Every Ramadan, in neighborhoods around Baghdad, groups of men face off in the streets. But they are engaged in a battle of wits, not arms, as they play a game called "mahaibis" or "little ring." One team cloaks itself behind a large cloth and hides a ring in the fist of one of its players. Then they all sit, their clenched fists on their laps, as a member of the opposing team tries to guess which player holds the ring and which hand it's in. He (the teams are almost always all-male) has a few minutes to scan each face, looking for telltale signs of nervousness or artificial nonchalance.

The searcher moves with swagger and showmanship, slapping the hands of those he eliminates from consideration among the dozens there to confound him. If he's wrong, and dismisses someone who actually holds the ring, the hiding team gets a point. If he's right, he continues the search to the cheers of his partisans, employing bravado and confusing banter to shake his adversaries' nerves. When he finally settles on his choice, he'll grab the suspect hand in a dramatic flourish. If he's chosen correctly, his teammates exult; they then get to hide the ring and try to win points by baffling the other team's designated hunter.

America might have had a less perilous time in Iraq if its diplomats and soldiers had come armed with the kind of skills Iraqis learn from childhood in this holiday game of subterfuge. Iraqis who are good at it use their uncanny powers of observation to read opponents' faces and gestures in divining, quite literally, who is hiding something.

The Iraqi parliament's vote today to hold local elections by Jan. 31 won quick praise by an American official but is actually a reminder of the decreased leverage the United States has here and that, in fact, the elections are in danger.

Prime Minister Nuri al-Maliki promised more than a year ago that the balloting would be held by the end of 2007. That didn't happen. Then the parliament this spring voted to set an Oct. 31 vote. By late summer, no one really expected that to happen, in part because the country still had no rules to govern the voting. Today, in a bill meant to set those rules, parliament chose a new deadline, Jan. 31. State Department deputy spokesman Robert Wood told the Associated Press that the vote was a "positive sign" of "maturing Iraqi democracy."

At this point, it's more a ratification of the fact that Iraqi leaders don't seem to want the vote as much as the Americans do and it's possibly an ominous sign that the relative calm of the past few months could again deteriorate.

The elections would choose the country's provincial councils, which will then select Iraq's powerful governors. The people holding those jobs now were chosen in 2005, when the incipient political system was at its crudest. Voters selected from big party lists that did not disclose the actual candidates. The winners were considered barely representative of the people and new elections, most observers hope, will be a huge step toward bringing alienated (i.e. potentially violent) factions into their share of power. (Even with the new January schedule, elections won't be held until later still for the three Kurdish provinces and one province disputed between Kurds and Arabs.)

As he was installed in his new job as top commander in Iraq last week, Gen. Ray Odierno called the provincial elections "critical" for bringing stability and emphasized the expectation they would take place this year. The holding of provincial elections is one of the benchmarks Congress required the White House to use in measuring progress in Iraq.

But to the major Iraqi parties in power, the prospect of elections probably looks more like a threat. They're loath to admit it but members of mainstream Shiite parties worry they will lose governorships to loyalists of radical cleric Muqtada Sadr. The Sunni minority leaders in the government fear they will lose seats in Sunni areas to upstart tribal factions who take credit for fighting off al Qaeda and barely participated in the vote the last time around.

In July, NEWSWEEK talked to Baha al-Araji, one of those disaffected Sadr followers in the parliament, and he accused the leading parties of seeking to keep pushing the date into next year. Then, he said, they will argue that it just makes sense to postpone the local vote and hold it along with national elections for parliament at the end of 2009. It seemed a little conspiratorial at the time but only elections by the new deadline will prove him wrong to suspicious Iraqis.

The dress code for the handover of American power in Iraq from Gen. David Petraeus to Gen. Ray Odierno was different today than it had been when Petraeus took the job 19 months ago. For reporters riding the armored military bus – the "Rhino" – to the ceremony, helmets and bullet-proof vests were optional. Last year, amid the anarchic sectarian violence and frequent deadly attacks on U.S. forces, protective gear was a must, even with the armor, on the ride down the dangerous airport road to the American military headquarters west of Baghdad. In February 2007, when Gen. George Casey handed off command to Petraeus, 81 U.S. troops died. Last month, 23 American soldiers were killed. Attacks are now at a four-year low and Iraqi deaths have also dropped steeply.

