the insurgency, at least for the foreseeable future, will rest with the U.S. military.

Officials expect Allawi's government to ask the U.S. military to hand over custody of Hussein and his top lieutenants, who are being held in U.S.-run detention facilities. Because the Iraqi government does not have prisons deemed secure enough, U.S. officials likely will offer to transfer legal, but not physical, custody.

Other than the handful of senior officials participating in the handover ceremony, which was not broadcast live on television, Iraqis had no knowledge of it as it was happening. The ceremony was so secretive that even members of Bremer's senior staff did not know about it until two hours before it began, an official said.