The American counterinsurgency effort in Iraq's largest urban war zone is being fought in the sewers. Maj. Gen. Peter Chiarelli, an earnest tank officer who recalled that he once dreamed of commanding "large mechanized formations across vast open deserts," is instead knee-deep in a very different fight.

The recently arrived commander of the Army's 1st Cavalry Division pulled up Wednesday to a trash-strewn lot in Al-Rashid, a treacherous southern suburb of Baghdad. A moat of sewage ringed the neighborhood, giving off an eye-watering stench in the noon sun. People assembled before easels and a podium. In front of them, huge pipes, pieces for a sewer system in a neighborhood that has never had one, waited to be set into the cracked mud.

"Your struggle is not with the occupation," Chiarelli told the several dozen community leaders and a pack of local reporters seated on plastic chairs before him. "Your struggle is right before your eyes."

A career tank officer who once taught political science at West Point, Chiarelli contends that public works projects may be more effective than guns in deciding the future of Iraq. He said he fears that time might be running out for the U.S. occupation after a year of enduring war and sluggish reconstruction that has left many Iraqis not knowing where to turn.

Chiarelli, the U.S. officer responsible for greater Baghdad, is among a number of commanders in Iraq who blame the U.S. civilian authority for many of the missteps that have plagued the occupation and turned many Iraqis against U.S. forces. The U.S. effort to improve the lives of ordinary Iraqis, hailed by President Bush this week as a notable achievement over a difficult year of occupation, has been largely forgotten in the recent surge of violence.

The armed resistance has targeted U.S. reconstruction efforts in the hopes of demonstrating to Iraqis that the U.S. occupation, despite its $18.4 billion development budget, has been a failure. If the resistance is successful, U.S. officials here fear, the Iraqi government scheduled to assume political authority from the Americans on June 30 would begin with very little public support.

Chiarelli described the next five weeks as the equivalent of an election campaign, and he said he intends to win it by drawing on lessons he once imparted to students: Understand your constituency and deliver on promises. He is targeting Iraq's "fence-sitters," his term for the mostly poor or barely middle-class Iraqis who he estimates account for 40 percent of the population.

They are deciding now, as the handover date approaches, whether to back the next government or an insurgency working in such neighborhoods as Al-Rashid to undermine it.

Chiarelli is tall and lanky, standing a head higher than most of his officers or the Iraqis he works with. His face is long, and his short black hair is graying at the temples. His arrival in March coincided with an upsurge in armed resistance, and he worries that beleaguered Iraqis may turn to the insurgency after months of neglect by U.S. civilian officials.

In a convoy of armored Humvees, Chiarelli rumbled Wednesday into a section of Al-Rashid known as Al-Shurta, the Arabic word for police. During ousted president Saddam Hussein's rule, members of Hussein's security services received free houses in the neighborhood. U.S. officials say those disaffected officials make up the backbone of the resistance.

Chiarelli kicked off two sewer projects that will cost $31 million, part of a $240 million pot of money he has to spend on public works construction and power generation. Instead of hiring private contractors, Chiarelli intends to turn senior military officers into project managers, saving the high security costs that have become a part of doing business in Iraq.

To prepare for the rebuilding, Chiarelli sent his brigade commanders to four months of civil affairs training, including a three-day seminar with the city planning department of Austin. From headquarters on the Baghdad International Airport grounds, the division peppers Austin planners daily with questions over a direct Internet link.

But those early perceptions of a nation-building operation vanished in the first days after the division's arrival. Intense street fighting in the concrete mazes of Al-Rashid, Sadr City and the town of Abu Ghraib during the first weeks of April stunned Chiarelli and his senior officers at a time when they expected to be dealing with the conflicting interests of Iraqi civil society. "If you'd have told me I was going to lose 36 soldiers in less than 45 days," said Chiarelli, his voice trailing off. He commands about 15,000 troops here. "The key to winning this is that we've got to show them progress."

"We're fighting at night and building by day," said Col. Steve Lanza, the burly, affable brigade commander from Brooklyn, N.Y., in charge of southern Baghdad.

Soon after the groundbreaking ceremony ended, a group of tribal sheiks strode up to Chiarelli. One complained that they were not formally invited to the event. "We think this means you don't respect us," Ismael Dona said.

About 10,000 neighborhood residents belong to the tribes and generally follow what the sheiks say. Chiarelli, the 54-year-old son of a butcher in Seattle who was a lifelong union member, realized immediately he was looking at what amounted to a wildcat strike before the job had even begun.