Under the enormous glass chandelier in an atrium of one of Saddam Hussein's old palaces, the home of the U.S. command, today's ceremony was formal and full of the usual pomp; a military band, color guards, anthems and the ritualized hand off of military banners from Petraeus, who ascends to command U.S. troops throughout the Middle East, to Odierno, now in his third major Iraqi command. Secretary of Defense Robert Gates came along to praise both men.

But the goals for Odierno's term remain tempered by reality. While some Americans talk about victory in Iraq, American commanders steer clear of that value-laden term and generally come back to earth in terms that are more about salvaging an acceptable end to a war that has taken more lives and years than they expected when it started. There was little talk of democracy in Iraq, let alone throughout the Middle East, and a lot of talk about lost comrades. Chairman of the Joint Chiefs of Staff Adm. Mike Mullin stretched things the most, claiming that Iraqi reconciliation had "begun to blossom," something most Iraqis would dispute bitterly. But Petraeus' bottom line was measured. He repeated his promise last year that the war in Iraq was "hard but not hopeless" and said U.S. troops have turned it now into "hard but hopeful."

Odierno was even more cautious. In his speech he said he would work toward "complete success." But in comments to reporters later he outlined what that meant. "[Iraq is] in a fragile state now. What I want to do is build it into a more stable state." He added, "What we have to do is maintain the stability so the [Iraqi] government can grow." Asked to describe the best possible scenario, Odierno said that would mean continued security and improvement in the government's ability to bring things like electricity and water to Iraqis.

He talked about Iraq as an "evolutionary" process and noted ongoing threats. An agreement with Iraqi officials about the future of U.S. troops here is still "extremely important," he said. American diplomats had said a deal would be wrapped up about July 31, but talks continue. He noted that local elections, already delayed and now hoped for by the end of year, will be critical. He cited rival Kurdish and Arab claims to disputed territories as another volatile issue still unsettled. He did not need to mention that bombers have struck several times in recent days but there were repeated warnings from speakers that Al Qaeda in Iraq is not dead.

Odierno and the other speakers showered Petraeus with praise, the real occasion at hand. The mood was practically jubilant compared to last time, when Casey told reporters that "history" would judge whether he erred by rushing to put Iraqi troops in charge – a policy Petraeus basically reversed. But much of the joy was relative, with frequent references to the horror that gripped the country last year. A helmet-less ride down the airport road today is good news. But it does not equal victory in Iraq.

It's easy to come up with reasons why Baghdad's relative peace might not last. There are still assassinations almost daily. Militias continue their saber-rattling exchanges. Only a tiny fraction of the displaced Iraqis have chanced a return to their homes. But in the instant snapshot of today, western reporters are moving around much more freely in the last six months.

I'm still not ready to risk a lunch in a restaurant, sitting long in public speaking English. But this weekend I decided to make a carefully considered trip to a grocery store I used to frequent regularly until early 2007. It just gets tedious and seems so colonial specifying for local staff the exact brand of Kellogg's cereals, granola bars and non-sugar fruit juices to fit my western tastes – upscale groceries stock these things inconsistently but commonly. A trip to a supermarket is a pretty good barometer of life in any city.

My looks are inconspicuous among Iraqis and I planned not to speak English in the store until I got to the check out, when I'd be almost out the door. But when I got to the milk and cheese fridge, I came across one of the most prominent Iraqi government spokesmen and his wife. "HELLO! HOW DO YOU DO?" he bellowed with characteristic joviality as other shoppers turned to look. I leaned into a handshake to whisper that I was trying to avoid English and he quickly understood. Whatever happens in the coming months, it's safe enough now for an American reporter and an Iraqi spin doctor to share a few words in the dairy aisle.

On a side note, I was pleased the cashiers remembered me and asked where I'd been.

A soon-to-be released book by The Washington Post's Bob Woodward reportedly confirms the most open secret in Baghdad's Green Zone – that you never know who's listening on your phone. The book, "The War Within: A Secret White House History, 2006-2008," quotes one source saying the Americans hear "everything" Prime Minister Nuri al-Maliki says. The scoop was heard in Baghdad and might complicate the oft-contentious relations between the two ostensibly allied governments. In his bright salon living room where he spent his Friday weekend time, government spokesman Ali Dabbagh fielded calls about the report, eying an Arabic translation of an Agence France-Presse version. "Definitely the Prime Minister will be upset. All the government will be upset" if it turns out to be true, Dabbagh said. He vowed that Iraqis would raise the allegation with their American counterparts. At the White House, spokeswoman Dana Perino declined to comment on the report.

