Global Policy Forum

By Peter Beaumont

The last streets of flat-roofed houses of the al-Shuhada district of Falluja peter out into unpaved roads that make their way between the fields to the villages populated by the Zawbi tribe. Under cover of darkness, the fighters of Falluja's resistance creep across this landscape, moving men and weapons from safe houses in the villages towards Shuhada, towards the battle for Falluja. Early yesterday it was US Marine vehicles that were heading into Shuhada, turning out of their forward operating base - a walled former resort of low bungalows round a lake known to Iraqis as 'Dreamland' - for a house raid that US military sources say netted a 'senior leader' in the network run by Jordanian terror mastermind Abu Musab al-Zarqawi, along with five others. He was named as Abdel-Hamid Fiyadh, 50, who was arrested along with his two sons, Walid, 18, and Majid, 25, and three relatives.

For a year and more, this is how the war in Falluja has been conducted: at night, raids by American troops seen largely through the green shimmer of their night-vision goggles; by day, block searches and vehicle checkpoints. On the insurgents' side, it has been prosecuted with an equal, if covert, vigour among the back lanes and along the quiet lanes to the south that act as supply routes between other centres for the rebellion. But it is the city itself and districts such as Shuhada that are the centre of gravity of the insurgency, along with the densely concentrated al-Askari neighbourhood on the Euphrates to the city's east, and the district of Johan in the city's north-west.

After a year and a half of gun battles, artillery and tank fire and bombing raids, many of the houses of Shuhada are scarred. But Shuhada is on the brink of even greater violence as US and Iraqi forces mass for what they hope will be the definitive battle of the Sunni Triangle. How that battle unfolds will not only hold the key to Iraq's elections in January, and to a joint US-British military strategy, but to the life of Margaret Hassan and perhaps to how history will judge the actions of both George Bush and Tony Blair.

It is a battle that will be fought among the metal shops off Highway 10, where it carves into the city of 300,000. It will be fought along the highway itself that neatly bisects Falluja and, eventually, it will be fought in the warren of narrow, filthy lanes of the slums that sit by the Euphrates, where fighters, at first largely from the al-Buesa tribe, first began their rebellion. Even when journalists could still visit the fighters in Falluja, this was a threatening place, where lookouts would stand on the street corners to warn of American troops and other 'spies'.

Now the state of the insurgency in Falluja is largely unknown, save that it has taken deep root in the 'City of Mosques' and its surrounding villages, despite claims by the US military that they have waged a bloody campaign of attrition that has bitten deeply into the leadership of both the insurgents and their allies in Zarqawi's militia network. What is equally uncertain is whether US Marines are capable of bringing Falluja back under control without the massive loss of civilian life that accompanied their last major excursion into the city in April, or without large loss of American lives.

It is a moot point. For in the run-up to planned elections in Iraq in January, US forces cannot risk rekindling the sense of outrage that joined Sunni and Shia and Kurd when confronted with the death toll in this city. It is for this fight that British troops of the Black Watch are being brought north into Babil province to release more US Marines for the fight.

According to military sources, this time the battle will be different - although there is no evidence of that so far from the bombing raids that have been levelled against districts like Shuhada in the past few weeks which, say the city's doctors, have already claimed many lives. This time military planners say the US Marine assaults will be led by special forces, who will pinpoint insurgent positions as they move through the city block by block, pushing the fighters back until they are stopped by the river and trapped by a cordon around the city. That is the theory. Iraq has a nasty habit of turning the theories on their heads. Nowhere more so than here.

Falluja was always a disaster waiting to happen. A deeply religious and socially conservative city with a tradition of Baathism, it had been one of the main recruiting areas of Saddam's security forces, including the Republican Guard. When these were disbanded after the fall of the regime, a large proportion of the city's men were excluded from the new Iraq. It was compounded by another problem. Despite the fact there had been no fighting in Falluja, and the city had negotiated its surrender without the looting that had been seen elsewhere, when American troops did move into Falluja it was to preside over an almost immediate disaster. Sixteen Iraqis were killed and dozens more were injured after the American soldiers opened fire on a demonstration.

