Abu Nawas Street runs alongside the Tigris River and through a thousand Iraqi memories of grilled fish dinners and twilight beers at sidewalk cafes.

Once a place for fun, the avenue has been closed for reasons of security since U.S. troops entered Baghdad 15 months ago. Across the river, the U.S.-held compound known as the Green Zone is within mortar range. Hotels on Abu Nawas Street house U.S. government contractors and journalists, prime targets for attacks by insurgents.

"We had memories, beautiful memories on Abu Nawas Street," said Abdul Naser Amar, 40, whose al-Mizan art gallery has suffered dearly during the road closure. "We want time to turn back."

On Wednesday, U.S. soldiers began to open Abu Nawas Street, using hoists and flatbed trucks as the chairman of Baghdad's city council, Ali Haidary, and the 1st Cavalry Division's commander, Army Maj. Gen. Peter W. Chiarelli, chatted with shopkeepers. By the time work was through for the day, blast walls and concertina wire had been rolled back three blocks. But they had not disappeared.

"Those Americans think that we are stupid," said Khaleel Ibrahim, 42, who has been paying rent on his shop on Abu Nawas Street despite its being closed throughout the 15-month occupation. "They will never open it."

The grim architecture of the U.S. occupation has begun to soften two days after an interim Iraqi government assumed political power, but the physical presence of the U.S. government in the heart of Iraq will remain a formidable obstacle for some time to come.

Iraqi officials have begun demanding that the United States relinquish some of the turf it holds in the capital. U.S. military commanders, however, must still contend with an insurgency that they say has not weakened with the passing of power to the Iraqis, requiring that the most irksome everyday aspects of the occupation remain in place.

"If we hold on too tight, this becomes the same occupation in a different dress. If we let go too quickly, there could be chaos," said Army Col. John Murray, commander of the 1st Cavalry Division's 3rd Brigade Combat Team, which is responsible for central Baghdad. "It's a very fine line we will be walking politically."

At the center of the city -- and of the debate over the enduring U.S. presence -- is the three-square-mile cluster of national monuments, palaces and parkland known as the Green Zone, where the Coalition Provisional Authority made its headquarters behind well-guarded walls. The zone, hard against the Tigris River, is a city unto itself, with broad, tree-lined avenues that wind among apartment buildings, garish palaces and government ministries, many of them caved in more than a year ago by U.S. bombs.

The U.S. Embassy has replaced the occupation authority, which dissolved with the handover on Monday. The largest U.S. diplomatic mission in the world, the embassy occupies some of the same buildings as the occupation authority did, including the Republican Palace complex that will serve as offices. Two Iraqi ministries also have their offices inside the Green Zone; the rest are scattered around the city.

Some Iraqi officials have expressed dismay over U.S. plans to remain in the Green Zone, the seat of political authority in Iraq for decades. Moreover, the zone encompasses Iraq's equivalent of the National Mall, including monuments erected by former president Saddam Hussein to glorify his wars and fallen soldiers. Iraqis used to picnic in their grassy shadows.

Iraqi officials have not officially asked the United States to roll back the zone's boundaries, but have said they would like some of its roads opened to the public as a first step.

In the weeks leading up to the handover, Murray and his battalion commanders drew up plans to give back roughly 60 percent of the Green Zone to the Iraqi government. Murray's plan, which has been approved by his senior officers, would turn over the Monument to the Unknown Soldier and the Crossed Sabers monument; the Baghdad Convention Center and the al-Rashid Hotel once favored by tourists and dignitaries, and apartment complexes where as many as 20,000 Iraqis have lived with U.S.-issued passes since the invasion.

Murray said he could dismantle the blast walls, bags of earth and hoops of concertina wire in two to three months. But he and his commanders said that Iraqi security forces, now being trained by U.S. troops, were not prepared to assume responsibility for the area.

"Without us doing the job, this fledgling democracy does not stand much of a hope," said Lt. Col. Robert Campbell, commander of the battalion in charge of the Green Zone's six checkpoints. "There are huge political gains in putting this back in Iraqi control. But there's a balance of risk involved."

The Green Zone is the hard core of Murray's roughly 250-square-mile area of responsibility that encompasses most of downtown Baghdad. Rich and poor, Shiite and Sunni, disgruntled and grateful, it is a cross-section of Iraq and its postwar confusions.

From his office in a bomb-crumbled mini-palace inside the Green Zone, Murray, 44, begins each day examining what he calls "patterns of life," indicators that help him assess the threat level. His bristly gray crew cut and grave demeanor give him a central-casting quality of a colonel. He is both amiable and mostly unsmiling.

"I don't think there's been a single day here that I haven't been worried," said Murray, whose 4,800-soldier brigade officially took responsibility of the Green Zone and its surroundings on April 15.

Traffic flow, the attendance of Iraqi police at morning roll call and the volume of shoppers in markets are some of the threat indicators he evaluates. At the checkpoints, Murray's soldiers consider a dearth of children or the cancellation of the morning ice delivery as signs of a possible attack.

Security duties, at some point, will fall to the Iraqi police and National Guard, which are rich on recruits thanks to Iraq's high unemployment but short on equipment and confidence.

Murray's goal, as it is with other U.S. commanders in Iraq, is to push the National Guard forward and begin pulling his own troops off the streets.

"Over the next few weeks, we're going to be trying very hard to give the impression this is joint," Murray said as he visited the 302nd Iraqi National Guard Battalion, headquartered in the air traffic control tower of Baghdad's old downtown airport. U.S. troops man the checkpoints outside.

The Iraqi security presence in the Green Zone will increase mostly around the perimeter, particularly at checkpoints. Inside the walls, the compound appears nearly frozen in the immediate post-invasion period.

Palaces damaged by U.S. bombs line the empty streets, shot through with sunlight. Blast walls line almost every street. Big bags of earth, set into giant wire-mesh baskets, reinforce them. The protections are there because rockets and mortars fall inside the zone an average of once every three days, and rifle fire strafes checkpoints almost daily.

Haidary, the city council chairman, is pressing hard for the reopening of the 14th of July Bridge, the southern entrance to the Green Zone. The bridge road is the most direct way from the upscale Karada shopping district to downtown, but it cuts through heart of the Green Zone.

Though opening the road would relieve traffic congestion, Murray said it would also isolate most of his troops on one side of the road and the U.S. Embassy on the other. He said the issue would be resolved "high above my level."

"They'll make a recommendation, I'll argue against it, and we'll work something out," Murray said. "That's what's going to be interesting over these next few months, watching the way these decisions get made."

Special correspondent Naseer Nouri contributed to this report.

Sgt. Joseph Watts, of Van Buren, Ark., clears razor wire from around a U.S. military checkpoint in Baghdad, part of an effort to scale back symbols of the U.S. occupation.