'All of us fought last night - it was like a war '

As we drove into Sadr City, Iraqi radio quoted Sheikh Moqtada al-Sadr's reaction to the overnight battle that left eight US soldiers…

As we drove into Sadr City, Iraqi radio quoted Sheikh Moqtada al-Sadr's reaction to the overnight battle that left eight US soldiers and more than 40 Iraqis dead in the slum named after his father and great-uncle.

The US administrator, Paul Bremer, was calling al-Sadr an outlaw, and on the other side of the city, US Apache helicopters had just blown up one of al-Sadr's offices, killing two more Iraqis. By evening, the Coalition Provisional Authority had announced a warrant for Moqtada al-Sadr's arrest.

"Our revenge will be greater [than the US strikes]," America's new number one enemy in Iraq threatened. "The blood of our people was not spilled in vain. The Americans must prepare for confrontation."

A cluster of US tanks was poised on the Kanat motorway bridge just outside this vast stretch of north Baghdad, inhabited by an estimated 40 per cent of the capital's five million people.

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We turned right, into the Jamila neighbourhood, and headed for the town hall, in the hope of finding an Iraqi official who could explain how the only part of Baghdad which cheered invading US troops a year ago came to turn on them with such lethal fury.

But instead we encountered a wall of US armour. The M1 Abrams tanks or Bradley fighting vehicles were wedged behind walls, their turrets peering over the tops. Some were simply so well-camouflaged against the sand-coloured buildings that I'd missed them. Every few kilometres, at major intersections, there was another tank nest, grouped together for strength in numbers.

The tank gunners were as still as statues, clad in helmets and sun goggles, their heavy machine guns pointed outwards, at the denizens of Sadr City. Cars and pedestrians crept by slowly, at a safe distance. One sudden gesture, one loud noise, and the whole thing could erupt again in a deluge of bullets and grenade explosions.

Only the little boys dared walk towards the hulking armour, stared at it, as if in defiance. The teenagers hung back, a second echelon.

The gunmen of Moqtada al-Sadr's "Mehdi's Army" had retreated into backstreets and houses. At the end of the boulevard, black smoke swirled up from burning tyres and a sense of familiarity swept over me. Was I in Baghdad, or the Gaza Strip? The walls of the children's hospital were covered with posters glorifying Moqtada al-Sadr and his "martyred" father.

"Symbol of Jihad," said one poster over the main entrance, showing the snowy-haired cleric whom Saddam had murdered with two sons on the way home from evening prayers in 1999.

Al-Sadr's statement condemning the Israeli assassination of Sheikh Ahmad Yassin was posted on the guard house. So was the most oft-seen image - a finger-wagging Sheikh Moqtada with the caption, "I will not worship the god of the infidels." The word "not" is printed in red.

The four dead men they'd received, all killed by bullets, had been picked up by their relatives, I was told at the guard house. Four Kalashnikovs lay on the table. "We were the very first people to receive the Americans with applause," said a hospital guard who asked to be identified as an ordinary Iraqi.

"The Americans created the riots," the guard continued. How? "The new troops that came about a month ago - they don't respect people. They run over cars with their tanks and they don't help us." Were there any Irish troops in Iraq, the guard wanted to know. He looked relieved when I said no. "Please keep playing football - it's better for you," he said of the young men of Ireland. "You will face death here in Iraq. Even armoured vehicles cannot fight the Iraqi people."

Back on the streets of Sadr City, one wondered whether US troops could ever hold this wasteland of shacks and burning rubbish, lakes of sewage and narrow allies. And men. Thousands upon thousands of men. Standing in small groups, talking.

Sitting on the steps of houses. Idle men without jobs, nurturing a whole new litany of grievances.

"We are all in Mehdi's Army," a 21 year-old named Haidar told me. "All of us fought last night - it was like a war. A war between Mehdi's Army and the Americans. For 12 hours, the shooting never stopped. People here are not frightened because we're fighting for our religion. If they kill us, we'll be martyrs."

Mehdi is the 12th imam, whose return the Shia still wait for. Though some of the "army" created by Moqtada al-Sadr after Saddam's fall marched in formation last weekend, it is more broadly based than a formal, organised militia.

"We were very happy when the Americans came," Haidar continued. "Now it seems they are much worse than Saddam. Before, Saddam was executing perhaps 10 Shia per month. Now, we are losing hundreds in the bombings."

In recent sermons, Moqtada al-Sadr accused US forces of carrying out the bombings of Shia shrines, and he was widely believed.

Haidar's unemployed father, Abu Ali (51), invites us into their cement and mud-brick house, where we sit on worn carpets and drink tea.

Several of his six sons sit alongside their father. They offered to give blood at Shouhada Hospital, the patriarch says, but there were so many donors that they were turned away.

Shia Islam allows for taqiya - dissimulation - in the interest of self-protection, and truth is a rare commodity here at the best of times. Abu Ali swore he'd seen US soldiers holding knives to the throats of infants, that more than 100 residents of Sadr City were killed overnight, that the US army was releasing bodies in dribs and drabs to keep the truth hidden.

Abu Ali confirms what I'd already been told: that things started going seriously awry with last month's troop rotation. "The former troops didn't come in the day time or go into the market," he said. "They only made patrols at night."

Moqtada al-Sadr's message has filtered down intact to every supporter's household: "One, we want the ban on al Hawza [Sadr's newspaper] lifted," Abu Ali says, counting demands on his fingers. "Two, we want Sheikh Yacoubi [an imprisoned aide to al-Sadr] freed. Three, we want the Americans to restore Sayyid Moqtada's freedom of movement. And four, we want democratic, direct, free elections."

Abu Ali's words are drowned out by the clatter of US helicopters above the house. "Listen to it! It's like that day and night!" he exclaims.

Sadr City has had no water or electricity for four days, a complaint I heard repeatedly. "You see," Abu Ali says, opening an empty tap as I leave through the courtyard. "This is the city council that America gave us!"

We had talked of relations between Sunni and Shia, so Abu Ali's sons run to fetch a photo-copied statement that was handed out in the streets of Sadr City on Monday.

"From the people of Fallujah," it begins. "We hail Muqtada al-Sadr and the heroic stand of the people of Sadr City and what they did yesterday and today to get rid of the occupiers. We will work together to destroy the infidels."