'A change in spirit is the most important thing for Iraq after the handover,' says Kassim Daoud, Minister of State in the interim Iraqi government and secretary-general of the Supreme Board for Reconstruction. 'The government now has a moral obligation to prepare the country for the elections and this is our top priority. We also have to concentrate hard on improving security and rebuilding the economy in parallel. Without creating more employment for Iraqis while strengthening the civil service there can be no resolution to the security issue and no end to the attacks.'

In his final speech on 28 June as the CPA chief administrator, Paul Bremer said: 'I leave Iraq confident in the future and confident in the ability of the government to meet the challenges of the future.' However, the potentially turbulent nature of that future was all too evident in the days prior to Bremer's address.

A week of unrest culminated on 26 June with a bomb blast outside a mosque that killed at least 31 people in the normally quiet Shia city of Hilla. The explosion was just one of a long list of violent incidents throughout June that were - according to the US military - perpetrated by insurgents loyal to Abu Musab al-Zarqawi and the former regime of Saddam Hussein. Set against the backdrop of 14 months of occupation the recent carnage contains little new, other than a sense of mounting intensity.

While the handover of power to the interim government led by Prime Minister Iyad Allawi may not result in an immediate cessation of violence it is expected to lead to a change in strategy from that of the coalition forces. 'We are still facing Al-Qaeda fundamentalists under Al-Zarqawi and the remnants of the old regime. But unlike the US and UK military we Iraqis know how best to deal with these problems,' says Daoud.

Just how the Iraqis will go about putting their house in order with their present armed forces is uncertain. According to the latest CPA figures, fewer than 10,000 men are in service in the New Iraqi Army, which is intended to number 70,000 soldiers. Civil policing is also ill prepared for the task ahead. Of the 87,000 officers in service, up to 57,000 have no formal training. Without a real fighting force to underpin its authority, the interim Iraqi government will continue to rely heavily on the 160,000 coalition troops already in Iraq.

A glimpse of future strategy may have been visible in the response to the May clashes in Fallujah. After weeks of heavy fighting between Sunni supporters of the former regime and US forces, the decision was taken to place Jasim Mohammed Saleh, a former senior officer in Saddam's elite republican guard, in command of Iraqi forces deployed in the city. Saleh's appointment drew the ire of many Shia religious leaders, not least the radical renegade cleric Moqtada al-Sadr, whose Mehdi Army had fought an intense battle throughout April with the US in the streets of Najaf.

Progress on key elements of reconstruction will grind to a halt unless firm action is taken to end the cycle of violence that has engulfed the country. 'Security, security, security is the main problem for the Iraqi government in the future,' says Andy Bearpark, the departing CPA chief of operations. 'If someone could do something about security then all the steps we have taken to rebuild Iraq will fall into place. It's difficult because without security they cannot hope to complete reconstruction and without the reconstruction they cannot improve the economy, which is the key to restoring order.'

However, the persis