Hundreds of women in black abayas crowd outdoor food markets, snapping up groceries and fresh vegetables. Stores are open again. Children play soccer on dirt fields until dusk — or later, when there's electricity.
This is Sadr City, where black-clad militiamen of radical Shiite cleric Muqtada al-Sadr's Mahdi Army once enforced discipline across the sprawling slum of 3 million people — half of Baghdad's population. The Iraqi army won control of the district in May after weeks of battles that damaged scores of houses and emptied the streets.
"Security is better without the Mahdi Army," said a 42-year-old resident who wanted to be identified only by his nickname, Abu Israa. "We don't want them back."
Most residents do not seem to miss the Mahdi Army, and the U.S. and Iraqi governments hope that sentiment sticks. So Sadr City is witnessing a flurry of public works projects — part of an effort to build confidence in the government and make it more difficult for the extremists to return.
The U.S. military has tried the same strategy before in Sadr City after cease-fires but with limited results. This time U.S. officials are more confident that they can do a better job of managing the effort and maintaining the flow of money. They also believe that support for the militia has dropped sharply because residents are tired of bloodshed.
The Iraqis apparently hope to avoid the disappointment that's growing in the southern city of Basra, where many residents blame the government for failing to deliver on its promises to improve basic services, provide jobs and distribute enough food after winning control from Shiite militias last spring.
Streets, sewers repaired
Taking no chances in Sadr City, hundreds of city workers have spread out across the district to spruce it up. They are resurfacing roads and sidewalks, repairing the sewer system and collecting garbage.
Prime Minister Nouri al-Maliki has pledged $100 million to upgrade the quality of life. The U.S. military is also providing some reconstruction and economic aid to help rebuild parts of Sadr City — with about $4 million already being spent and more on the way.
"The Iraqi government is rebuilding Iraq, one area at a time," says a large billboard on one of Sadr City's main roads — part of a U.S.-backed propaganda effort.
To make sure everything goes smoothly, Iraqi troops man scores of checkpoints and are even directing traffic. They have set up small outposts deep inside the district, complete with blast walls and sandbags.
U.S. troops continue to stay in the area's outlying neighborhoods, but residents report nightly forays by American forces and their Iraqi allies to arrest Mahdi Army commanders — moves the government once roundly condemned and the Mahdi Army pledged never to allow.
On Monday, the top U.S. military officer visited Sadr City, where he met with U.S. troops at a coalition observation post and strolled through a market.
"We saw extraordinary progress there," said Adm. Michael Mullen, chairman of the Joint Chiefs of Staff. "A few months ago no one could go into Sadr City. I was able to walk openly down a street that until recently was extremely unsafe, and I'm encouraged by that."
Islamic courts are gone
With a canny mix of persuasion and intimidation, Mahdi Army fighters and clerics loyal to al-Sadr had governed the enclave since 2003 like a mini-state. They set up Islamic courts, punished offenders and operated hospitals and gas stations.
Rogue militiamen also ran extortion rackets and black-market rings in food and gas, and formed kidnap-for-ransom gangs.
Residents tolerated the abuses because the militiamen protected them from Sunni militants during sectarian strife in Baghdad in 2006 and 2007. But when violence abated, so did the Mahdi Army's welcome.
The setback for the Mahdi Army in Sadr City, its largest stronghold, has presented the once-feared militia its biggest challenge since al-Sadr created it in 2003. The uncertainty over the militia's future is deepened by al-Sadr's voluntary exile in Iran, where he has lived for more than a year.
Behind the scenes, al-Sadr is quietly reorganizing the militia into a smaller force to fight again, according to a senior militia commander. The commander, who fled Iraq in May at the end of seven weeks of fighting in Sadr City between the militia and U.S.-backed Iraqi troops, spoke by telephone from Iran's holy city of Qom.
The commander said al-Sadr and a small clique of trusted aides are working to organize groups of militiamen into small fighter cells that can operate in secrecy and in isolation of each other. Speaking on condition of anonymity because he is not authorized to speak to the media, he said about 20 commanders have been picked to lead the new cells.
The new structure will mirror that of Hezbollah, the Lebanese Shiite guerrilla group backed by Iran whose popularity soared in the Arab world after it fought Israel to a standstill in the summer 2006 war.
"The last round of fighting was a lesson to everyone and it is the reason behind the restructuring," said the commander.
The recent fighting in Sadr City ended with a truce that allowed the government to take control of the vast district and obliged al-Sadr to take his soldiers off the streets.
It is unclear if the smaller, more mobile force foreseen by the commander would have trouble controlling Sadr City the way the full Mahdi Army did. But it would likely give al-Sadr better control over the proposed fighter cells. His aim likely is to bolster his standing as Iraq's top anti-American figure.
'Black shirt now risks arrest'
Publicly, the Mahdi Army has melted away.
Gone are the small groups of militiamen hanging out on major roads or racing through dusty streets in pickup trucks. They have even stopped guarding al-Sadr's office and manning checkpoints to search worshippers headed to outdoor Friday prayers.
Many commanders have gone into hiding or fled.
"Anyone with a beard and a black shirt now risks arrest," said Hussein al-Mohammedawi, a 36-year-old, midlevel commander who first joined the Mahdi Army in 2004.
"I often spend the night away from home to avoid arrest," he said.
But others say this is just a waiting period.
"We are still here even if you don't see us," said Mahdi al-Freiji, one militiaman. "There is a time for everything. You just have to wait and see."