The Iraqi government might be upset, but no one will be too shocked. Reports surfaced in January, 2007, that U.S. agencies were listening in on Maliki. The Green Zone is probably among the most thoroughly spied-upon pieces of turf on the planet. Tales circulate of phone transcripts of top Iraqis passed among embassies. Drones frequently buzz like flying lawn mowers overhead. It's reputed that U.S. government employees' calls are monitored and people can be disciplined for speaking the details about top officials' movements. This means the Americans think insurgents could have the equipment needed for listening in on mobile connections, carried by local phone companies. It can make it tough for embassy press aides, who have to invite reporters to press conferences without naming the speakers.

They use phrases like "senior U.S. official" when a cabinet secretary has come from Washington. Reporters have to gamble on whether showing up will get them a meeting with a top State Department power or someone on a junket from the Department of Commerce.

There's also the old-fashioned in-person spying. I know of one operative from Muqtada Sadr's Mahdi Army who was arrested by U.S. troops at his job in a Green Zone police station. People worry that Mahdi Army spotters could be phoning in the locations of rocket strikes to provide better aim to the attackers. U.S. advisers assigned to Iraqi ministers are sometimes suspected of reporting back to American commanders.

And, yes, the phones are highly suspect. Dabbagh acknowledge that Iraqis often joke about who might be listening to them chat. They are especially suspicious of the mobile phones that coalition officials have handed out since early in the war. They carry the U.S. country code and a 914 area code. Dabbagh would not say whether Iraqis also spy on U.S. officials but he said spying is not a two-way street. "It is our right if we want to do it," he said. "As long as there's no problem with international law, for our national security we have to do it. But the U.S. should not do it in Iraq." Surely, they're both doing it.

By Lennox Samuels 

By Lennox Samuels

Scores of soldiers loiter on one side of the expansive grounds of Baghdad's Al-Sijud Palace, some in full uniform and others wearing brown T-shirts tucked into their camouflage pants. Nearby, dozens of backpacks stuffed with gear stand upright, as if at attention. The troops smoke and chat in small groups, the talk mostly about the violent drama unfolding back home. These are members of the Georgian Army, waiting to be re-deployed to their country in the Caucasus to join the battle against a historical foe they believe is trying to re-conquer their nation. "We look on TV and see the Russians bombing our country and we know what we have to do," says one sergeant who does not want to give his name. "We have to go back and fight."

Russia's military campaign may be designed to eject Georgia from the secessionist republic of South Ossetia, but it also is forcing Georgia to drastically reduce its presence in Iraq. A longtime stalwart of the American-led coalition in Iraq, the small European/Asian nation will send back at least half of its 2,000 Iraq-based troops to help on the home front. Georgia, a small nation of only 4.5 million people, currently supplies the third-largest contingent of forces in Iraq, after the United States and Britain. "The Georgians are redeploying the majority of their troops," says Rear Admiral Patrick Driscoll, a spokesman for the Multi-National Force in Iraq. "We wish them well."

The Georgians, who have been in Iraq since 2004, currently spend much of their time providing security and medical services to Coalition personnel. They have been a familiar sight around Baghdad's Green Zone, manning checkpoints. Many have served on security details along the Iranian border, trying to help prevent smuggling and reduce the flow of potential insurgents into Iraq. Most recently, some companies have been working alongside American and Iraqi troops in their latest drive to kill or expel Al Qaeda in Iraq from Diyala Province. "In the near term their [departure] will have some impact as we adjust operations," Driscoll concedes without elaborating.

For the soldiers waiting on the compound of the massive, blue-domed Al-Sijud, the change of fronts is not only sensible; it is essential. They mill around the compound, which is now called Forward Operating Base Sakartvelo (Georgia's name in the native Kartuli language) and where the distinctive red-and-white, five-cross Georgian flag is mounted at the entrance. As they wait for the Americans to arrange their transport out of Iraq, the troops talk about what they see as Russia's long-held desire to rule Georgia, a former Soviet republic that became independent in 1991, 70 years after it was absorbed into the U.S.S.R. They know that Georgian President Mikheil Saakashvili has tried to navigate a careful course between establishing closer relations with the U.S. and European Union and expanding cooperation with Russia, the nation's powerful—and suspicious—neighbor to the north and east of the Caucasus Mountains. "They've always wanted South Ossetia and Abkhazia [another separatist region in Georgia]," says another soldier, getting up and stamping away.