It was the first in a series of fatal misjudgments that allowed the insurgency to establish a foothold in Falluja. In an experiment that would have far-reaching consequences, American troops retreated from their positions inside the city, relocating to two substantial bases on its outskirts. Rapidly, the fighters in Falluja took advantage of the American withdrawal, using it as cover to ambush US patrols with bombs, sometimes even as they left their gates. By the beginning of the year, those attacks were becoming ever more auda cious, culminating in the downing of a Chinook helicopter full of US troops and the murder of a group of American contractors whose burnt and mutilated bodies were hung from a city bridge.

The response was the first serious attempt to pacify the city in April, an operation that left hundreds of Iraqis dead, many of them civilians, with little impact on the insurgency. If that was serious enough in its own right, a worse misjudgment was over the nature of the insurgency itself. For months, despite all the evidence to the contrary about its high level of organisation, senior US officers convinced themselves that the attacks were the work of a few dead-enders, foreign fighters or criminals in the town. And they consistently underestimated the numbers of those fighting them. New assessments have radically altered that picture. Across Iraq, US military intelligence officials conceded to the New York Times on Friday, the estimated numbers of fighters now stand at between 8,000 and 12,000, perhaps 20,000 when active sympathisers are included.

They are assessments that contrast sharply with earlier intelligence reports, in which the number of insurgents has varied from as few as 2,000 to a maximum of 7,000, with 400 in Falluja. What US military planners now recognise is that the fighters in Falluja could number many more. And, as The Observer reported last weekend, the insurgents have access to huge sums of money from an underground financial network run by former Baath Party leaders and Saddam Hussein's relatives operating from Syria and elsewhere. All of which raises serious new questions over the nature of the insurgency: has it grown out of plans laid down in advance for Iraqis loyal to the old regime to continue the fight? Was the battle for Falluja, in many respects, always destined to happen?

The biggest question is how hard the men of Falluja and their allies will fight and whether they will try to make their stand as definitive a turning-point for Iraqis sick of the US 'occupation', just as the American forces hope that it will be for their own project in Iraq. Fort Carson, south of Colorado Springs, is known as the 'Mountain Post'. It is home to 3rd Armoured Cavalry Regiment, 3rd Brigade, 7th Infantry Division, and the 43rd Area Support Group. It is also home to a group of men whose reported deployment soon to Iraq threatens to have a significant bearing on Falluja's future. The 10th Special Forces Group has for years been catapulted into action from its base in the Colorado mountains. Now, according to US reports, more than 1,000 of them are heading for the Middle East, amid official reluctance to discuss where they are going or what they will be doing.

Speculation has been mounting, however, that such a large movement of the Green Berets, with their specialist snipers, linguists, civil affairs specialists and military intelligence officers, could only be headed for two places - for Afghanistan and an attempt to capture Osama bin Laden or, more likely, to spearhead the fighting inside Falluja, acting as forward air controllers on the ground for US bombers and strike helicopters, and leading the hunt for al-Zarqawi. It is a view that is endorsed by John Pike of the Washington think-tank Global Security. 'The Marine units that are being gathered for the battle are short on laser designation [for guiding air attacks from the ground]. They are significantly under-equipped. A special forces group like this would fill that gap.' Pike believes their deployment , alleged to be within the next couple of weeks, is a possible indicator of the political considerations that surround the timing of a final decisive assault. It must not come so soon that bad news from the battlefield - either in terms of American or civilian casualties - can affect the presidential election. 'My guess is that, as soon as the US election count - or recount - starts, you will see an awful lot of action.'

But in some respects a campaign has long been under way. Since mid-October the 1st Marine Expeditionary Force has been operating checkpoints around the city, while US jets have launched almost daily raids. The city has been the target of numerous airstrikes by precision-guided missiles destroying suspected hideouts of insurgents. One slim hope remains for the beleaguered citizens of the world's most terrified city. Interim Prime Minister Iyad Allawi has made Falluja an offer they can't refuse, insisting that the city hand over Zarqawi and his fighters. If they fail to do so, they face a brutal military operation. The events in Falluja over the next few weeks will shape the future of Iraq.