In Baghdad the Iraqi government is eager to give the impression that peace is returning. “Not a single sectarian murder or displacement was reported in over a month,” claimed Brigadier Qasim Ata, the spokesman for the security plan for the capital. In the US, the Surge, the dispatch of 30,000 extra American troops in the first half of 2007, is portrayed as having turned the tide in Iraq. Democrats in Congress no longer call aggressively for a withdrawal of American troops. The supposed military success in Iraq has been brandished by Senator John McCain as vindication of his prowar stance.

Seldom has the official Iraqi and American perception of what is happening in Iraq felt so different from the reality. Cocooned behind the walls of the Green Zone, defended by everybody from US soldiers to Peruvian and Ugandan mercenaries, the government of prime minister Nouri al-Maliki pumps out alluring tales of life returning to normal that border on fantasy. For instance, Brigadier Ata made his claim that there had been no sectarian murders or expulsions in the capital over the previous month on February 15, but two weeks earlier, on February 1, suicide bombers, whom the government said were al-Qa’ida, had blown themselves up killing 99 people in two bird markets in Baghdad, both situated in largely Shia districts.

So keen are the authorities to show that Sunni and Shia have stopped killing each other and overall violence is down that many deaths with an obvious sectarian motive are no longer recorded. “I think the real figure for the number of people being killed is about twice what the government says it is,” said one local politician. He had just sent the death certificates of the victims of sectarian killers to the military authorities, who were steadfastly refusing to admit that anybody had died at the time and place that the bodies were discovered.

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One day after Brigadier Ata claimed that there had been no sectarian killings or abductions over the previous month, prime minister Maliki himself went on a walk about in central Baghdad to demonstrate just how safe things have become. But it was the precautions taken by Maliki’s bodyguards which were more revealing about the real state of security in the city.

Maliki’s brief venture onto the streets and out of the Green Zone took place in the al-Mansur district of west Baghdad. This is an area of big houses and many embassies, but has been heavily fought over by Sunni and Shia in the past year. “I was in Mansur on Saturday afternoon,” an Iraqi friend told me, “when, at about 3.15pm, I noticed a strange movement in the street, which was suddenly flooded by soldiers in green uniforms, led by generals and colonels, who were checking parked cars and all the buildings.” Minutes later a large convoy of vehicles appeared, with three US army Humvees in front and behind, and, in the middle, five black armoured four wheel drives They stopped in front of a famous ice cream shop called al-Ruwaad, but for fifteen minutes nobody got out of the vehicles as soldiers searched all the shops nearby. When officials and their guards did begin to emerge Maliki was in the middle of them and began to walk around.

“Everybody was scared when they saw him because they thought his presence might lead to an attack,” reported my friend. “Some women began to run away and I thought it was too dangerous for me to stay. I heard that Maliki gave 500,000 Iraqi dinars [£200] each to a woman who said her husband had been killed in a bomb explosion and a blind beggar.” Maliki also bought two suits from a well-known shop called Mario Zengotti, which promptly shut down, the owner presumably calculating that Baghdad is full of people who might kill him for selling clothes to the prime minister.

Baghdad is ‘better’ than it was, but the improvement is only in comparison to the bloodbath of 2006 when 3,000 people were being killed every month. People stay inside their own Sunni or Shia ghettoes. I drove one night through west Baghdad at 8 pm, sitting in the back of a police car with a second military vehicle full of heavily armed soldiers and police behind. Though I was driving in the heart of the capital I saw only three civilian cars during a three or four mile journey through a maze of military checkpoints and fortifications. In Shia-dominated east Baghdad, where there has been less fighting, there are more shops open but few customers. Overall the city the city is still frozen in fear. The growth in the number of checkpoints is not entirely good news because it has always been a favorite tactic of kidnappers and death squads to set up fake checkpoints to stop and identify potential victims. More reassuring is the knowledge that the Mehdi Army militiamen, the military wing of Shia clerics Muqtada al-Sadr’s movement, who killed so many Sunni at the height of the slaughter, are still abiding by a strictly-enforced six month ceasefire on the orders of their leader. The killings have not stopped but there are less of them.

Baghdad is entirely divided between Sunni and Shia and the sectarianism is as deep seated as it was before fall in violence. In many areas, say Iraqis bitterly, “the killing stopped because there was nobody left to kill.” There are very few mixed neighborhoods left. Just beneath the surface the Mehdi Army still exists as a parallel government in Shia areas, which means most of the city. A friend who was trying to sell a large house for $300,000 had to pay a $25,000 bribe to government officials to get the sale registered. No sooner had he paid this than the Mehdi Army demanded a further $15,000 for the sale to go through, money he reluctantly paid on the grounds it was too risky to refuse. Baghdad remains the most dangerous city in the world. This explains why so few of the 2.2 million Iraqis who have fled abroad, mostly to Jordan and Syria, or the one million forced from their homes within Iraq, are coming home, despite the fact that many families exist miserably in a single rented room in Damascus or Amman.