The men figure that they can employ the battlefield skills picked up from fighting terrorists and insurgents in Iraq to battle the Russians. One lieutenant says the Iraq contingent can play an important role among Georgia's 32,000-strong armed forces, given its Mideast experience. But for now, they must wait to hear when the U.S. will expedite their departure for home. "We have orders to pack but no firm deployment orders yet," says 1st Lt. Nukri Rezesidze, commander of Bravo Company. "It all depends on the Americans." A bearded Georgian Orthodox priest in a black cassock nods as he listens. He's heading home as well, he says. But as Moscow announces that it will send reinforcements into South Ossetia and rejects a ceasefire offer from Tbilisi, many of the troops are hoping they don't fly out too late.

The military admitted late Sunday that three bank employees – a 57-year-old man and two women coworkers – killed by U.S. soldiers in the Baghdad airport complex were just as their loved ones and Iraqi police had maintained: "Law abiding citizens of Iraq." But the soldiers who fired at them were, a military statement said, "not at fault."

The announcement about the conclusion of an Army investigation corrected what had seemed implausible all along. For weeks after the June 25 shooting, the Army claimed a weapon was found with the Iraqis' car despite the fact that they had just passed through the rigorous weapons searches leading to the airport terminal. Even as NEWSWEEK reported on the high-profile case July 7, the military was standing by its story, which would have meant that a long-time employee of an airport bank branch suddenly decided to divert from his daily commute to fire small arms at soldiers in multiple armored vehicles. The original Army statement portrayed the incident as a minor combat victory, claiming soldiers had killed three "criminals" attempting to attack them.

The U.S. military says there were zero attacks in Baghdad on Wednesday. A year ago, there were an average of 43 a day. The question of how this happened has led to the latest tussle in America's race for the White House. Republican candidate and of Iraq War supporter John McCain attributes the improvement to George W. Bush’s troop surge. Democratic candidate and war opponent Barack Obama disagrees. Who’s right? The answer is somewhere in between, with an edge to McCain but with Obama raising important points. If you think military force solves problems best, then you can attribute the success to the troop increase and, probably, it largely is. But if you tend to think politics and winning hearts and minds works best, you can point credibly to other factors that also reduced the bloodshed.

The timeline is rather simple. On Jan. 10, 2007, President Bush ordered the troop increase, calling it the "surge" rather than by the more traditional term, "reinforcements." Gen. David Petraeus, the main proponent of the more than 28,000 additional troops, took command on Feb. 10. It then took until June 15 for all the five surge brigades to position themselves. Between February and June, the troops were amassing and already establishing many of the neighborhood combat outposts that were key in reducing the sectarian violence between Sunnis and Shiites.

Starting June 15, a 90-day surge plan kicked in with U.S. troops retaking areas that had fallen to chaos or control by militias and Al Qaeda. Violence rates, based on military graphics, dropped steeply from an anarchic peak of more than 1,500 attacks Iraq-wide per week in June 2007. McCain is right that the troop increase was important, perhaps the key when combined with their new tactics, in turning the country around.

By Lennox Samuels

Two men, one American, the other Iraqi, daubed wet cement on a short stack of limestone bricks and laid the cornerstone for what is to be the first new five-star hotel in Baghdad since the days of Saddam Hussein. A couple dozen people standing in 115-degree heat on a parched piece of land near Zaitun Street and Al Qadisiya Highway, just inside the International Zone, watched the tableau. Most of them understood that the ceremony was a symbol of Iraq's accelerating efforts to transition to life beyond wartime. And the developer's representative spelled it out for those who might not have gotten the message. "This project will be a signal that will go out all over the world that the economy of Iraq is ready for investment," declared Robert K. Kelly, CEO of Delaware-based Summit Global Group.

It will take more than such baby steps to rebuild Iraq, but the cornerstone event is part of a growing trend toward normality in Iraq as violence subsides. Parts of the country remain dangerous and terrorists still occasionally launch attacks that result in mayhem and high body counts, but there is a sense that real change is in the air. "Today we can stand here fairly safely and lay the cornerstone for the future of Iraq," said Brig. Gen. David Perkins, a newly arrived Multinational Force-Iraq spokesman. "This project encapsulates progress across all the aspects of improving security, creating good government and reviving the economy."

