Mahdi Army, Not Al-Qaeda, is Enemy No. 1 in Western Baghdad

"We have to be out there with our coalition partners, engaging the populace and making progress on essential services and major projects," Frank said. "We know that we can conduct direct action from now until we go back" to the battalion's base at Fort Riley, Kan. "But that is not the solution to lasting victory."

In the most heavily Shiite neighborhoods, particularly al-Amil and Bayaa, the Mahdi Army has assumed the role of local government, according to American soldiers. On the streets of West Rashid, Sadr's followers maintain a hold over basic services, often to the detriment of Sunni residents.

"The Mahdi Army kind of shorts them out of power," said Capt. Charles Turner, who oversees reconstruction projects for the battalion. "You drive down the roads, you look over here, it's light. And you look over there, it's dark. From what I've seen, it's kind of a Tony Soprano thing: 'I outnumber you, so I'm going to do what I want.' "

Along certain militia-controlled blocks, "the curbs are painted, the streets are cleaner, they have beautification projects," Turner said. "It would be cool if it was a positive thing, but it's not."

To finance their operations, Shiite militiamen run an elaborate enterprise featuring stolen car rings, weapons trafficking, kidnapping and extortion of local businesses, U.S. soldiers said. One of their more lucrative initiatives involves forcing Sunnis from their homes, then renting their houses, cars and furniture to Shiite families at discounted prices. One Sunni woman in the al-Jihad neighborhood recently complained to U.S. soldiers that Shiite militiamen had forced her out of her home and used her yard to fire 120mm mortars.

The soldiers also believe the Mahdi Army controls gas stations, charging preferred Shiite customers a fixed price, regardless of the amount bought, while turning away Sunnis. One of the Iraqi army's projects in the area is to monitor gas stations to prevent such discrimination and corruption, in some cases temporarily shutting down the stations.

"Of all of these, that's the cash cow," said Frank, the battalion commander. "Jaish al-Mahdi, from our sources, is extremely upset that we're putting so much pressure on the gas stations. It's common sense. We're shutting down the cash flow."

The American soldiers offer rewards to residents who alert them about weapons caches or other signs of criminal activity, but the Mahdi Army offers wider support and will probably remain influential after the Americans have moved on.

"That's hard for us to combat. We can, and we've been trying since we've been here, but we're not giving away homes, whereas JAM is," said Wink, the intelligence officer. "Who are you going to go with -- somebody who just gave you a house or U.S. forces saying you shouldn't follow insurgents?"

'Ran Out of People to Kill'

The fighting here is daunting, with the eyes of the militia seemingly everywhere. The violence that U.S. troops monitor -- shootings, bombings, mortar and rocket fire -- has risen and fallen in their four months in the district, without obvious trends. Roadside bombs encountered rose from 25 in March to 51 in April, then fell to 49 in May and 32 in June. Gunfire attacks numbered 84 in March, 152 in April, 113 in May and 132 in June. Sectarian killings dropped to their lowest level of the past four months in June. But the downturn in violence in Shiite-dominated areas was not necessarily encouraging, Wink said.

"Now that the Sunnis are all gone, murders have dropped off," he said. "One way to put it is they ran out of people to kill."

On the decrepit city streets -- some dirt, some paved, some drowned in lakes of sewer water -- the fighters and bomb-placers seem relentless to the Americans. There are blocks in these neighborhoods that armored U.S. Humvees and Bradley Fighting Vehicles visit only during targeted raids, normally at night. The soldiers avoid main routes, dipping through the dirt alleys to avoid the bombs that fire heated copper slugs capable of piercing armored vehicles.

Last Monday, they pulled up outside a gated school on a tip that someone had launched rockets from the inner courtyard, using the children as cover so the Americans would not fire back. The brigade commander, Col. Ricky D. Gibbs, said later his patience for such tactics was limited: "One of these days, if they keep shooting, I'm going to shoot back and level the whole neighborhood."

When his soldiers hopped the concrete wall that day they found no clues inside, only broken windows, empty classrooms and a few people cowering behind closed doors. These guerrilla tactics can breed suspicion and distrust -- sentiments hard to reconcile with a mission to win the confidence and allegiance of the Iraqis.

"One of their techniques is they'll pretty much just conscript a family -- you'll have no idea if those children and that woman are the guy's actual wife and children," said Lyons, the company commander. "They use them as cover all the time. If you see guys walking holding kids, holding their hands, it's almost like a perfect indicator that they're up to no good. It's really sad."