Again, the Iraqi government has tried to prove the contrary. Last December it paid for a highly publicized convoy of buses to bring Iraqis home from Syria, the exercise geared to giving the impression that a flood of people was returning to peaceful Baghdad. Unfortunately, it never happened. Three months later, despite much tougher Syrian visa regulations, the flow is still out of Iraq. The latest figures from the UN High Commission for Refugees show that the number of Iraqis entering Syria from Iraq was 1,200 a day in late January “while an average of 700 are going back to Iraq from Syria.”

Baghdad is now divided along sectarian lines like Beirut or Belfast. The Surge, along with the Mehdi Army truce, the emergence of al-Sahwa, the anti-al-Qa’ida Sunni movement, have all helped to freeze in place the demographic outcome of the ferocious battle for control of Baghdad which took place after the bombing of the Shia shrine in Samarra on February 22, 2006. It was a struggle which was won by the Shia with the Sunni, always a minority, being pushed back into a few enclaves, mostly in west Baghdad or being forced to leave Iraq. They make up disproportionate number of the refugees in Syria and Jordan and many, particularly of the better educated, will never return. The Shia also suffered, but they outnumber the Sunni by three to one in Iraq as a whole and they now control 75 per cent of the capital. It was this crucial battle for Baghdad and central Iraq, which, far more than the Surge, has determined the political landscape of Iraq for the foreseeable future.

The shooting may have died down for the moment, but the butchery of 2006 and early 2007 has left a legacy of hatred and fear. Even the most liberal-minded Sunni and Shia no longer feel at ease in each other’s company. The history of one family from al-Khudat, a middle class Sunni neighborhood in west Baghdad, explains why city is going to remain divided. In this case the victims were Shia, but what happened to them, and how they reacted to it, is typical of refugee families elsewhere in Iraq. The family had lived in Khudat for thirty years and were well liked by their Sunni neighbors. The father of the family died two years ago leaving his fifty-five year old widow, Umm Hadi, who had been a primary school teacher, along with four sons and three daughters. Early in 2007 it became so dangerous for Shia in al-Khudat that the family fled to Syria after asking the neighbors to look after their house. Umm Hadi did not like it there. “We thought we were just going for a short time,” she says. “The Syrians mistreated us and charged us a lot of money, so we decided to come back to Baghdad at the beginning of 2008.”

On Umm Hadi’s return from Syria she and her family found that their house had been taken by a Sunni family from al-Amel, another embattled area, and they refused to leave. Umm Hadi and her sons, all grown up, were too frightened to call the police or the Americans. Instead they moved to Hurriya in north west Baghhdad, which once was mixed but is now controlled by the Mehdi Army and the Shia. Hadi, the eldest brother, who works as a carpenter was dispirited when asked on February 1 what he intended to do. “We were so surprised,” he said, “that our house was taken and our dear neighbors allowed this to happen. There is nothing we can do to force these people to leave because they might retaliate by attacking me or my brothers or even blow up the house.” He was interrupted by his mother, Umm Hadi, her face quivering with anger, who said she was not going to surrender so easily. “It is true,” said this former primary school teacher, “that we are poor people, but that does not mean that we are weak. We can call on our strong Shia arm [apparently referring to the Mehdi Army] to get our house back. I have information that one of the sons of the family that took it is working in a petrol station. It would be a good message to send his dead body to them if they insist on staying.” At this point her sons interrupted their mother saying that she had “suffered a lot since we came back to Iraq; she is a kind woman and does not mean what she says.” A week later, however, on February 8, the father of the Sunni family who had taken their house, was found shot dead in his car in west Baghdad.

Perplexity among non-Iraqis about what is going on in Iraq is stems primarily from a failure to understand that ever since fall of Saddam Hussein in 2003 there have been two wars being fought in the country. One was between the US occupation forces and the Sunni, rulers of Iraq down the centuries. This war had gone surprisingly well for the Sunni. They had inflicted significant losses, now approaching 4,000 dead, on the US army which, while not militarily crippling, were politically unsustainable in America. But the Sunni were also fighting a second war, this one against the Shia majority, and this war they were losing badly. They had lost control of the Iraqi state machine with the fall of the old regime. The elections of 2005 gave the Shia, in alliance with the Kurds, control of parliament, the government, army and police, though admittedly this was under partial American tutelage. The Sunni came to regard the Interior Ministry as the headquarters of the death squads. The Health Ministry was believed to have torture chambers for Sunni in its basement. If this was not enough, the Sunni were being squeezed by the murderous killers of al Qa’ida, who slaughtered all who opposed them, and were seeking to set up a Taliban-like enclave to be called the Islamic State of Iraq.