"Not at all, and this is the first of many ceremonies," Chiarelli bellowed good-naturedly about not respecting the sheiks. "How about some pictures?"

With that, the group walked over to a set of souvenir shovels and dug into the dirt for a second groundbreaking. The sheiks were appeased for the moment, but their long-term interests revolve around which tribe will secure the bulk of the 1,200 jobs on the project to lay seven miles of pipe and renovate a pump station to rid the streets of standing green slime.

"That's the next fight," Lanza said. "Who gets the work."

The people in the surrounding neighborhood, many of whom Chiarelli places among the fence-sitters, remain skeptical of the project. "Any possible improvements in basic services will help the Americans," said Ismael Saeed Abdul Rahman, a 50-year-old electrical engineer with a graduate degree, who has remained ambivalent about the occupation. "The Americans should have done it from the beginning, when they were welcomed."

Chiarelli said U.S. civilian officials have moved too slowly to free up public works money and failed to ask the Iraqis to draw up their own wish lists, as his senior officers have done and compiled in an inch-thick binder he flips through during meals.

He said he believes U.S. civilian officials focused too intently on satisfying the Iraqis who already support them -- a group he estimates at 55 percent of the population -- rather than reaching out to those who still might.

Referring to the insurgents, he said, "This is their worst nightmare -- our delivering on promises to these places." Of the fence-sitters, he added, "They don't believe me. They think this should have been done a year ago."

In seeking to minimize conflict with any Iraqi, even those among the 5 percent he says "we'll probably have to hunt down and capture or kill," Chiarelli has experimented with solutions short of war.

Last week, on the edge of the Shiite slum of Sadr City, a stronghold of an anti-occupation militia, Chiarelli's officers tried out a law enforcement technique imported from urban American: the weapons buyback.

The program, which pays Iraqis for weapons they turn in, was part of a truce arranged between Chiarelli's officers and sheiks from the neighborhood. The sheiks would rein in the militia, led by cleric Moqtada Sadr, and U.S. forces would cut down on patrols. Chiarelli's idea was to allow his soldiers back in the neighborhood to continue public works projects, but first he had to stop the shooting. The gun buyback was an incentive.

For days, men, women and children lined up outside a sports stadium on the neighborhood's dusty edge. They clutched burlap sacks filled with AK-47s, each selling for $200. Little girls held artillery rounds. A donkey cart dragged in a worn antiaircraft gun.

"If they keep this going a few more days, maybe I'd bring them a chemical weapon," said Khadar Hassan, 35 and unemployed, holding a sack full of assault rifles. "I have 35 more of these at home."

Capt. Kevin Baird, a 29-year-old from Nashville, watched the flow of weapons burn through his budget with an air of amusement and amazement. By the end of six days, he had collected 800 AK-47s and half that many rocket-propelled grenade rounds -- each one of which, he said, would likely have killed a soldier or crippled a vehicle.

"We knew everyone had an AK-47, but the tank rounds, artillery rounds, we had no idea," said Baird, surveying piles of munitions cluttering the stadium tunnels. "This is stuff they had just laying around the house. It's made a dent, maybe only a small dent, but there are now that many fewer guns that will shoot at us down the road."

The larger truce collapsed over the weekend after stepped-up attacks on U.S. soldiers, and Chiarelli's troops have been fighting intensely in the neighborhood ever since. Chiarelli said fighting continued because the sheiks could not control the fighters.

Chiarelli's intelligence officers have shown him a map of Sadr City that reinforces his belief that public services are key to defeating the insurgency. The map transposes information on unemployment, sewer capacity and electrical service with the number of guerrilla cells and attacks on U.S. troops. The areas where unemployment is highest and public services most feeble are the same areas where the insurgents are most active recruiting in mosques and schools, and attacking his soldiers.

"It's a classic insurgency -- you go to the have-nots," Chiarelli said. "This 40 percent could easily flip over to follow Moqtada. Someone else will fill the void."

Special correspondent Huda Ahmed Lazim contributed to this report.

Om Hyder talks to U.S. soldiers about problems in her suburban Baghdad neighborhood during a groundbreaking ceremony for a sewer project.Maj. Gen. Pete Chiarelli, commander of the U.S. Army's 1st Cavalry Division, applauds during a groundbreaking ceremony for a sewage project in Al-Rashid, a southern suburb of Baghdad that has never had such a system. An Iraqi boy steps over sewage streaming through his neighborhood, where a U.S. Army general is pushing public works projects instead of military might.