After the riots of August - the Nasiriyah suicide bombing notwithstanding - comparative stability has been delivered in predominately British-controlled southern Iraq. Basic utilities are functioning, the souks are bustling and the Iraqi police are back on the streets conducting traffic. And the frequency with which coalition forces are attacked has declined dramatically. 'Back in July we were having six or seven incidents a day of coalition forces coming under fire,' says Major Charlie Mayo, the military spokesman in Basra. 'Now we might only be seeing two or three minor incidents a week.' In particular, the number of improvised explosive devices deployed against coalition forces has dropped considerably since the army started paying Iraqis to sweep the streets, making them harder to hide.

However, the improvement has only served to highlight the difficulties faced by the US forces in the centre of the country, where warplanes are once again being radioed in to attack static targets, where helicopters are being shot down and where the US military's body-bag count is rising.

The difficulties are likely to be magnified by the accelerated disengagement programme unveiled on 15 November. The schedule is aggressive. A 'Fundamental Law' defining Iraq's federal structure and establishing a schedule for the drafting of a permanent constitution has to be completed by the end of February. The status of coalition forces in Iraq must be agreed by the end of March. The Transitional National Assembly is to be elected by the end of May. By 30 June it will assume full sovereign powers. Elections to a constitutional convention will be staged before 15 March 2005, after which a draft constitution will be drawn up and subjected to a public referendum. Elections for a new Iraqi government will be staged by 31 December 2005, after which a new government will be formed.

For those focusing on the reconstruction programme, the key date is 30 June 2004, the day on which the Coalition Provisional Authority (CPA) will be dissolved. 'It is a very ambitious deadline: time will tell if it is realistic. The announcement effectively brings forward the exit strategy by nine months,' says Henry Hogger, Basra's governate co-ordinator for CPA South, and deputy to Hilary Synott, the head of CPA South. 'This will lead to increased pressure to speed up the reconstruction programme. It's possible in some areas, but there are many parts of it that you simply can't accelerate - building power stations for example. And the major new projects that will be financed under the $33,000 million from the US and [the] Madrid [donors' conference] have not even been agreed yet. Much of the work will still be going on when the handover takes place and the CPA ceases to exist. A 'status of forces' agreement will have to be reached - the coalition forces will have to remain, but at the invitation of the new government. More importantly, the accelerated exit will have an impact on the pressure to have Iraqi participation in the reconstruction projects.'

The potential impact could be massive. 'We were given only a handful of days to prepare our bids for the distribution of the reconstruction pot,' says a senior figure in CPA South. 'There's no doubting that competition for resources is going to be tough. What we don't know is how political the process will become. Will the CPA in Baghdad be keeping one eye on the disengagement process as it allocates the cash? Or will it be focusing on what is really best for Iraq's infrastructure and economy? There will be a lot of projects on which these two interests will not coincide. Perhaps even more importantly, how will handover to Iraqi control of all but the shortest-term projects be managed?'

While the process may be convoluted, the importance of the result is not. One of the most valuable lessons learned in southern Iraq has been the link between progress in the physical reconstruction programme and the security situation. The mid-August failure of the southern power network and the collapse of fuel supplies sparked the riots that erupted in Basra.

'One of the issues has been matching expectations against what is possible in the time available,' says Hogger. 'On the power infrastructure, the mainstream CPA projects, the work being done by Bechtel, have long time scales, but the people want immediate improvements.'

And when they didn't see them, they went out on the streets. 'There can be no doubt that essential services - power, water, fuel - and security are interlinked,' says Colonel Tim Grimshaw, head of the Emergency Infrastructure Programme (EIP) launched by the coalition forces in southern Iraq. 'What we have been trying to manage is the transition of the infrastructure from fragility to stability, because from a military perspective this is at the heart of the security issue.'

The EIP - which has a $127 million budget sourced directly from the UK Treasury and the Department for International Development (DFID), with supplementary funds from CPA South - is focused on repairing the infrastructure, rather than reconstruction or humanitarian objectives. 'It is short-term, and we had to break the bureaucracy because we needed rapid procurement,' says Colonel Grimshaw. 'The CPA couldn't provide the expertise needed so the military has provided it. Hopefully that expertise will be in place by December and we will start transferring EIP components back to the CPA in January. Most of the projects should be completed by March, at which point the main project work - the KBR [Kellogg Brown & Root] and Bechtel contracts - should be beginning to bear visible fruit.'

Basra now has power 24 hours a day, fuel supplies have been secured and the provision of water has improved. But the CPA knows there is more to the establishment of peaceful, stable civil society than patching up utilities. In conjunction with the military it has established a string of training schemes to prepare Iraqis for the transition to sovereignty. The Iraqi Civil Defence Corps (ICDC) is being trained as a paramilitary force in waiting. The Iraqi police are also being retrained, re-equipped and mentored. The Basra Chamber of Commerce has been reconstituted with a clear mandate to support the establishment and nourishment of small and medium-sized enterprises (SMEs). Tens of millions of dollars have been spent on the rehabilitation of schools and the healthcare network. Even Basra's main football stadium has been renovated at a cost of $70,000. There is a certain irony in the fact that the stadium was originally built by the British Army during its first period of occupation of southern Iraq some 70 years ago, in an attempt to distract the local population from violent uprising.

'We are now focusing on capacity building, and by this we mean both institutions and individuals,' says Hogger. 'This goes with the transition from emergency operations to empowerment. When we leave, our success should not be measured by the infrastructure programme but by what is sustainable.'

The challenges facing attempts at 'capacity building' are immense, and are magnified by the abbreviated timeframe for departure. 'De-Baathification effectively stripped out the top three layers of management within ministries and state-owned enterprises,' says a CPA South official. 'What we have now are a lot of people who are capable but have responsibilities they have never had before. And at the same time they have to digest a shift away from the old system, in which everything was controlled very tightly from the centre, from Baghdad. We are trying to develop regional decision making, and this is even more important now that the timetable for disengagement has been accelerated.'

The extent to which the CPA is successful in developing regional responsibility, authority and autonomy will have a significant bearing on the robustness of Iraq's future constitution. The tension between core and periphery could prove problematic, particularly if it sits uneasily within a loosely-defined federal structure.

Capacity building

It is not only the Iraqi people that have been confronted by the need to build capacity. The CPA itself has been plagued by recruitment difficulties, despite the generous salaries offered. As with other parts of the post-war programme, the military has provided cover. A number of key CPA programmes in decidedly civilian sectors, such as the development of Iraqi SMEs and the establishment of youth centres and sports facilities, are being run by soldiers on secondment. With the CPA only having seven months of life left, its ability to recruit and position key staff within Iraqi institutions to help with the reconstruction programme after the return of sovereignty is a cause of mounting concern.

The CPA's difficulties have been compounded by the limited deployment within Iraq by aid agencies. 'This has added to the strain,' says a CPA official. 'We would have expected a greater presence on the ground from the UN, its agencies and a number of the major charities. But the security situation has prevented it. This has been particularly unfortunate for us in Basra, because the security situation is much better down here than in Baghdad, but when they are attacked there they decide centrally to pull out of the whole country.'

As with most other aspects of Iraq's future, the security situation is the determining factor. Major Cannon has got his binoculars back but it remains difficult to see too far ahead. n