Construction on the $100 million, 300-room hotel is to begin in 30 to 45 days. The project is expected to create 500 jobs and be completed within 12 months, Kelly says. The development, dubbed Hotel Two Rivers (Iraq is home to the famous Tigris and Euphrates rivers), will rise in the shadow of monuments to the megalomania of Hussein. Nearby stand the hulking Adnan Palace and the giant Crossed Swords that commemorate the ill-fated Iraq-Iran War.

    Iraqis are mystified by Barack Obama. As he kicked off his tour of Europe and the Middle East—including a stop in Baghdad—this week, both leaders and ordinary people here were trying to size up the Democratic candidate. For many, opinions are distorted by decades of misinformation and years of post-war cynicism about American motives in general. If you ask unemployed, 34-year-old Uday Ahmed whether he views Obama as a Muslim, because his father was Muslim, or as a Christian, which is the candidate's religion, he answers: "I think he is Jewish." It's an old conspiracy complex common in the Middle East, that Jews run American policy. But Ahmed didn't seem to mind. "If he is going to save my country from the chaos, I think I will like him. It is so important to have a good person, whether he is a Muslim, a Christian, or Jewish."

    Iraqis--even those who like and work with Americans--generally see the American invasion as a manifestation of U.S. interests in controlling the region and its oil wealth rather than anything done for their well-being. Most we talked to thought Obama would follow that path. Maybe, with all the power outages, they haven't had a chance to be touched by the candidate's telegenic charisma and set aside their cynicism. Here are some samples from Iraqis when we asked about their views of their incoming guest as the potential U.S. leader, his religion and what he'll do for Iraq:

Sign of the Times: Waleed al-Bayati has re-opened his pizza restaurant (Credit: Larry Kaplow)

Baghdad's probably still too dangerous for western reporters to comfortably linger over meals in restaurants but it's just about right for pizza runs. We made one the other day to mark something of a milestone, the return of Pizza Italiana Napoli, which owner Waleed al-Bayati reopened six months ago. The tiny, crumbling storefront sits amid groceries, liquor stores and sandwich shops on a gritty street near gates to the Green Zone.

There are other pizza options in Baghdad. There's a pizza franchise in the Green Zone and I hear the Italian embassy serves up a great slice to those who can wrangle an invitation. A few restaurants around town offer variations of pizza along with menus of mixed cuisine. But for me and a lot of other reporters who have covered the war, when you think of pizza, you think of Waleed. His shop was a favorite among reporters in 2003 and 2004. We'd meet at the counter – with the gigantic brick oven there's only room for dining at a thin counter in the window – on our way to and from meetings in the Green Zone. A bulletin board was full with business cards from American, British and Italian correspondents. Soldiers also ate there or ordered out, back in the days when things were laid back enough for that. And it was popular with Iraqis who liked western food.

Al-Bayati, 42, learned his pizza skills near the Trevi Fountain in Rome, where he went to college and worked in a restaurant. He speaks Italian and a little English. He opened his shop in 2003 and he was described in Washington Post journalist Rajiv Chandrasekaran's "Imperial Life in the Emerald City," an important book about the war's early days (and being adapted in an upcoming film, "The Green Zone.")

Nearby bombings targeting the Green Zone's Assassins Gate rattled the restaurant and drove business away until almost no westerners would eat there. Al-Bayati closed down for about two and a half years. He says improved security makes the work possible again, a story being told by storeowners around Baghdad. But demand for his pizzas, which cost the equivalent of about $4, is down to a small percentage of what it used to be. The reporters don't come around anymore – in part because there are far fewer than there were in 2004 - and Iraqis are turned off by checkpoints and barriers used to protect the street. His complaints sounded familiar as Baghdadis are increasingly growing used to the relative calm but awaiting economic growth and public services.

When we showed up, it was around 100 degrees outside and he was sweating hard (no AC in the shop) as he shoveled our pizzas into the oven. There was the old pungent smell of sewage outside the door – this was never a big place for atmosphere. But the portly man had a wide smile for me when I walked in and the pizza tasted fine. He said I was the second reporter there in a month.