By the end of 2006 many Sunni leaders were coming to see that they could not afford so many enemies. The non-al-Qa’ida Sunni guerrilla groups were less fragmented than they looked, their common background as Baathists, former military and security officers, and tribal leaders, making it easier for them to make collective decisions. They formed al-Sahwa, the Awakening movement, which was against al-Qa’ida and allied to the Americans. It was also, though al Sahwa and the US military played this down, either against the Iraqi government or not under its control. The Americans themselves were surprised at the speed with which the movement spread until there are some 80,000 al-Sahwa fighters, armed and paid for by the US, which constitute a powerful Sunni militia.

The US called the al-Sahwa fighters ‘Concerned Local Citizens’ and later ‘Sons of Iraq’, seeking to give the impression that they were simple tribal folk who had turned on al-Qaida. In reality they are the same Sunni guerrillas who have been fighting the US for five years. Their leaders have a very clear idea about what they are doing and why. On 26 January I went to see Abu Marouf, whose full name is Karim Ismail Hussein al-Zubai, the leader of 13,000 al-Sahwa fighters between Fallujah and Abu Ghraib west of Baghdad, a strategically important area that has seen the heaviest fighting in the war. I counted 27 checkpoints between central Baghdad and Abu Marouf’s headquarters in a half-ruined villa, hastily fortified with heavy machine gun emplacements, down a rutted tracks running between irrigation canals and reed beds near the village of Khandari. He expressed anger with the Iraqi government for not giving him and his men ‘long term jobs in the security services’ and the Americans for not paying his men. He threatened to go to war against both in three months unless his demands were met. A thin faced man in a brown suit and a tie, he said he was a former security officer under Saddam and later a fighter against the Americans. He would not say which guerrilla group he belonged to, but he is believed to have been a commander in ‘the 1920 Revolution Brigades’. “If the Americans think they can use us against al Qa’ida,” he said, “and then push us to one side they are mistaken.” He expressed contempt for Nouri al-Maliki’s government as “the worst government in the world.” Of the 13 divisions in the Iraqi army most were Shia and half were made up of militiamen controlled by Iran.

There is no doubt that these former Sunni guerrilla are very much in control of the Fallujah as far south as an area which used to be known as ‘triangle of death’ near Yusufiyah. The city of Fallujah itself, scene of the climactic battle between Sunni fighters and US Marines in November 2004, is run by police Colonel Feisal Ismail Hussain al-Zubai who is Abu Marouf’s elder brother. Like him he candidly admits that up to the end of 2006, when he was appointed to his present job, “I was fighting the Americans,” he said. “If your country was occupied what would you do?” Beside him on his desk is a picture of himself in uniform as a young officer, along with other officers, in the Iraqi army’s Special Forces in which he served after 1983. He and his brother use the word ‘militia’ to describe Shia-dominated institutions. Asked why he had switched from fighting against the Americans to fighting with them, Colonel Feisal said: “We decided that, when we compared the Americans to the militia and al Qa’ida, we should choose the Americans.”

The present American strategy may look like smart politics back in Washington. It is better to pay Sunni gunmen $300 a month to guard the road rather than have them planting bombs in it to blow up American Humvees. The US is losing one soldier dead a day compared to three or four killed each day a year ago. Since American casualties are the main barometer by which the US electorate views success or failure in Iraq these are important figures in an election year. The lower American casualties also reflect an important political change in Iraq. The Sunni and Shia now hate and fear each other more than they do the Americans. This puts the US in a stronger position because it can control the balance of power between the two communities. Sunni in Baghdad would prefer American soldiers to kick down their door in the middle of the night than the Shia-dominated Iraqi army and police who are likely to torture and kill them. In many ways the US position in Iraq is like Syria’s status in Lebanon, which resembles Iraq in its ethnic fragmentation, between 1976 and 2005 when it partly occupied the country. The Syrian army prevented the civil war escalating, but also stopped anything being resolved between the different communities.

Probably the US cannot play this intermediary role for so long. At the end of the day neither Sunni nor Shia Arabs in Iraq want the US to stay. It would be very easy for any of the myriad armed groups in Iraq to launch an offensive and send American military casualties soaring. With the rise of al-Sahwa, a powerful Sunni militia, the country is more divided than ever. The Sunni now have their own private army as do the Shia and the Kurds.

The greatest success of the Surge has been in terms of public relations. Suddenly there is a perception in the US that ‘things are getting better in Iraq’, though they are better only in terms of the mass killings of 2006. In the struggle over who will hold power in Iraq in the future nothing is decided and fighting, just as ferocious as anything we have seen in the past, could erupt at any moment.